The Bank of England’s Monetary Policy Committee kept interest rates pegged at 0.25% this morning. But the real story was the extra room given to bank hawks in the MPC minutes: rates “could need to be tightened by a somewhat greater extent over the forecast period than current market expectations”.
That’s Bank-of-England-speak for don’t expect cheap money to hang about for too much longer. More or less. The not very dove-ish tone gave sterling the predictable poke it was expecting; at 4pm the pound was up more than +1.25% against the dollar at $1.3347. Against the euro the pound’s gains were even more extreme with the euro buying 0.8872 sterling, down -1.36% on the day.
FTSE 100 shares slipped noticeably as sterling hurtled higher (many of the big names are heavily dependent on overseas earnings). At the close of business tonight the Big Board was more than -1.14% lower at 7,295 points with large drops for Morrisons, down -5.14% and Experian, down -4.8%. Next shares though stormed more than +13% ahead as investors cheered better profits guidance, released this morning.
- UK FTSE 100 7,295 -1.14%
- Dow 22,165.45 +0.04%
- S&P 500 2,496.37 -0.08%
- Nasdaq 6,446.97 -0.21%
- Nikkei 225 19,807.44 -0.29%
- DAX 12,528.82 -0.21%
- CAC 40 5,226.28 +0.17%
- Gold 1,328.60 +0.04%
- Oil WTI 50.37 +2.13%
US consumer prices surge in August
US stocks lost a little traction as a hike in consumer prices came through, indicating a higher chance of a rate rise – potentially a third this year – before the end of 2017. US consumer prices rose +0.4% in August. That's the biggest climb for more than half a year.
The inflation numbers are significant because this index measures a massive basket of everyday costs, from rent to clothing to fuel and car insurance. One of the most significant consumer price climbs was petrol, up +6.3%.
The new inflation numbers have been late trailing better US job numbers which emerged earlier this year. The inflation picture is likely to increase as supply chains struggle to service the damage wrought by Hurricanes Harvey and Irma.
Operating margins up for Hermès
Luxury goods player Hermès earlier said operating margins for the first half of the year hit 34.3% – a new record. However Hermès also said the supercharged euro was in danger of eroding sales for the next year.
The sales brooding from Paris saw the luxury goods company shares fall by more than -2% to trade at €423.15.
"In the medium-term, despite growing economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates," the hand-stitched lux goods operator said in a statement.
Breaking news: The European Court of Justice has ruled against Ryanair in the airline's efforts to push through Irish labour laws on cabin crews working in Europe. Ryanair had argued that Irish law should overrule EU law on account of its planes being registered in Ireland despite many staff ending and beginning a working day in Charleroi.