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Markets have been able to gorge themselves on economic outlooks today: earlier the UK chancellor George Osborne announced his 2014 Budget, and later today the US Federal Reserve chair Janet Yellen will announce the latest Federal Open Market Committee economic projections.
Big losses for insurance sector
Today’s Budget had a distinct tilt towards the grey voter, as the often forgotten savers were finally handed a raft of benefits to tackle their dwindling savings returns. Unsurprisingly, companies like Hargreaves Lansdown, who specialise in these sectors, saw shares spike by more than 6% in the aftermath.
As with all budgets there were losers too, and the UK insurance sector saw Legal & General, Aviva, Standard Chartered and Prudential all drop as the chancellor announced he was planning on ending annuity rules. This wiped out over £3.5 billion of value by mid-afternoon.
Markets anticipate $10bn reduction of QE
Today’s US markets are solely focused on Fed chair Janet Yellen's FOMC statement and the clarity over the Fed’s policies towards the US debt-purchasing scheme. The consensus is that we will see a further $10 billion reduced from this scheme, taking the monthly total down to $55 billion. The calm state of equity markets is a reflection of the time spent by ex-Fed chairman Ben Bernanke in forewarning this occurrence.
The IG Alibaba grey market has shown no signs of cooling and the client-trading driven valuation is now pointing towards a staggering $250 billion market capitalisation for the Asian online retailer. If this comes to fruition it would more than double the previously largest IPO valuation for Facebook of $104 billion.
Gold continues to tumble
Gold’s collapse has continued again, stretching into a third day, and is heading towards the more supportive $1340 region.
Crude has once again decided to test the resilience of the bulls by drifting below the $106 level, as it did in both January 2014 and November 2013. Previously this has proven to be enough to tempt the buyers back in.
GBP/USD finds support
Once again GBP/USD has found support following yesterday’s intraday dip below the $1.6600 level. The reaction that we have seen in the last couple of days has seen the currency pair back to the level it was at the beginning of the year. Currency traders have been paying close attention to today’s Budget speech, especially as George Osborne had previously hinted towards wanting to improve the UK’s exports, and from this point last year the GBP/USD rate is up 8% hampering British exporters.