Business
Pound Dips as Rate Hike Talk Eases; Oil Prices Hit 2017 Low
Asian shares were slightly lower Tuesday, erasing initial gains, but Tokyo’s benchmark rose, cheered by gains on Wall Street led by technology shares. (AP Photo/Eugene Hoshiko)
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LONDON – The British pound was under pressure Tuesday after Bank of England Governor Mark Carney reined back market expectations that the bank would soon raise interest rates, while oil prices struck 2017 lows on worries over a glut in the market. Elsewhere, markets were fairly flat amid a dearth of market-moving news.
KEEPING SCORE: In Europe, France’s CAC 40 was up 0.3 percent at 5,326 while Germany’s DAX rose 0.2 percent to 12,917. The FTSE 100 index of leading British shares was 0.1 percent lower at 7,517. U.S. stocks were poised for a flat opening with Dow futures and the broader S&P 500 futures unchanged.
UK RATES: In a speech, Mark Carney, the Bank of England governor, sought to dampen down on expectations that interest rates were heading higher after last week’s policy meeting saw three-of-eight policymakers surprisingly vote for a quarter point hike in the bank’s base rate to 0.5 percent amid rising inflation. However, Carney said now is “not yet the time to begin that adjustment” in light of uncertainties related to Britain’s exit from the EU. Following his comments, the pound was down 0.5 percent at $1.2672.
ANALYST TAKE: “Rising inflation is clearly a concern among certain policy makers, having risen to 2.9 percent last month which is well above the central banks 2 percent target, but Carney was keen to stress that other factors have to be considered,” said Craig Erlam, senior market analyst at OANDA.
CRUDE HITS 2017 LOW: Oil prices have fallen sharply amid ongoing signs that production levels remain high and skepticism over the OPEC oil cartel’s ability to deliver on its cuts. There will be particular interest in upcoming U.S. production figures. The New York benchmark was down 2.3 percent at $43.43 a barrel while Brent crude, the international standard in London, fell 2.5 percent to $45.73.
THE QUOTE: “Unless we see a marked reduction in crude stockpiles, the possibility of further short term falls in the price of oil cannot be ruled out,” said Fawad Razaqzada, market analyst at Forex.com
ASIA’S DAY: Japan’s benchmark Nikkei 225 added 0.8 percent to finish at 20,230.41. Australia’s S&P/ASX 200 edged down 0.8 percent to 5,757.30. Hong Kong’s Hang Seng fell 0.3 percent to 25,843.04, while the Shanghai Composite fell 0.1 percent to 3,140.01.
CURRENCIES: The euro was flat at $1.1157 while the dollar fell 0.1 percent to 111.40 yen.
