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Spreadex Market Update

Thursday, November 05, 2015 - Evening Market Update
Connor Campbell - Market Analyst at Spreadex

Not so ‘Super Thursday’ as the pound sinks on dovish report from Bank of England

Somewhat as expected Ian McCafferty remained lone hawk in the MPC, despite analysts suggesting he could be joined by at least one more member. More surprising was the dour tone the central bank struck this afternoon; cutting forecasts for 2015 and 2015 after stating that the ‘outlook for global growth has weakened since the August Inflation Report’ (and specifically pointing to emerging markets as a key area of concern), Carney and co. also warned that inflation will likely remain below 1% until the second half of next year. Immediately the pound began to fall, plunging by around a percent against both the euro and the dollar, with a rather rambling press conference from Mark Carney (the governor coming under-fire for his previous early New Year rate hike-hinting comments) failing to help matters.

This left the FTSE struggling for direction as the day went on; initially pleased by the pound-harming nature of the inflation report, soon the weight of its mining stocks returned, leaving the index down by around 30 points. Things were far better in the Eurozone; the CAC tentatively touched 5000 for the first time since mid-August, whilst the DAX edged even closer to the 11000 mark.

Despite big BoE-inspired gains for the dollar, weaker than expected jobless claims and preliminary non-farm productivity figures helped sent the Dow Jones around 15 points higher at the open. That means the US index still roughly 100 points away from 18000, a gap that could closed on Friday dependant on the state of the non-farms job report. However, it currently looks like reaching that landmark level may have to wait. Analysts are expecting the headline figure to rise to 179k from last month’s 142k 6 month low; wage growth, meanwhile, is forecast to increase to 0.2%, whilst the unemployment rate is set to fall to 5%.

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The Trading Day and Week Ahead

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