Markets drink in the end of cheap money

On the surface markets were little changed following the Fed’s policy announcement – balance sheet tapering, finally, plus multiple interest rate climbs inked loosely into the diary.

However US shares dipped earlier from all-time highs. Clearly some mulling over the words of Fed boss Janet Yellen from the previous night was going on. Apple shares were down more than -1.5% to $153 (on the back of an even more severe fall yesterday) as the Cupertino tech giant attempts to sort out smartwatch connectivity issues. 

Financials and oil operators did better with Anadarko Petroleum up +7%. But there’s a feeling that some investors have been complacent on valuations generally – hence some marked dips, especially from tech; Microsoft and Facebook shares were under pressure today also, both down -0.65% at 4.15pm.

Late afternoon today the euro was trading +0.26% higher at $1.1921 while the pound had regained some punch too, up +0.16% to $1.3513. European Central Bank boss Mario Draghi is giving a speech in Frankfurt this afternoon but it’s unlikely to contain shock value (Theresa May's major Italian speech tomorrow may be more of a market mover with an attempt to nail a final Brexit bill).

In London the FTSE 100 ended eight points down at 7,263. One stand-out performer though was chemicals specialist Johnson Matthey whose shares accelerated more than +14% (more of below). But big drops for Sainsbury's and Kingfisher, both slumping more than -4%.

• UK FTSE 100 7,263.90 -0.11%
• Dow 22,396.17 -0.07%
• S&P 500 2,502.06 -0.25%
• Nasdaq 6,413.89 -0.66%
• Nikkei 225 20,347.48 +0.18%
• DAX 12,616.63 +0.38%
• CAC 40 5,271.66 +0.57%
• Gold 1,294.90 -1.64%
• Oil WTI 50.21 +1.48%

Johnson Matthey soars on EV investment

One clear FTSE 100 winner today was Johnson Matthey. The specialty chemicals player said it was to put up to £200m into battery tech in order to give it a fuller grip on the electric car sector. The news saw its shares jump more than +14% to 3,390p.  

Johnson Matthey said it wants to “build capacity to drive growth in a market which could be more than US$30bn sales when battery electric vehicle penetration increases to around 10%”. 

The chemical manufacturer – it celebrated its 200th anniversary in July – has made much of its revenues from emission-cutting devices, including from diesel cars. And the VW ‘dieselgate’ scandal propped up the company further as EU emissions moves demanded the latest technology. 

“I’m comfortable with where our R&D is,” Johnson Matthey CEO Robert MacLeod told the Telegraph last year. “It feels right and is aimed at ensuring the company’s future for another 200 years.”

The end of diesel? Johnson Matthey aren't taking chances: Shutterstock

Euro to weaken by year end?

Earlier in the day Handelsbanken Capital Markets said it thought the euro will remain strong in the short term, but weaken towards the end of 2017. The frailer dollar will gradually feed into higher inflation, which in turn should lift interest rate expectations for the US it predicts. 

“By year-end 2017, heading into 2018, we believe that sentiment toward the US and the USD will have shifted, just as it will have done for the eurozone and the EUR. In our view, this will translate into a lower EURUSD toward year-end 2017, spilling over into 2018.”