By Dave Morris
London markets climbed on expectations that the U.S. Federal Reserve may soon be forced to cut its policy rate, which is positive for equities.
How did markets perform?
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.24% grew by 0.2% to 7,201.1. On Monday it closed up 0.3%.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.1619% was roughly flat, trading at $1.2665 on Tuesday after increasing 0.2% Monday.
What’s moving the markets?
Investors were pricing in a rate cut by the U.S. Federal Reserve, as evidenced by falling yields on U.S. government debt. Yields on the 10-year U.S. Treasury bond opened at 2.0779%, which is 70.7 basis points down from their year-to-date peak on January 21. At pixel time they had recovered to 2.103%.
All eyes will be on Fed chairman Jerome Powell when he speaks Tuesday afternoon, given that many market observers see pressure on the domestic economy from U.S. President Donald Trump’s tariffs on China and Mexico and expect the Fed to intervene. On Tuesday, St. Louis Fed President and Federal Open Market Committee member James Bullard said the Fed may need to cut rates “soon”.
Which stocks are active?
News that U.K. fund manager Paul Woodford was suspending trading in his flagship investment fund following the exit of a key investor hit several related stocks. The former Invesco manager’s publicly traded entity, Woodford Patient Capital Trust PLC , slumped 11.2% Online investment marketplace Hargreaves Lansdown PLC /zigman2/quotes/201025857/delayed UK:HL +1.57% , which had endorsed Woodford publicly and included his main fund in several of their portfolios, was down 6.2%. Shares in Purplebricks Group PLC /zigman2/quotes/203490954/delayed UK:PURP +0.32% , an online real-estate agent which Woodford had backed heavily, fell 4.5%
Oil benchmarks continued to sink after a rough couple of weeks, and airlines were the main beneficiaries of cheaper fuel prices. EasyJet PLC /zigman2/quotes/202825892/delayed UK:EZJ +5.05% climbed 3% and TUI AG /zigman2/quotes/207049334/delayed UK:TUI +0.23% rose 2.6%