London UK - February 7, 2013 (www.investorideas.com newswire) Ishaq Siddiqi of ETX Capital, a spread betting company based in Britain, looks at the effect the Bank of England's monthly meeting had on the markets.
As predicted by many, the Bank of England has not changed the national interest rate at the monthly gathering today – what followed was a continuous fall in the FTSE 100, but it would appear that traders are more concerned with the comments made by the new BOE Governor Mark Carney. The current Canadian bank head played down speculation that he is set to rapidly change the monetary policy when he assumes the role in the middle of 2013. Carney did say that the central bank will need to seriously look at a way of effectively exiting its quantitative easing program without damaging the bank's reputation and the confidence that the public has in the bank. All eyes will now turn to the release of the meeting minutes to gain further analysis on the decision by the BOE's board and how close of a decision it may have been.
Economic data in the UK has not got off to the best of starts this year, ever since the disappointing Q4 GDP announcement a few weeks ago. Speculation is now rife that Britain could be heading towards an unprecedented tripe-dip recession, which is likely to be confirmed if Q1 2013's GDP figures come in negative. As a result of the continuing negativity, even the buoyant news of increasing UK industrial and manufacturing output and trade data failed to pick up the markets. The FTSE 100 barely moved on the news, as traders were prepared to play the waiting game following the FTSE's outperformance against European peers in the previous session.
Spain is back in the focus after its bond yields have jumped. This comes after the news that the Prime Minister, Mariano Rajoy, may have received corrupt payments, while news that the perennial Silvio Berlusconi may have gained further ground in the Italian election polls made uneasy viewing for the markets. Spain did manage to hold a bond auction today which went off without any real problems, with the country selling bonds at the top-end with respectable demand. This was seen as one of the first tests to the country's resolve in the wake of the growing Rajoy fiasco.
Looking ahead to the US session, all eyes will be on weekly jobless claims – DJIA is likely to open around 9 points higher and the S&P500 to open around 2 points.
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