Markets haven’t got over-excited by the US Federal Reserve’s new stance on letting inflation run higher, despite it implying that interest rates will stay lower for longer – normally something that would benefit equities. One could argue that the Fed following this path was already expected by the market, hence why stocks haven’t surged ahead,” says Russ Mould, investment director at AJ Bell.
“Parts of Asia followed the small gains seen on parts of Wall Street last night, yet Europe was mostly weak on Friday. The FTSE 100 fell 0.2% to 5,988.
“Japanese stocks fell 1.4%, as measured by the Nikkei 225 index, on talk that Prime Minister Shinzo Abe is stepping down for health reasons, subsequently confirmed after Japan’s market close. A change in leader is likely to raise speculation of a shift in strategy to boost the country’s economy and drive inflation.
“On the UK market, financial stocks were the only bright spot with Prudential, Standard Chartered and HSBC leading the way. Rolls-Royce continued its descent, falling another 3.4% after yesterday’s disappointing results and heightened speculation that the company will have to do a discounted equity placing to raise money to strengthen its balance sheet.”