Europe was unable to ride the Draghi-rocket into Wednesday, investors instead fretfully turning towards the evening’s potentially huge Fed meeting.
The FTSE trickled back under 7450, if only by a few points, as it fell 0.2%; the DAX slipped a similar amount as it drifted from 12350, while the CAC managed to hold above 5500 as it shed a handful of points.
The indices are hoping that Jerome Powell and his FOMC cronies will be just as dovish as Mario Draghi was on Tuesday morning, with many expecting the Fed to tee-up a July rate cut. However, the central bank’s decision is complicated by Donald Trump, specifically his trade war with China. The President is set to meet Xi Jinping for more talks at the G20 meeting in Osaka next week, the outcome of which could be the key driver of what the Federal Reserve actually does in the coming months.
Showing little interest in last night’s Tory leadership debate on the BBC – and, having watched it, fair enough – the pound remained at its 5-month lows on Wednesday. Down 0.1% against the dollar and the euro, sterling was stuck under $1.255 and €1.1195 respectively. The currency does have the latest UK inflation reading to deal with this morning – it’s expected to slip from 2.1% to 2.0% month-on-month – though it has failed to react to a lot of the data released in the last few weeks.
Investors checked out of Whitbread (LON:WTB) following its Q1 statement, the stock falling 1% as the Premier Inn-owner announced a nasty 6.3% plunge in revenue per available room. The company is feeling the Brexit-pinch, with the regional market especially suffering from ‘declining business confidence’. It also failed to provide a substantial update to its full year guidance, claiming that ‘it is difficult to predict how business confidence and business investment will evolve over the year’ – i.e., we don’t know what is happening with Brexit yet.
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