AA shares were in desperate need of a jump-start today as they dived on a profits warning (more below). There was some relief for US investors with the Dow powering back across the 25,000 threshold earlier though the +0.45% lift fell short of super-heroic. Apple shares were up strongly, rising +0.88% to more than $173 while Facebook and Amazon shares fared even better, both taking +1.5% gains.
However the really big US news of the day – the release of the Federal Reserve January minutes which may point to future interest direction policy – is still to come (this evening). It’s almost all about nuance: how much will Fed officials talk up the tax code economy breaks? How robust is the tone around inflation risk? These signals will require a measure of distance given that the January Fed meeting fell before the big stock sell-off in early February.
Better news for the Conservative Government today following an +0.8% boost to productivity in the last quarter, according to the Office of National Statistics. A bit of spring sunshine was added to earnings, up +2.5% year-on-year, though this earnings increase still lags inflation at 3%.
On forex, the dollar index spot was up +0.15% earlier taking it to 89.86 helping push the pound down -0.13% and the euro against the greenback by the same amount. If the Fed FOMC minutes turn hawkish shortly, there may see another turn of speed from the US currency.
- UK FTSE 100 7,281.57 +0.48%
- DAX 12,423.20 -0.51%
- CAC 40 5,287.09 -0.05%
- Euro Stoxx 600 379.86 -0.17%
- Dow 25,057.57 +0.37%
- S&P 500 2,730.24 +0.51%
- Nasdaq 7,287.51 +0.74%
- Nikkei 225 21,970.81 +0.21%
- Gold 1,333.60 +0.19%
- Oil WTI 61.53 -0.42%
AA shares rammed by fresh sell-off
AA shares plunged more than 25% today on news of a fresh – and drastic – dividend cut plus a reduced profits forecast. Shareholders will now endure 2p a share dividend compared to 9.3p a share offered last year.
The roadside recovery player says underlying income will come in at £345m max for 2019 compared to £390m previously anticipated by the City. In the last year alone AA shares have sunk more than 55%. Berenberg downgraded AA shares on Monday. The stock has been heavily shorted.
In its new strategic overhaul today, boss Simon Breakwell said his plans will take the AA “from a company helping when you break down to one actually predicting when you might break down in the first place. These investments, while reducing our short term profitability, are vital to our long term success.” Investors remain unimpressed.
Unilever to leave UK?
Away from some robust UK economic figures Theresa May may have to prepare to shrug off news that dual-listed consumer goods giant Unilever is to settle on Holland, not the UK, for its HQ.
Unilever is likely to make the decision in early March. Unilever has been under pressure to simplify its corporate governance structure and a Rotterdam move, plus a single listing, may echo ambitions to be more sensitive to local decision-making. However both Dutch and UK sides to the business garner strong national loyalties.
“The government remains in regular contact with Unilever and we will continue to work with them during this process,” the UK’s department of business told the FT earlier today.