In the wake of the FOMC decision, base and precious metals along with oil prices are all trading lower and the UK 2 year yield has fallen below 0.6%. Despite all the talk that the focus would now be on the BOE to tighten policy, the market is clearly not expecting anything anytime soon.
All this adds up to a stronger open in risk assets with the mining sector lagging here in the UK. Goldman Sach’s call that iron ore will likely remain below $40 over the next three years is also weighing on sentiment. Fresnillo, Randgold Resources and Glencore are all slightly lower on the day.
Berkeley Group going ex-div today is lower by 3.49% and takes the bottom spot on the UK benchmark.
Healthcare, specifically pharma is the best performing sector owing to the Astrazeneca deal. The company has bought a 55% stake in Acerta Pharma in a deal worth $4bn.
There does seem to be a bent towards the defensive this morning, with retailers Sainsbury up 4% on evidence that it may be reversing its revenue decline. The financial sector, particularly institutions with exposure to emerging markets and South Africa are also staging a bounce back. Old Mutual is up 6.61% while Standard Chartered has added 5.99%.
UK retail sales beat expectations by a wide margin rising 1.7% in November (inc. auto) against an expectation for a rise of 0.6%. The 3.9% rise year on year figure is even more impressive but his has done little to boost the pound which is now struggling to make any headway above $1.50 marker against the greenback.
Other equity highlights:
Mondi (+4) stock continues to rise after terminating agreements with Walki Group.
London Stock Exchange (+1.7%) As part of their results £40bn of equity was raised this year, just 2 per cent below last year, despite tougher markets.
Entertainment One (+5%) The studio have teamed up with Steven Spielberg to form Amblin Partners, a new film, television and digital content creation company.
Ted Baker (unch.) The fashion brand have paid £58.25m to buy the building they currently rent as its headquarters in Camden.
Later this afternoon we’ll see the release of the Philly Fed Manufacturing Index and unemployment claims. Both will be watched but certainly will not possess the same importance that they might have done prior to last night’s Fed decision.
Following yesterday’s gain of 1.28% we are calling the Dow higher by 20 points to 17769.