Carney at the TSC – and it impacted the FTSE

Mark Carney finally gave his eagerly anticipated testimony to the Treasury Select Committee today, and it confirmed to me something that I’ve been thinking about for a while – that the appointment of Mark Carney as the new Bank of England Governor could have a major impact on the UK stock market. That sterling rose when he seemed cooler on easing than investors thought isn’t the biggest surprise, but sometimes people doubt that the stock market is so sensitive, being composed of many constituent companies with their individual earnings profiles which are so much more than just a proxy on monetary policy (and so detached from the condition of the domestic UK economy). Today’s stock price movements did suggest sensitivity to what he was saying, however, from weakness in the banking sector to the minute by minute chart of his speech and price movements. The picture was muddied by the conflation of his written answers and what he was saying in both media reports and investor reaction.  But the combination of at least the use macro-prudential tools to tackle asset bubbles without raising interest rates and his scepticism over QE could have interesting effects on stock prices, and potentially pressurise them in different directions. Have to shoot now: the market report I wrote on this today is here, but more soon on this, I promise…

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