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MPC minutes indicate continued caution
Royal Mail has posted disappointing first-half figures which have seen the markets wipe 8% off the company’s value. The loss of Amazon's business and the company’s inability to tackle the bloated staffing numbers continues to be the elephant in the room of the 30% government-owned postal company.
Once again worries over Asian consumption of commodities have seen the FTSE fallers list dominated by mining stocks, as investors factor in tougher times ahead.
Today’s Bank of England Monetary Policy Committee minutes have shown that the majority of members are still to be convinced that the economic backdrop for the UK is strong enough to warrant change in the interest rate. As the UK’s largest trading partner the eurozone continues to struggle and, since the UK’s average earnings haven’t grown at the rate anticipated, caution appears to be the watch word with most of Mark Carney’s colleagues.
US markets still lethargic
Yesterday’s sluggish mentality from US equity markets appears to have been replaced with outright negativity, as European markets have done nothing to alter trader lethargy. Tonight is the Federal Open Market Committee's turn to open up minutes from its last meeting for public scrutiny, offering traders the opportunity to speculate which changes to the Federal Reserve’s interest rate timeline can be interoperated.
At the recent G20 meeting in Australia, the atmosphere between Barack Obama and Vladimir Putin looked particularly frosty, though McDonald's has attempted to thaw relations with Russia by once again opening up its flagship Moscow restaurant.
Reporting very much at the tail-end of the US reporting season, Target – the merchandise and food store – looks to have hit the mark, with earnings figures coming in at the top end of the range.
Gold driven higher
The spot gold market has been driven higher by increased buying from Russia as its central bank has acquired over 150 metric tons over the last year while the Russian ruble has continued to tumble. Indian demand for the precious metal has also increased, as markets expect further government restrictions on importing gold.
Just over a week away from the next OPEC meeting and confirmation that Japan is now in a recession has seen anticipated demand for oil fall again, as oversupply in the markets shows no sign of being addressed in the short term.
GBP/USD sees brief flurry
This morning’s confirmation that the MPC had kept its 7-2 voting on interest rate rises will not have surprised many; the market consensus is pointing towards a rate rise sometime in the second half of 2015. GBP/USD has had a brief flurry of interest edging it out of oversold territory. Tonight, after European traders have packed up and headed home, we will hear from the US FOMC with the release of the minutes from its last meeting.