FTSE closes higher supported by softer pound while Facebook dives

supported by a weaker pound following a softening of inflation. Core inflation falling to 2.4% has led traders to reconsider the BoE’s next moves. Whilst no rate hike is expected when the BoE meet on Thursday, there had been increasing expectations of a rate rise in May. Weaker inflation now makes this increasingly unlikely, pulling the pound lower.

After setting the day off on the front foot, the FTSE continued to charge higher across the day, supported by a weaker pound following a softening of inflation. Core inflation falling to 2.4% has led traders to reconsider the BoE’s next moves. 

Whilst no rate hike is expected when the BoE meet on Thursday, there had been increasing expectations of a rate rise in May. Weaker inflation now makes this increasingly unlikely, pulling the pound lower.

Facebook continues to tumble

Problems at Facebook are intensifying in the US session, with shares down over 3.7% as pressure from regulators increases over the Cambridge Analytica data scandal. 

Investors in internet firms are rarely spooked by regulatory threats but that is not the case this time round, as shares have fallen over 10% in the past two days. 

Increased regulation could impact on advertising, potentially hitting hard that revenue stream, a bloodline for Facebook. 

Investors are starting to acknowledge that there is a fundamental conflict of interest at Facebook between its business side and its public, which needs to be addressed. Facebook’s handing of this data mismanagement scandal will be key to the shares ability to bounce back, but a no show so far from Zuckerberg is doing little to appease investors.

Wall Street is putting Facebook issues behind it, leaving the stock lower as the major indices bound higher in Tuesday trading. 

The S&P, the tech heavy Nasdaq and the Dow are all moving northwards, paring some, but by no means all of the losses from the previous session. Energy stocks were among the biggest gainers after the price of oil jumped over 2%.

Crude jumps 2%

Crude advanced this afternoon, hitting a three-month high as forecast suggest that the global oil supply glut will come into line much sooner than originally forecast. 

Expectations are for crude supply to now balance with demand by September. There is a clear attitude from the OPEC led group that they will stick to the supply cuts until the objective is achieved and the glut drained. 

Crude is currently up 5% as the supply cut measures work their magic against previously heavy stockpiles.

Dollar higher ahead of tomorrow’s Fed rate decision

In the forex market the dollar is showing signs of resilience ahead of the Fed monetary policy decision tomorrow evening, with higher treasury yields boosting the greenbacks appeal. The Fed are widely expected to hike rates by 25 basis points; however, traders are undecided as to whether the Fed will opt for a more aggressive path to tightening.

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