Little surprise to investors earlier this afternoon that the ECB did not fiddle with interest rates – or intimate there was a need to cut further. “We are now confident that inflation will converge with our objectives,” ECB president Mario Draghi said.
The ECB also upped its growth forecast from 1.7% to 1.8% for 2018 while downgrading the inflation picture from 1.7% to 1.5% for 2017. All in, a ‘dovish’ response with the euro slipping back slightly in response ($1.1222, 4pm). Sterling remained largely flat at $1.2945 though still close to a two-week high of $1.2975 earlier in the day.
At 4pm also the FTSE 100 was down eight points to 7,470.02 with Randgold Resources and Reckitt Benckiser the biggest daily fallers, slipping 1.77% and 1.49% respectively. Over in the US the Dow has been muted, up just 16 points to 21,190.08 as fired ex FBI boss accuses the White House of ‘lies’ though just before 5pm US shares were back in positive territory.
- UK FTSE 100 7,449.98 -0.37%
- Dow 21,174.21 0.00%
- S&P 500 2,431.50 -0.06%
- Nasdaq 6,296.95 -0.02%
- DAX 12,709.64 +0.31%
- CAC 40 5,265.90 +0.01%
- Nikkei 225 19,909.26 -0.38%
- Gold 1,277.10 -1.24%
- Oil WTI 45.94 +0.35%
Tighter monetary policy on the cards
Barclays said it deemed Mario Draghi’s words consistent with an improving growth outlook and the ECB’s revised assessment of risks, upgraded from “downward” to broadly “balanced”.
“Nonetheless, the inflation outlook remains weak and was slightly downgraded on the back of weaker oil prices.” It added: “We expect an extension of QE into 2018 but also reduction of its pace to €35-40bn in H1 18 and €15-20 in H2 18.”
Amazon hands out more than $3bn
Amazon’s lending business appears on the up: Amazon dished out more than $1bn in the last 12 months to merchants using its market place while also loaning $3bn to up to 20,000 business across the UK, US and Japan. Reuters reported that while many traditional lenders laid low after the financial crisis, it created opportunities for other players.
“While this exposes Amazon to additional credit risk, the company," said Reuters, "has near real-time data on sellers' businesses and access to their customer reviews, which are helpful in deciding whether to make a loan.”
Digging into the numbers it transpires more than 50% of those who took Amazon loans also take a second loan. Typically loans range from $1,000 to more than $500,000.
Flybe must 'get' digital
Meanwhile Flybe has announced new losses following its efforts to up capacity while also suffering slower consumer sales.
Flybe says pre-tax losses came in at £19.9m up to 13 March. That almost £20m loss compares to profits of £2.7m a year ago. More than 80% of ticket sales are now via the web – Flybe admits it must “be better at digital”.
While capacity growth has slowed, Flybe says it has improved its load factor while revenue per seat is also recovering. Flybe shares climbed 4.5% earlier as investors warmed overall on the outlook however shares are down more than 20% year-to-date.
Breaking news: BT has ditched PwC as its auditor after a lengthy 33-year relationship. BT replaces PwC with KPMG.