The pound continued to inch higher overnight to $1.3221, up 0.05% while the euro was down 0.14% to $1.1825, though that’s down from an earlier $1.1845 high. Either way the pound is now at its highest point since autumn 2016 reflecting on-going concern about the direction of the US under President Trump. Though the White House claims there’s little to worry about, the markets disagree.
However sterling has been lifted by expectations that the Bank of England (BoE) could just raise interest rates from their current pre-Brexit decade low – at some point. Other central banks are starting to normalise their monetary tack; why should the BoE be any different? ‘Super Thursday’ – an interest rate decision, an inflation report plus MPC minutes – later this week will reveal more though a rate rise will probably be deferred.
Even if a rise does come through, it would only take the rate back to where it was in early August last year after the BoE snipped the base rate to 0.25% following the Brexit vote.
- UK FTSE 100 7,372 +0.05%
- Dow 21,891.12 +0.28%
- S&P 500 2,470.30 -0.07%
- Nasdaq 6,348.12 -0.42%
- Nikkei 225 19,973.17 +0.24%
- DAX 12,118.25 -0.37%
- CAC 40 5,093.77 -0.73%
- Gold 1,276.50 +0.24%
- Oil WTI 50.26 +0.18%
British Gas hikes electricity prices
We start with a half-year 4% dip in operating profits to £816m for British Gas owner Centrica though revenues climb 7% to £14.3bn; the utility giant claims it’s still on target to make its 2017 targets.
Margins were hit by warmer weather claims Centrica. However Centrica is hiking electricity prices by 12.5% from mid September it says which will likely hit its 3.1m customers. Centrica claims it has been selling electricity at a loss which is not “sustainable” though the wholesale price of electricity has actually fallen. Centrica pin much of the blame on transmission charges and government policies.
“With our gas price remaining unchanged, the average annual dual fuel bill for a typical household will rise by £76, or 7.3%, to £1,120. The price rise reflects increasing delivery and environmental and social policy costs since 2014.”
Profits up for Taylor Wimpey and Rolls Royce
Next, builder Taylor Wimpey says half-year trading numbers are positive with a 9.3% increase in completed homes with a 24.2% increase in operating profit to £346.2 million (H1 2016: £278.8 million). However group profit is down to £205m from £268m.
Taylor Wimpey says it’s returning a special dividend of £340m (10.4p pence per share) to be paid in July 2018 (July 2017: £301 million and 9.20 pence per share).
“The land market remains fundamentally attractive, and we have continued to acquire land at compelling investment margins and returns in the period. We remain focused on pursuing opportunities that are in high-quality locations.”
Lastly Rolls Royce says underlying profit before tax come in at £287m, up £183m (2016: £104m) while the interim dividend remains unchanged at 4.6p. Rolls Royce shares are at 893p, up 12.2% on the year but 32% up year-to-date.
"Our long-held commitment of investing in R&D and future technologies remains unchanged, as we look to secure the long-term success of the business, built on a solid platform of outstanding customer service and strong cash flows.”
Breaking news: Tobacco player BAT has confirmed it is under investigation by the Serious Fraud Office over bribery allegations in East Africa.