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Even though we are no closer to a deal being struck over Greece, there is a feeling that a lifeline will be cast out to save the Mediterranean nation. Athens is angling for emergency funding for its banking system and should the European Central Bank deny it, it would effectively be turning its back on the debt-laden country.
Europe doesn’t want to let Greece go as it has too much at stake, given the popular discontent in countries like Spain, but at the same time it wants to save face, and this is why markets believe a roundabout rescue package will be reached in the end.
Sterling surged above $1.54 after the UK announced its lowest unemployment rate since 2008 and a jump in average earnings that confirms the trend of recent months.
The Bank of England was unanimous in its voting pattern, as was the case in January, but there were signs of disagreement, with two policymakers still arguing a rate hike is possible in 2015 versus one that thinks easing is more likely, which left the market with a hawkish sentiment. However, this set of minutes is unlikely to change overall sentiment around GBP/USD, since the Federal Reserve is much further along the monetary tightening road.
Adverse currency movements left a sour taste in the mouth of Coca-Cola HBC, although the soft drink bottler benefitted from cheaper commodity prices such as oil and sugar, and the operation in Russia is on the rise. However it couldn’t prevent earnings from falling during the period; the stock has lost 1.3% today.
Shares in Galliford Try hit an all-time high after the homebuilder revealed a record first half performance. A rising property market, more sensible lending policies by banks and rock-bottom interest rates paved the way for a double-digit rise in profits and the dividend.
We are expecting the Dow Jones to open five points lower, at 18,040, as markets prepare themselves for the Fed minutes later tonight. The update from the US central bank will be under scrutiny as the economy is gaining momentum, but a cooling off of the emerging economies and a collapse in commodity prices may restrict the recovery.