Dollar lifts on US stimulus retreat

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.

• UK FTSE 100 7,271.95 -0.05%
• Dow 22,412.59 +0.19%
• S&P 500 2,508.24 +0.06%
• Nasdaq 6,456.04 -0.08%
• Nikkei 225 20,354.77 +0.22%
• DAX 12,569.17 +0.06%
• CAC 40 5,241.66 +0.08%
• Gold 1,300.90 -1.18%
• Oil WTI 50.29 +1.64%

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.  

Ryanair shareholders meet O’Leary face-to-face at today’s Dublin AGM. Investors will be looking for reassurance that O’Leary is capable of sorting out the chaos – and will want to know what contingency plans he has in place should things deteriorate further.    

Ryanair shareholders will want good answers from O'Leary: Shutterstock

Co-op profits slump, Compass Group boss to exit

The Co-op Group says pre-tax profits have slumped by close to half – to £14m – in the last six months while group sales has fallen modestly to £3.4bn. 

As widely suspected Google yesterday brokered an HTC deal – though not a complete buy-out – for $1.1bn allowing HTC to expand its smartphone operation. The deal bolsters Google’s hardware capacity; HTC already manufactured Google’s Pixel and Pixel XL smartphones in 2016. This is a move that should revive HTC overall. 

Pub group Mitchells & Butlers say sales in the 51 weeks to 16 September climbed +2.9% but comparable drink sales are down -1.2% in the last eight weeks. 

Breaking news: Compass Group boss Richard Cousins is to quit at the end of March. Dominic Blakemore, chief operating officer for Europe, steps into his shoes.