There was something for everyone in last night’s FOMC statement with equity markets initially reacting negatively Yellen purports that a March hike remains a possibility on the table despite the rising concerns on China, multi-year low commodity prices and volatile equity markets globally.
The issue now is one of credibility, or lack thereof and the market’s probability pricing of a March hike fell to 18%, lowest since the Fed hiked its rates for the first time in December 2015 would more than suggest that rate hiking will remain at ‘one and done’ for the time being.
The pound has surpssed its 40 point range against the dollar on foot of the in line Q4 GDP print. GBP/USD is now pressing towards the $1.43 level depsite the fact that interest are likely to remain as is until at least the final quarter of 2016. It’s a matter of balance, and the UK economy does not manifest this. As was expected, services remain dominant while construciton and manufacuring output lack any rebound and may well continue in that vein. The services sector now makes up over 70% of UK GDP.
The FTSE 100 has retested the 6000 level in early trade; an event that many might not have expected given the volatility over the past month. Leading the charge is the mining and energy sector with financials also in the green.
A host of trading updates have provided mixed fortunes for the UK benchmark and elsewhere in Europe, with many using the strong dollar as an excuse of impoverished revenues. This is likely to be a recurring theme as we immerse ourselves in earnings season.
Flybe Group Plc (L:FLYB) (-7.7%) Trading update said its return to growth delivered in the year’s first half continued in Q3 despite the reduction in travel after the events in Paris in November which placed pressure on “industry wide capacity growth acceleration and lower fuel costs”.
EasyJet PLC (L:EZJ) (-1.65%) continues lower on the back of FlyBe’s updates as investors fret that despite lower fuel costs the threat of terrorism will continue to impact revenues.
Diageo (L:DGE) (-0.16%): H1 profits beat estimates despite a drop in sales. net profit rose to £1.41 billion ($2 billion) for the six months ended Dec. 31 from £1.31 billion in the same period a year earlier. has continued to lose market share in North America, operating margin in North America dropped by 29 basis points. In Europe, Russia and Turkey, net sales climbed 3% on an organic basis, as did they in Africa. In Latin America and the Caribbean net sales rose 9%, while in the Asia Pacific region they edged up 2%.
Daily Mail & General Trust (L:DMGOa) (+0.38%): Revenues increased 27% in the last quarter of 2015. Still not offsetting the decline of print advertising, will put up the price of its weekday edition for the first time in three years to mitigate the trend.
Anglo American (L:AAL) (+5%) set to cut 3900 jobs to mitigate the price plunge in commodities.
Babcock International Group PLC (L:BAB) (-0.32%) group chief executive Peter Rogers will retire from the company at the end of August.
Ashtead Group (L:AHT) (-6%) Falling in sympathy with peer United Rentals which reported Q4 net income of $169m and EPS of $2.19 per share, falling short of expectations. Its share price fell 7% overnight – adding to the 23% loss since the year began.
Lonmin PLC (L:LMI) (+4.78%) recently raised $396m with a massively discounted rights issue, cut more than 5,000 jobs in the last quarter and trimmed production. Has also used the money raised from the rights issue to cut its debt.
SSE (L:SSE) (+.28%) The second gas supplier to announce price cuts albeit that the firm is waiting until the worst of the cold weather is over by introducing the cuts from March.
Centrica (L:CNA) (-2.62%) Cut to sell v hold at SocGen