Shares were boosted through the night in Asia and at the open in Europe after Fed Reserve Chair Janet Yellen dropped a reference to the timing of any increase in U.S interest rates in her speech last night. This comment followed Friday’s monthly jobs report which triggered concerns regarding the ability of the US economy to absorb another rate hike. The rhetoric also lent support to US indices as the S&P 500 hit a new high year-to-date. It now seems a June US Fed Funds rate rise is off the cards, as the probability of a July rate rise stands at 22%, down from 27% on Friday, further out on the horizon, the chance of a September rate rise is estimated at 42%.
Brent oil traded above $50/bbl overnight, appreciating to $51/bbl into the London close, a high not surpassed since October 2015. Again, Nigerian issues and price hikes in Saudi Arabia played their part as oil majors and oil service companies helped nudge the FTSE 100 index higher, up 0.18%.
Two further polling results on the prospective referendum were released this morning in national newspapers contradicting results seen yesterday. The polls, which included an online YouGov survey published for The Times newspaper and an ORB telephone poll for The Telegraph both showed a one point lead for ‘remain’. The release of such news saw Sterling jump against both the euro and dollar to €1.282 and $1.458 from €1.274 and $1.4475 respectively.
Elsewhere, HSBC will be hoping the divestment of its £3.5bn HSBC Bank Brazil passes the Brazilian competition watchdog without hitch, enabling them to simultaneously maintain their status as the biggest dividend payer in European banking and boost the key capital ratio of the bank by 60bps – from 11.9% to 12.5%, within the 12-13% range targeted by the bank.
At the close European indices were up with the FTSE 100 +0.18%, with the CAC 40 +1.19%, and the DAX 30 +1.65%.