FTSE pauses for breath ahead of Service data and tomorrow’s BoE decision
City Index July 4, 2012 1:15 PM
<p>“The FTSE 100 paused for breath on Wednesday with the UK Index falling back 12pts after three days of consecutive gains as investors awaited fresh […]</p>
“The FTSE 100 paused for breath on Wednesday with the UK Index falling back 12pts after three days of consecutive gains as investors awaited fresh service data and looked ahead to tomorrow’s Bank of England (BoE) decision.
The FTSE 100 has gained over 3% in the last three days on expectations of further asset purchases by the Bank of England and in interest rate cut by the European Central Bank. With US markets closed today for the 4th July holiday, volumes will likely think out as the day progresses and investors are looking ahead to see if both Central Banks now deliver on heightened expectations.
At 9am, we will see the attest release of UK services PMI data, which is expected to fall from 53.3 to 52.7. A weaker than expected reading could help lock in at least £50bn worth of increases in asset purchases by the BoE.
Focus will also maintain on Barclays this afternoon as former CEO Bob Diamond is questioned by MP’s at the Treasury Select Committee at 2pm. Of significant interest will be on hearing evidence b Diamond that the bank was instructed to lower its interbank lending rates by Paul Tucker at the Bank of England and/or senior ministers at Whitehall. This could potentially open up a systemic issue to new levels of coercion with significant political and Central Bank officials.
Interestingly however, so much of the focus remains on Barclays despite confirmation that many other global banks are also under investigation. Over the last three days, Barclays shares has lost 15%, but RBS has lost 7% and many other banks, rumoured to be also under investigation have actually seen their share prices gain.
Tullow Oil shares fell 1.3% after a trading update that broadly met expectations. The oil explorer reported that it forecast 82,000 barrels of equivalent oil per day (BOEPD) and that it expected to report record half year revenues of $1.15bn. Tullow Oil’s shares price has rallied strongly in the last three days ahead of this trading update, and so investors have now used the update as an excuse the lock in some gains.”
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.