Dovish comments from Ben Broadbent, the deputy governor of the Bank of England, helped equity markets move higher this morning.
Mr Broadbent said the British economy was moving in the right direction, but he expressed some concern about the ‘mood of business’ and feels there are too many imponderables, and therefore believes interest rates should remain on hold.
The remarks from the UK central banker were welcomed by investors, particularly as the Russia-related controversy surrounding Donald Trump Jr has died down. The better-than-expected unemployment and average earnings data from the UK took the shine off the early morning rally, but the FTSE 100 is still up 0.6%.
Barratt Developments is up 1% today after announcing a bullish trading statement, in which it reported that house completions are at a nine-year high. The low interest rate environment is still fuelling buying.
The GBP/USD currency pair dropped on the back of the Mr Broadbent's comments, but the market quickly turned around after the UK announced a drop in unemployment to 4.5% and a rise in average earnings to 2%. The rebound in earnings is encouraging as it’s needed to counteract the higher cost of living.
We are anticipating the Dow Jones to open 20 points higher at 21,429, and we are calling the S&P 500 2 points higher at 2427.
Janet Yellen, the chair of the US Federal Reserve, will testify before the House Financial Services Committee at 3pm today, and traders will be paying close attention to try and ascertain the Fed’s next move.
Also at 3pm, the Bank of Canada will announce their interest rate decision, and the market is expecting an interest rate hike from 0.5% to 0.75%. If the Canadian central bank does raise interest rates, it will be the first rate hike since 2010.
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