There were just 2 subjects on investor’s agenda today. Top of the pops was Janet Yellen’s the first of a 2-day Humphrey Hawkins testimony to Congress on the outlook for the US economy. We will have to wait to see if she talks in ‘Bletchley Park’ styled riddles like her 2 predecessors – Alan Greenspan – you needed a code book to understand him – and Ben Bernanke. The new FED chairman left few in doubt that the Labor market was not plain sailing, despite its improvement and even though the 6.5% threshold for unemployment was in sight, there were plenty of imponderables to challenge the prospect of officially higher interest rates. She was conscious of the fact that higher wholesale interest rates had dampened down the mortgage market and the demand for houses – no bad thing. 2% remains the yardstick for inflation. So that is not a worry at present. You certainly get the feeling that the FED chairman wants to crack on with tapering QE. However if conditions alter adversely M/S Yellen will adopt an adaptable approach and would be prepared to reverse actions taken. Many still believe that there is little immediate prospect of higher rates.

Certainly the Street of Dreams breathed a sigh of relief – at 4.00pm the DOW was up 0.5%, the S&P 500 and the NASDAQ by 04% – so there was a temporary and small sense of relief.

Barclays’ results were the main topic of conversation in the wine bars and coffee shops. The shares were down 4%, with investors taking a poor view that the dividend was measurably less than the £2.38 billion paid in bonuses, in the wake of potential 10,000 to 12,000 redundancies. Antony Jenkins’s explanation that banking is global and that it was necessary to pay competitive compensation to keep pace with their peers cut no ice at all.
At 4.00pm the FTSE was up 60 points at 6650. Miners such as Fresnillo and Randgold made a brave showing – up between 3-4%. Babcock, Sports Direct & William Hill also pleased their acolytes adding between 1.8% and 3%. RSA was down 2.5%, Sainsbury 2% and Tesco 1.2%.

There was a placing of £3 million worth of shares in Egdon Resources, post its tie up with Total at 25p. The placing went well, considering the share price has varied between 8p and 40p in the last 2 weeks.

These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
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