Rate Cut Hope Helps Market to Reach New Highs

  • Jul 10, 2019 BST
  • Team Kalkine
Rate Cut Hope Helps Market to Reach New Highs

Global Markets: Boosted by dovish comments by the Fed chairman, equity indices in the United States were all up on Wednesday, with the broader index S&P 500 scaling new heights by reaching 3,000 before retreating to 2,989.67 points, an increase of 0.34%. The Dow Jones Industrial Average Index rose by 0.33% or 88.39 points to trade at 26,871.88, and tech-focused Nasdaq Composite added 49.48 points, reflecting a rise of 0.61%, to trade at 8,191.20, at the time of writing.

Global News: In prepared remarks ahead of his first appearance on Capitol Hill, Fed Chairman Jerome Powell said on Wednesday that the US economic outlook continues to face downside risk from concerns about trade policy and a weak global economy. He added that the central bank would act appropriately, hinting that the bank was ready to cut interest rate later this month. The increased hopes of a sharp cut in interest rate drove benchmark S&P 500 to 3,000 points mark for the first time on Wednesday, and Treasury yield curve steepened as yields on longer maturities rose and yields on short-dated notes fell.

European Markets: The London’s broader equity benchmark index FTSE 100 traded at 5.78 points or 0.08% lower at 7,530.69, the FTSE 250 index snapped 47.99 points or 0.25% lower at 19,419.38, and the FTSE All-Share Index ended 3.97 points or 0.10% lower at 4,101.88 respectively. Another European benchmark index STOXX 600 ended 0.77 points or 0.20% lower at 387.15 respectively.

European News: A rebound in car output helped the British economy to grow more than expected in May, as overall output rose by 0.3 per cent after contracting by 0.4 per cent in April. Economists had expected a growth of 0.1 per cent, but a recovery in car production after a record drop in April helped to beat the estimates. However, as a new prime minister prepares to take Britain out of the European Union, the outlook remains fragile amid fears of a global slowdown due to trade war and concerns over smooth exit from the EU. After days of criticism from Donald Trump, the British ambassador to Washington quit on Wednesday, saying his position had become untenable.

London Stock Exchange (LSE)

Top Performers Stocks: DP EURASIA N.V. (DPEU), LUCECO PLC (LUCE), and MANCHESTER & LONDON INV TST PLC (MNL) surged by 6.02 per cent, 5.45 per cent and 5.07 per cent respectively.

Top Laggards Stocks: PAGEGROUP PLC (PAGE), MICRO FOCUS INTERNATIONAL PLC (MCRO), and LINDSELL TRAIN INVESTMENT TRUST PLC (LTI) decreased by 15.09 per cent, 11.73 per cent and 9.76 per cent respectively.

FTSE 100 Index

FTSE100 Index: 5-days Price Chart (as on July 10, 2019), after the market closed. (Source: Thomson Reuters)

Top Risers Stocks: SMURFIT KAPPA GROUP PLC (SKG), ANTOFAGASTA PLC (ANTO) and SCOTTISH MORTGAGE INV TST PLC (SMT) rose by 3.00 per cent, 1.79 per cent and 1.73 per cent respectively.

Top Fallers Stocks: MICRO FOCUS INTERNATIONAL PLC (MCRO), COCA-COLA HBC AG (CCH) and WPP PLC (WPP) reduced by 11.73 per cent, 2.01 per cent and 2.00 per cent respectively.


Top Risers Sectors: Basic Materials (+0.84%), Energy (+0.46%), and Healthcare (+0.13%).

Top Fallers Sectors: Technology (-1.59%), Telecommunications Services (-1.27%) and Financials (-0.43%).

Foreign Exchange and Fixed Income

FX Rates*: GBP/USD and EUR/GBP were exchanging at 1.2506 and 0.8999 respectively.

10-Year Bond Yields*: US 10Y Treasury and UK 10Y Bond yields were trading at 2.067% and 0.766% respectively. 

*At the time of writing

With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities. 

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