The market’s reaction to rather less dovish FOMC comments than might have been expected, having left the possibility of two hikes this year on the table, the first not ruled out for June, took me by surprise. The DOW and S&P closed above the Plimsoll line and the NASDAQ just below it, courtesy of the larruping Twitter took. I suppose it’s fair to say that Kuroda-san’s level of inertia in keeping BOJ’S stimulus and rate policy unchanged did rattle the NIKKEI’s cage – down 3.6%, much of the fall contributed by a strong Yen.
The FTSE 100 didn’t like the uncertainty of the day’s news from Washington and Tokyo, in particular the latter. Guesswork of 1.2% GDP for Japan was probably held in derision with many hoping that more stimulus packages would be thrown at the problem, thanks to Abe-san refusing to reflate the economy through infrastructure projects. To add fuel to the fire the earnings season has been no great shakes though after hours Facebook posted a 9.9% increase in its share price, thanks to a 52% increase in revenues in the last quarter. EPS came in at 77 cents and Facebook’s stock will be split. Half an hour ago the FTSE 100 was down 90 points but it has regained some poise and is currently down 50 points at 6269 at 11.35am.
Mining has fared quite well (+1.5% on average) as has the oil sector down just 0.5% thanks to a strong crude oil price. Drugs were down 2%. The market was underwhelmed by Lloyds Banking Group’s results and took the stock down by 4% – now down only 1.8% to 68p – still 5p below breakeven. A profit of £2.05 billion was posted (down 6%) – Lending up 2% across key customer segments, incl: SME net lending up 5% y-on-y. On line banking numbers have increased from 11.5million to 12 million. There were no extra provisions made for PPI. The fact that the market was poor contributed to the negative reaction to the share price. Tier One Capital came in at a generous 13%. Aggreko was unchanged as was Home Retail and Harvey Nash failed to please its acolytes – down 5%. DOW futures are set to fall 125 points.