Morning Report – Friday 18th September

Main

The Bank of England voted unanimously 9-0 to keep interest rates at 0.1% and the level of Quantitative Easing at £745 billion. Investors, however, reacted adversely to the language used by the Central Bank who suggested that they would be considering implementing negative rates during their November meeting.

US stocks fell again on Thursday, as tech shares fell for the second consecutive day on the news that government data showed high levels of weekly jobless claims. Last week all three major US stock indexes posted losses, far from the record highs that were being seen since the March lows.

Asian stocks have inched up slowly this morning, despite Wall Street declines, but didn’t make strong inroads due to fears about a faltering economic recovery, which has kept many investors seeking refuge in safer assets such as the Japanese yen. There is also uncertainty around China-US tensions, which led Asia-Pacific shares to only rise by 1 percent this week.

GBP

Sterling sank on the news of that there could be negative rates but rebounded to trade higher towards the end of the day. If the Bank of England do decide to make interest rates negative, it will be the first time in their history and would follow the lead of the ECB and BoJ.

EUR

Ursula Von Der Leyen said she was convinced that a trade deal between the EU and UK could be done but it depends on Westminster to restore trust between the two sides. Envoys will continue talks this week hoping for a complete deal by October.

USD

The dollar gained ground on the news that the Bank of England were contemplating negative rates. Investors were slightly annoyed by the Fed’s approach to not wade into the market and increase its buying back programme. Equities were sold off after Chair Powell’s press conference on Wednesday and continued into Thursday.

Main Economic Data/Central Banks/Government (All Times BST)

7:00 a.m.: U.K. Aug. retail sales
7:00 a.m.: Germany Aug. PPI
9:00 a.m.: Euro-Area July current account
9:00 a.m.: Italy July current account, industrial orders
10:15 a.m.: ECB’s de Cos, Guindos speak
11:30 a.m.: Russia rate decision
1:00 p.m.: Bank of Russia’s Nabiullina holds briefing
3:00 p.m.: ECB’s Schnabel speaks
5:00 p.m.: Russia Aug. retail sales, unemployment
6:00 p.m.: Baker Hughes U.S. rig count