Comment: Dow Hits All-Time High; UK Data Sends Sterling Soaring
May 1, 2014 8:13 am
The US Federal Reserve’s Monetary Policy Statement yesterday was generally optimistic in its outlook for the US economy; as expected, the Fed scaled back its monthly bond purchase by another $10 billion, bringing it down to $45 billion. However, US GDP numbers, also out yesterday, were uninspiring, showing a 0.1% growth rate in Q1 2014. Nonetheless, the Dow rose by over 45 points and closed at a record high of 16,580.84, with the S&P and NASDAQ also up, as Wall Street chose to focus on the Fed’s optimism rather than the slightly dispiriting Q1 GDP.
The earnings season continued, bringing mixed news for Lloyds and BSkyB. The bank saw a 22% rise to £1.8 billion in underlying first quarter profits, with stocks rising as a result. However, a look at Lloyd’s pre-tax profits showed a different story, with a drop from £2 billion to £1.4 billion. BSkyB also had a good news/bad news quarter, with a 6.6% rise in revenues but an 8.5% drop in operating profits.
Last night’s China CPI numbers were similarly diverse, with both positive and negative figures published. Encouraging news of a slight rise in the official manufacturing PMI, from 50.3 to 50.4, was diluted by the fact that the new export orders index dropped down to 49.1, suggesting decreased international demand for Chinese products.
However, the latest macroeconomic numbers out of the UK were far less equivocal. UK house prices rose 1.2% in April, with an overall increase of 18% since the first quarter of 2013. Furthermore, the UK Manufacturing PMI, released this morning, showed a figure of 57.3, a significant increase from March’s 55.8, amidst reports opining that the UK’s manufacturing output is nearly at a 20 year high, news which promptly caused Sterling to rise sharply, nearly reaching a five-year high.
The US Federal Reserve’s Monetary Policy Statement yesterday was generally optimistic in its outlook for the US economy; as expected, the Fed scaled back its monthly bond purchase by another $10 billion, bringing it down to $45 billion. However, US GDP numbers, also out yesterday, were uninspiring, showing a 0.1% growth rate in Q1 2014. Nonetheless, the Dow rose by over 45 points and closed at a record high of 16,580.84, with the S&P and NASDAQ also up, as Wall Street chose to focus on the Fed’s optimism rather than the slightly dispiriting Q1 GDP.
The earnings season continued, bringing mixed news for Lloyds and BSkyB. The bank saw a 22% rise to £1.8 billion in underlying first quarter profits, with stocks rising as a result. However, a look at Lloyd’s pre-tax profits showed a different story, with a drop from £2 billion to £1.4 billion. BSkyB also had a good news/bad news quarter, with a 6.6% rise in revenues but an 8.5% drop in operating profits.
Last night’s China CPI numbers were similarly diverse, with both positive and negative figures published. Encouraging news of a slight rise in the official manufacturing PMI, from 50.3 to 50.4, was diluted by the fact that the new export orders index dropped down to 49.1, suggesting decreased international demand for Chinese products.
However, the latest macroeconomic numbers out of the UK were far less equivocal. UK house prices rose 1.2% in April, with an overall increase of 18% since the first quarter of 2013. Furthermore, the UK Manufacturing PMI, released this morning, showed a figure of 57.3, a significant increase from March’s 55.8, amidst reports opining that the UK’s manufacturing output is nearly at a 20 year high, news which promptly caused Sterling to rise sharply, nearly reaching a five-year high.
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