Carney's comments weigh on FTSE 100

In mid-morning trading the FTSE 100 is broadly unchanged after Mark Carney voiced his concern over productivity in the UK economy.

Bank of England
Source: Bloomberg

The London market is paying close attention to Mr Carney’s comments, especially in light of the downgrade to UK growth recently. The BoE governor also stated a referendum on the UK membership of the EU should take place ‘soon’, and the financial stocks are particularly sensitive to the European question. Eurozone equity markets are still shaky from the Greek situation, but they are recovering slightly as short covering kicks in. The financial problems that Greece are facing are far from over and it’s going to intensify this summer, and traders are treading lightly before the next round of crisis talks emerge.

British Land is riding the wave of the property market boom, and the shares are marginally higher after the company revealed a 20% rise in net asset value (NAV). High rental demand and rising property prices are being fuelled by low-interest rates, and the BoE is happy to keep its monetary policy unchanged for the time being, which will further assist British Land. The recovery of the UK economy is giving the retail and leisure sectors the confidence to expand, and this is driving up commercial rents. Shares in Vedanta Resources are under pressure after the company announced a $4.5 billion impairment charge relating to asset values. The company’s fortunes are changing, and the correction in  the commodity markets has seen the share price rally over 50% since the low in January.

We are expecting the Dow Jones to open 60 points higher, at 18,120, as the US market is on track to break its losing streak. The jobless claims report at lunchtime will be the focus of the trading session. The US market has been experiencing a tighter trading range over the past two months, and the 18,200 mark is acting as a barrier. Traders are wary about buying into the market at the top end of the range as Janet Yellen’s remark about high ‘valuations’ is still in traders’ minds. 

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