Bank stocks look forward to prospect of higher rates
Heading into the close, the FTSE 100 is flat on the day, but banks have risen thanks to the Fed’s renewed vow of monetary tightening.
- FTSE struggles, but financial stocks shine
- EURUSD fights to hold its rising trend
- Johnson Matthey looks to the future
The FTSE 100 would be lower today, were it not for the banks, which have risen steadily, along with their counterparts in Europe, in response to the Fed’s restated commitment to its tightening programme. The prospect of higher rates in the key US market, and indeed even the possibility of a modest rate rise in the UK, has prompted investors to buy up financial services stocks in hope of better margins and improved profits and dividends. Europe has been bolstered by a weaker euro, as Janet Yellen manages to do what Mario Draghi could not or would not, with last night’s arguably more hawkish statement putting some fight back into the US dollar. Today’s speech from Draghi stayed off the topic
of monetary policy, thus providing little for euro bulls to go on. With EURUSD still above $1.19, it is far too early to declare the great euro surge of 2017 finished, but it looks under greater threat than at any time in the past six months.
Everyone, it seems, wants to be in on the electric car market, as governments pledge to go over entirely to electric vehicles in coming decades. Johnson Matthey is now looking to charge up its own operations to provide batteries for electric vehicles. This looks like a prudent move to shift away from its dependence on ‘old-fashioned’ vehicles, and for now investors, who have sent the shares up 14% today, are happy to see the firm bear the $200 million cost if it means long-term success.
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