Most European equity markets are continuing to pare losses again on Thursday and the U.S. is expected to open slightly higher as sentiment continues to recover following Friday’s shock referendum result.
The U.K. will remain front and centre on Thursday as the list of Conservative party leadership bids to succeed David Cameron continues to grow and we wait to hear from Bank of England Governor Mark Carney. Close attention will be paid to the leadership contest in the coming months with the next Prime Minister being tasked with the huge job of negotiating the UKs future with relationship with the E.U.. The lack of progress since last week’s vote is probably partially what has stabilised the markets for now but the longer this persists, the more uncertain the future is going to look. Until article 50 is triggered, there remains a chance, albeit small, that new negotiations and even another referendum could take place.
Given that the markets haven’t fared too badly this week, I imagine Carney will primarily use today’s speech to once again reassure the markets that the central bank is on top of things and as of yet, the situation has been managed well. He may also warn about future risks, with the coming months likely to remain quite volatile for the pound and certain U.K. assets. I wonder if he will also talk about monetary policy responses to the events of the last week and what could follow.
We’ll also hear from the Federal Reserve’s James Bullard today who is due to speak at the Society of Business Economists Annual Dinner, in London. Bullard is a voting member of the FOMC and is likely to touch on the impact of Brexit on U.S. interest rates this year, with the market already having all-but priced out any chance of another hike happening.
For a look at all of today’s economic events, check out our economic calendar.