The US dollar fell earlier today after Fed chair Janet Yellen indicated interest rate increases were likely to be gradual. Yellen was speaking at the bi-annual Congress testimony where she also said that work on reducing the US balance sheet will start – though Yellen was frustratingly spare on detail.
At 4pm the euro was trading at $1.1414, down -0.45% though sterling was up 0.27% to $1.2883 (following better employment numbers from the Office of National Statistics). Stronger industrial data earlier boosted the outlook for the euro area with Eurostat figures hitting 4%, better than anticipated (forecast 3.6%).
Elsewhere WTI crude surged to $46.48 earlier only to fall back to $45.55 mid-afternoon. The gold price crept up again, climbing +0.76% to $1.222.90.
Shares though in London closed more than 1.19% up as the FTSE 100 hit 7,416.93. Mediclinic Int and Burberry (more below) saw the biggest rises, up 4.73% and 3.16% while shares in Micro Focus Int slumped more than 8% to 2020p following anticipated slow first-half revenues .
- UK FTSE 100 7,416.93 +1.19%
- Dow 21,552.60 +0.68%
- S&P 500 2,441.98 +0.68%
- Nasdaq 6,242.58 +0.80%
- Nikkei 225 20,098.38 -0.48%
- DAX 12,639.61 +1.63%
- CAC 40 5,237.43 +1.87%
- Gold 1,220.40 +0.49%
- Oil WTI 46.37 +2.75%
RBS on the hook for more US fines
Yellen’s earlier remarks did little to light up the share price of US banks with Bank of America shares slipping 1%. However RBS in the UK has now agreed a $4.75bn settlement with the US Federal Housing Finance Agency over its role in sub-prime mortgage products up to the 2007-2008 financial crisis.
The UK government still owns a chunky 72% stake of RBS after bailing it out in 2008 (total bill £45bn). Unfortunately for UK taxpayers the US settlement is not the end of the story as a separate settlement with the US Department of Justice remains to be agreed.
So far RBS has put around £6.7bn aside for the total bill. However, a total agreed figure would make it easier for the government to return RBS gradually to private hands.
Burberry shares surge on Chinese sales support
Earlier shares in Burberry surged more than 3% to 1,631p following better quarterly sales and encouraging momentum from Asia (retail revenues surged 3% to £478m). However it wasn’t all good news as the Burberry update indicated a US slowdown as consumers fight new import taxes as well as less disposable spend.
Tomorrow is Burberry’s AGM and a row over incentives to ex CEO Christopher Bailey looms, plus new finance director Julie Brown. The Investment Association and Institutional Shareholder Services organisation are urging shareholders to reject pay awards for Bailey and Brown.
Breaking news: the EU recommends Greek spending oversight should be lifted.