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The City’s cold-hearted approach to the world was highlighted by the 5% rise in Barclays, as Anthony Jenkins announced a fresh round of job losses in investment banking and the complete withdrawal from the European retail banking scene. Although they have announced a new ‘bad bank’, I fear it is a case of ‘too little, too late’ for Barclays, given that there are likely to be ongoing problems with toxic loans. The example of Bank of Ireland is instructive – a bounce in the share price, followed by continued declines as reality sets in.
Morrisons continues to serve up cold hard gruel to its shareholders, as the supermarket unveiled yet another drop in sales. Shareholders must be hoping that the firm has deliberately front-loaded all the bad news, but executing such a major turnaround in the full glare of analyst scrutiny is going to be a far harder task than many realise. Ocado is down 1.5% in sympathy with Morrisons, and has now lost around half the gains made in its 2013 rally.
Janet Yellen has survived day one of her congressional testimony, having remained tight-lipped on the timetable for interest rate rises. Evidently the experience from March’s Federal Reserve meeting has been instructive, since Ms Yellen refused to give way even when repeatedly questioned on the point. In situations like these, markets are too keen to focus on the minutiae of what she says rather than the broad points, and the reality is that the Fed is determined to avoid imperilling the US recovery with a premature rate hike.
Hyper-growth stock Tesla slumped last night after earnings, as the company pays the price for the astronomically high expectations that have been baked into the share price.
Ahead of the open, we expect the Dow Jones to start 16 points higher at 16,534.