Thursday, 21 March: The FTSE was nudged higher at the opening bell from a weaker pound and mining shares outperforming. Overnight US markets fell after a somewhat confused reaction to the Fed’s announcement. The Fed Chair Jay Powell stated that the central bank isn’t forecasting any rate hikes during 2019. The dovish tone is fairly different to only three months ago, where they were planning a possible two hikes this year, and the new dovish tone had a mixed reaction among investors, with GDP and inflation expectations lowered. Asian shares followed suit and were broadly lower before the European open.
As the session matured our latest central bank interest rate decision was easily missed. The unanimous decision to hold rates shocked nobody and markets barely flinched, but if our withdrawal goes ‘smoothly’ they do expect a gentle increase in rates. Earlier we also had retail data for the UK released, showing that sales rose in February even after a strong January, in the face of Brexit fears.
Reporting today was high-street veteran Next, which saw profit and sales fall in line with their prior lowered guidance. Pre-tax profit was down 0.4% but the retailer has backed guidance for next year. Another high-street struggler Ted Baker reported today, showing a 26% drop in profits after tough conditions, competitive pricing and the ‘hug’ scandal. The company trades 50% lower than this time last year and shares closed -6.4% today. Other firms also struggling today following results were IG Group (-6%) and Renishaw (-11%). The former has struggled due to a lack of volatility across markets and Renishaw issued a profit warning.