The British central bank chose to cut its key rate from 0.5 to 0.25, its first rate cut in seven years.
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Bank stocks fell the most, as the interest rate cut suggests they won’t be able to make as much money on lending.
World stock markets wobbled Thursday as investors awaited an expected interest rate cut from the Bank of England to counter Brexit fallout. Compared to the “slowdown” in Europe, U.S. equities and investments are more attractive, if not by default.
“The vote to leave the European Union has created a period of uncertainty, which will be followed by a period of adjustment as the shape of our new relationship with the European Union becomes clear and the economy responds to that”, Hammond said. He followed up by stating, “On the innovation side, [the United States] is second to none”.
The dollar, meanwhile, gained against a basket of currencies for a second straight session, as investors continued to balance positions ahead of Friday’s crucial USA nonfarm payrolls report for July.
Factory orders fell 1.5% in June, but excluding the volatile component of transport orders rose 0.4%.
“We may need the jobs report to come in much higher than expected to revive rate increase prospects for September and lift the dollar, given how weak the second quarter U.S. GDP was”, wrote Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
Sterling sank 1.5 percent against the dollar in the first half hour after the decision and as BoE Governor Mark Carney started speaking. In the eurozone, Frankfurt stocks won 0.6 percent and Paris gained 0.2 percent in value.
But now that the United Kingdom has voted to leave the European Union after all, the bank is doing its best to make the transition as smooth as possible. The measures seemed to exceed the expectations of investors, and the bank said the measures could be expanded later if that proves necessary. It has since pared some of those gains, and just before 10:00 a.m. BST (5:00 a.m. ET) is around 0.3% higher at 6,759 points.
The price of gold rose $2.70 to $1,367.40 an ounce.
Thursday’s news sent London’s FTSE 100 shares index 1.6 percent higher by close, while sterling dived against the dollar and the euro.
Japan’s Nikkei, which earlier touched a near-four-week low on Thursday, rebounded to end the day up 1.1 per cent as the yen weakened.
Benchmark U.S. crude rose $1.10, or 2.7 percent, to $41.93 a barrel in NY after a 3-percent climb Wednesday.
Brent crude settled up $1.19, or 2.76%, at $44.29 a barrel, while U.S. crude settled up $1.10, or 2.69%, at $41.93. South Korea’s Kospi added 0.3 percent and Hong Kong’s Hang Seng index gained 0.4 percent.
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For the year to June, sales rose 2.8%, well below the long run average of 4.5%, and down on the 3.4% sales growth seen in the year to May. Government borrowing costs also plummeted, with 10-year gilt yields falling to fresh record low of 0.639pc.
