The FTSE currently indicates a very weak opening, as traders await the announcement from The Bank of England regarding a rate cut. Traders worry that the BOE might not cut aggressively enough to help the economy out of this slowdown. However an over aggressive cut would unleash hyperinflation, which will hurt the consumers as their buying power will evaporate. If we get a 50 basis point cut, it is possible for the FTSE to open the day in positive territory.
A surprising increase in the inventory of gasoline was the cause for the 5 dollar per barrel drop in yesterdays trading. While the demand continues to fall, we expect a few more weeks of growing inventory before the OPEC cuts finally affect the price per barrel. We still expect oil to continue to fall towards the 60 dollar per barrel level.
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