Markets Round-Up 2nd November 2017.
Stock Markets
US shares showed modest gains after the U.S. Federal Reserve kept interest rates unchanged and gave positive commentary on the US economy, with Energy and Materials leading the charge and Telecoms and Utilities being the laggards. (The Nasdaq ⇓0.17% to 6716.53, the Dow ⇑0.25% to 23,435.01 and the S&P 500 ⇑0.16% to 2,579.36.)
Asian shares were mixed after the U.S. Federal Reserve said economic growth was solid, virtually cementing the case for a December rate rise even as investors anticipated the Bank of England’s first hike in more than 10 years. (Japanese Nikkei ⇑0.53%, Hong Kong Hang Seng ⇓0.26%, The Chinese CSI 300 ⇑0.01%, Taiwan TAIEX ⇓017.% Korean Kospi ⇑0.4%, Australian ASX ⇓0.10% and the Indian Nifty ⇓0.16%.)
With the Bank of England announcing its first rate rise in 10 years from 0.25% to 0.5%, back to where it was pre- brexit UK stocks jumped and the pound fell 1%+ (The FTSE 100 ⇑0.9% to 7555.32, the FTSE 250 ⇑0.3% to 20,385.5)
European stocks held just off two-year highs thanks to forecast-beating results from lenders Credit Suisse, ING and Danske Bank.(Euro Stoxx 50 ⇓0.23%, German Dax ⇓0.18%, French CAC40 ⇓0.07% , Spanish IBEX ⇓0.47% , Italian MIB ⇑0.24%)
Currency
The pound dropped against the euro to €1.1208 Euros and fell against the dollar too to $1.3066 US Dollars.
Commodities
Gold edged up, held by weaker dollar and lower bond yields in the US as investors eye the new fed chairman announcemment. ( $1276.48.)
Oil Prices hovered around one-week highs amid a weaker dollar, opec cuts (Brent $60.52, WTI $54.41)
Other News
Rate-setters in the US decided unanimously to keep monetary policy at its current “accommodative” settings, while indicating that they continued to monitor price developments “closely”. The target range for the Federal funds rate was kept at between 0.0% and 0.25%, as expected, and the tapering of the monetary authority’s balance sheet was proceeding, the central bank said after its two-day meeting. Economic growth since the Federal Open Market Committee’s last meeting had continued to rise at a “solid” rate, despite the hurricanes that hit the Gulf Coast in September, they said in their policy statement.
The Bank of England delivered one of the most closely watched interest rate decisions since the financial crisis. as expected by Economists and investors they announced the first increase in a decade, raising interest rates from the current 0.25% to 0.5%. It is the first increase since July 2007. The pound fell after the Bank of England increased interest rates but indicated that any future rises would be “very gradual”. It repeated previous guidance that any future rises would be “at a gradual pace and to a limited extent”. Sterling fell more than a cent against the dollar and more than a cent against the euro.
BT Group’s reported revenues fell by 1% to £5,949m in the six months to the end of September and underlying revenue was down 1.5% but the full-year outlook has been maintained. Adjusted EBITDA fell 4% to £1,811m, reflecting investment in sports rights and customer experience, along with higher pension costs, business rates and decline in Global Services partly offset by cost savings. Net cash inflow from operating activities of £1,270m was down £464m, and normalised free cash flow of £689m was down £205m due to working capital phasing and higher capital expenditure.
Royal Dutch Shell’s income attributable to shareholders surged from $1.5 billion to $4 billion in the third quarter, a year-on-year increase of 197%. Earnings increased from $1.4 billion to $3.7 billion, a rise of 155%, which the company said reflected higher contributions from Downstream, Upstream and Integrated Gas. Earnings benefited mainly from stronger refining and chemicals industry conditions, increased oil and gas prices and higher production from new fields, which offset the impact of field declines and divestments.
Tate & Lyle grew its adjusted pre-tax profit by 13% at constant currency to £161 million in the six months to 30 September. Sales grew by 6% to £1.4 billion on a statutory basis but were flat at constant currency. The Speciality Foods division grew its operating profit by 4% at constant currency to £104 million, with volumes up 3%. North America returning to modest growth, which the company said was driven by its approach of focusing on higher growth sub-categories and customer channels, while continuing to provide high-quality service to larger customers.
Gavin Williamson has been appointed Defence Secretary after Michael Fallon resigned from the job amid Westminster sleaze allegations, Downing Street has announced. Fallon quit after admitting his behaviour had “fallen below the high standards required” in the role and acknowledging that what might have been acceptable in the past was no longer appropriate. Williamson, who was the government’s chief whip before this appointment, will take the job having never held ministerial office.
David Davis has said the government intends to be “as open as we can be”when making Brexit economic impact studies available to MPs. The Brexit Secretary said he was already talking to Hilary Benn,chairman of the Exiting the EU Select Committee, about handling the release of the studies showing the potential impact of leaving the union on 58 economic sectors. The government has repeatedly refused to release the studies in response to freedom of information requests and parliamentary questions from MPs, claiming doing so would harm Britain’s negotiating position with Brussels. But on Wednesday, Labour used an arcane parliamentary procedure to pass a motion to have the studies provided to the select committee so MPs can analyse how different negotiating outcomes could affect the economy.
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