LONDON MARKETS: U.K. Stocks Hang Onto All-time High Ahead Of BOE Hearing
May 22 2018 - 6:43AM
Dow Jones News
By Sara Sjolin, MarketWatch
Pound moves slightly higher
U.K. stocks struggled for direction early on Tuesday, a day
after scoring an all-time closing high, as traders waited for fresh
catalysts to give the market a kick.
One of those catalysts may come this morning, when several Bank
of England members -- including Governor Mark Carney -- are due to
speak before lawmakers on inflation and monetary policy.
What are markets doing?
The U.K.'s FTSE 100 index was marginally higher at 7,862.77, but
was swinging between small gains and losses.
The pound rose to $1.3443, from $1.3426 late Monday in New
York.
What is driving the market?
Trading was subdued on Tuesday, as investors paused after
pushing the London benchmark to a fresh record in the prior
session. A major factor in the recent stock rally was the weakening
pound, which slumped on the back of a rising dollar and fears over
government infighting over Brexit.
The cabinet remains divided over whether the U.K. should remain
in something similar to a customs union with the European Union to
avoid a "hard" border in Ireland. The bitter row has spurred some
Conservative MPs to reportedly push for an out-of-cycle election in
the U.K. to break the negotiation deadlock and potentially oust
Prime Minister Theresa May
However, Foreign Secretary Boris Johnson late Monday spoke out
against holding a "snap" general election and said he stands by
May. Johnson has been very vocal in his opposition to a customs
union, whereas May has indicated her willingness to compromise to
avoid a hard border in Ireland.
What is on Tuesday's agenda?
Carney and three other BOE members are due appear at a Treasury
Select Committee hearing at 10 a.m. London time, or 5 a.m. Eastern
Time.
The central bank policy makers will discuss the recent inflation
report, in which the BOE slashed its economic growth outlook and
gave a somewhat confusing forecast for monetary policy.
What are strategists saying?
"We suspect that [the BOE hearing] will not bring any major new
revelations about the monetary policy outlook in the U.K., with
Carney likely to reiterate that some degree of policy tightening --
about three [interest rate] hikes of 25bps apiece over the coming
three years -- will be required if the economy performs in line
with their expectations," analysts at Daiwa Capital Markets said in
a note.
Stock movers
Shares of National Grid PLC (NG.LN) fell 0.6% after the U.K.
energy regulator Ofgem said it has opened an investigation
(http://www.marketwatch.com/story/ofgem-to-probe-national-grid-unit-over-forecasts-2018-05-22)
into the company's forecasting on the electricity market.
(END) Dow Jones Newswires
May 22, 2018 04:28 ET (08:28 GMT)
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