City Watch: Markets waiting for a steer from central banks, says Brian Tora
- Credit: Archant
Fortunately for investors, markets have not been following the weather so much recently.
Having become used to proper summer conditions, the arrival of autumn last week came as something of a shock. Shares and bonds, on the other hand have been experiencing altogether calmer conditions, with our FTSE 100 share index inching higher.
The possibility of a diplomatic solution in Syria has clearly helped. But the interesting boost to markets as this week began was the news that former US Treasury Secretary Larry Summers was withdrawing from the race to become Ben Bernanke’s successor as chairman of the Federal Reserve Bank. The front runner is now Janet Yellen. Not only would she be the first woman to hold the post, it is believed she is likely to favour maintaining monetary easing for longer than Mr Summers.
Meanwhile, good news for those holidaying on the continent continued, with the pound maintaining its progress against the euro. By the end of last week it looked as though 1.20euros to the pound was in prospect, though some profit taking did occur yesterday. And the dollar continued to dip, although government bonds on both sides of the Atlantic strengthened a little, with 10 year yields once more falling below 3%.
As the evenings draw in, so we might get more of a steer as to what central banks’ plans are for their various economic stimulation initiatives.
News is likely to be thin on the ground this week, with little to learn from the corporate sector. The start of the next company reporting season is still a month or more away, so let us hope markets can maintain their steadier tone.
: : Brian Tora is an associate with investment managers JM Finn & Co.