Bank of England Raises Rates

European indices provided weak leads for the US overnight as the FTSE 100 closed down 1% on trade concerns while the Dax index closed 1.5% lower. This caused both the Dow Jones and S&P 500 to open down although these losses were recouped throughout the session. The Dow eventually closed flat while the S&P 500 was up 0.5%, a 1% turnaround from the open. The best performing S&P 500 sector was technology, reflected in the fact that the Nasdaq 100 climbed 1.4% overnight which included a 2.9% gain in Apple (AAPL) stock. This brings AAPL to a $1tn market capitalisation, the first public US company to reach such a milestone. After a weak few days for the ASX 200, futures are up 21 points this morning.

As expected, the Bank of England raised rates by 0.25% to 0.75%, the second rate rise in this cycle. The hike was taken as slightly more hawkish than expected do to the unanimity of the vote, 9-0. It had been expected in the lead-up that one or two of the voting members would dissent. The Bank sees the weak first quarter GDP as an outlier and expects that inflationary pressures will continue to build.

Today Australia releases retail sales data while the US releases its monthly employment data. Retail sales are expected to grow at 0.3%, slightly below the 0.5% of the prior month. Retail sales data so far this year has painted a picture of a sector that is neither racing along nor lagging behind. US employment data is expected to show 191,000 new jobs were created and the unemployment rate declining to 3.9%, from 4.0%.   

Data Releases:

-    Australia Retail Sales 11:30am AEST

-    US Employment Data 10:30pm AEST

This article was written by William O'Loughlin - Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.

Complex product warning

This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
comments powered by Disqus

DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice and dealing services on securities, derivatives and superannuation (SMSF). Rivkin also provide SMSF administration and accounting services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.