Folk in the UK were having a less negative time of it. The reaction to fiscal (government taxes and spending) and monetary (interest rates and Bank of England bond-buying) stimulus was positive.
The value of the pound was pushed up relative to other currencies. That impeded gains being registered by companies on the FTSE 100 which generate about two-thirds of their revenues from overseas sales (higher pound = higher price exports effectively).
So the FTSE 100 closed 0.8% higher. The FTSE 250 or “mid-cap” index (the next 250 largest companies AFTER the FTSE 100) is more domestically focused. As a result, mid-cap companies give far fewer hoots as to the value of the pound, and up they went to leave the FTSE 250 5.9% higher.
Demand for bonds is whipsawing. Looking at the graph for the benchmark 10-year Gilt yield (government bond yield) is a bit like looking at a set of shark’s teeth. The yield was above 0.6% in mid-February, down to a record low of below 0.2% a couple of weeks ago, up to 0.8% last week before dropping to 0.5% a few days later.
But all this happened before US politicians failed to agree an aid package. Since then, futures (proxies for shares when the real things aren’t trading) have slumped. So don’t expect fun and giggles today.
Back to Contents