It’s been a buoyant start to the trading day in London with both sterling and the stock market in positive territory at the time of writing. There’s little by the way of fundamental news that has caused these moves, as volumes remain at diminished levels and trade still has a summer feel to it.
Building firms top the index
The biggest risers so far this morning come from the housebuilding sector, with Barratt Developments (LON:BDEV), Taylor Wimpey (LON:TW) and Persimmon (LON:PSN) the top three and already gaining by more than 4% on the day.
The main catalyst for this move was the release of Persimmon’s half-year results prior to the market open which showed a solid performance for the first half of the year, with the firm reporting a 29% increase in profit before tax and a 12% rise in revenues.
It should be noted though that by far the biggest development during the time period covered was the EU referendum, and with the vote coming just one week before the cut-off date for these results, its impact on the business isn't fairly reflected.
With this in mind, the increase in the share price this morning may be more on the back of comments from CEO Jeff Fairburn rather than the impressive results, with Mr. Fairburn describing customer interest since the referendum as robust.
The fallers on the FTSE100 number just 11 at present, with Mediclinic (LON:MDCM) and Royal Dutch Shell (LON:RDSa) currently in the minority in trading in negative territory.
GBP/USD touches highest level since BoE
Cable traded above 1.32 earlier today, and in doing so recorded its highest level since Thursday 4th August - the day the Bank of England announced their aggressive easing measures. Whilst part of the recovery can be attributed to an appreciation in the pound, the majority has come in fact from weakness in the US dollar.
Whilst the majority of the post-BoE move in the GBP/USD has been retraced, if we look at the EUR/GBP it becomes apparent that the retracement is more down to the USD depreciating rather than the pound appreciating.
Despite beginning the week on the front foot following Fed vice-chair Fischer’s hawkish comments, the greenback has been selling off since, as the focus shifts to Friday’s Jackson Hole symposium.
The market clearly is giving little credence to the idea of a September rate hike, and with the current levels seen in USD crosses, the risks are skewed to the upside for the buck going into Yellen’s speech, with any hawkish rhetoric having the potential to spark a rally in the buck.