Mixed data messages dampen expectations
Tue close: Stocks rose after weaker than expected US data led traders to believe an early interest rate hike in the US may be less likely. However, warnings of a rise at home dampened enthusiasm.
The FTSE 100 ended the session up by 15.80 points at 6,753.75 as comments from Bank of England Governor Mark Carney led to a spike in the pound and in longer-term Gilt yields.
Testifying to the newly-composed Treasury Select Committee Mr Carney said that, “the point at which interest rates may begin to rise is moving closer given the performance of the economy.”
Analysts reacted differently to the Governor’s comments which came after the latest CPI figures revealed that core inflation in the UK slipped in June. The headline figure was zero, after a rise of just 0.1% in May, as expected by economists.
Traders were also keeping an eye on Athens and the prospect of a final settlement to the debt crisis.
Shares in satellite broadcaster Sky topped the risers after analysts at Deutsche Bank upgraded their rating from ‘hold’ to ‘buy’ and raised estimates for 2017 by 20% more than consensus.
But housebuilders such as Taylor Wimpey, Barratt Developments and Persimmon were all knocked lower by Mr Carney’s remarks.