In a widely anticipated shift US Federal Reserve boss Janet Yellen yesterday confirmed the removal of economic stimulus it has poured into the American economy since the financial crisis. Around $10bn from the $4.5trn balance sheet colossus will be snipped initially each month.
Yellen was also robust on US inflation. Despite the recent dip – “I will not say that the committee fully understands the shortfall,” she said – the American central bank remained on course to raise interest rates by year end, plus more interest rate increases to come next year. The economy could take it she said.
Her words – the tone was more hawkish than some expected – saw the dollar surge to a two-week overnight high of 92.70 though at 7am the spot price had settled at 92.54. The euro was -0.07% down to $1.1883 while the pound ducked under $1.35 to $1.3487, down -0.03%. Yellen’s move may now exert more pressure on the Bank of England to raise rates also.
A rash of US jobs data arrives early afternoon; UK public sector borrowing numbers are out at 9.30am.
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Capita revenues down; turbulence expected at Ryanair AGM (today)
New half-year numbers for Capita are out. Operating profit improved +38% to £228m helped by some strategic disposals. Reported profit before tax fell to £28m from £37m. Underlying revenues though slipped -3%. Capita’s share price has slumped more than -33% in the last 12 months but is +21% year-to-date.
“Underlying pre-tax profits before significant new contracts and restructuring to rise modestly in the second half, compared to the first half of 2017,” the company said. “We remain confident that the actions we commenced last year are making Capita a simpler business, well positioned for the future under new leadership.”
Not good news for Ryanair boss Michael O’Leary. A group of Ryanair pilots have rejected a cash bonus – up to £12,000 for some – in favour of better working conditions and work contracts. Questions remain over whether this latest rebuff may impact further flights in coming weeks.