Eurozone inflation moves further from ECB target in June
Eurozone inflation continued to fall in June, edging further away from the ECB’s target despite four years of stimulus programmes.
The inflation figure fell to 1.3 percent June from 1.4 percent, a significant way from the 2 percent target in place by the European Central Bank but above analysts expectations of a drop to 1.2 percent.
in a setback for the European Central Bank as its stimulus programs enter a fourth year.
June’s inflation reading was the lowest so far in 2017, with weaker energy price rises having a negative impact according to a flash estimate from the Eurostat statistics office.
Jennifer McKeown, chief European economist at Capital Economists, said the European Central Bank was unlikely to cut interest rates any time soon.
“The data will add to the ECB’s sense that reflationary pressures are appearing. But core inflation is still well below the Bank’s near-2 percent medium-term target for the headline rate, and its rise has been concentrated in Germany.
“The Bank has repeatedly stressed that it will wait for core inflation to be on a clear upward path throughout the euro-zone before raising interest rates and we suspect that this is still some way off.”
Lloyds miss compensation deadline for HBOS fraud cases
Lloyds Banking Group (LON:LLOY) have missed the deadline it set itself to pay compensation to victims, after a fraud trial that ended in February.
Two HBOS bankers were found guilty pressurising small business customers into hiring a turnaround consultancy firm, which then bullied business owners into paying extortionate fees and handing over their companies.
HBOS was bought by Lloyds in 2009, making it responsible for the compensation payments of the victims. £100 million was set aside, but only a small fraction of that has been paid so far.
Of the 64 customers who joined the compensation scheme, fewer than 10 have received offers and only one settlement has been reached.
Shares in Lloyds fell on Friday, currently trading down 0.71 percent at 66.67 (1221GMT).
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Although the author and publisher have made every effort to ensure that the information in this publication was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause. Investments can go up in value as well as down, so you could get less than you invested. This information does not constitute personal advice and you should speak to your financial advisor before committing to any pension product. Information in this document is for reference use only and its accuracy cannot be guaranteed and is subject to change.
US economy grew faster than anticipated in Q1
The US economy grew faster than initially anticipated in the first three months of the year, according to the Commerce Department’s final figure released on Thursday.
Gross domestic product increased at a 1.4 percent annual rate, 0.2 percent higher than the 1.2 percent pace reported last month.
The revised growth figure was boosted by a growth in consumer spending, which saw a solid revision from a rate of 0.6 percent to 1.1 percent.
“The economy is expanding at a solid, if unspectacular pace,” said Gus Faucher, chief economist at PNC Financial Services.
The revised figure will go some way to alleviate fears of a slowdown in the world’s largest economy. Earlier this week the International Monetary Fund warned that political uncertainties meant there were “larger than usual” risks to the U.S. economy.
FCA cracks down on unclear pricing structures in investment sector
The Financial Conduct Authority have cracked down on the way the asset management sector charges its customers, in a bid to make the industry more transparent.
The new regulations will aim to promote a clearer pricing structure, with each firm declaring a complete annual fee, rather than the current mix of different charges.
The FCA’s investigation found that firms in the sector had an average profit margin of 36 percent. Yet despite “sustained, high profits” for these firms, there was weak price competition and no link between higher fees and better performance.
“In the current low-interest environment, it is vital we help people earn a return on their savings. We need a competitive sector, attracting investment into the United Kingdom which also works well for the people who rely on it for their financial well-being,” said Andrew Bailey, FCA chief executive.
“We have put together a comprehensive package of reforms that will make competition work better and help both retail and institutional investors to make their money work well for them.”
Kromek shares sink despite recording smaller loss for 2017
Technology company Kromek (LON: KMK) saw shares sink nearly 10 percent on Wednesday, after recording a £1.5 million loss for the year to April 2017.
The company, who focus on the medical, security screening and nuclear markets, saw revenue increase 7.5 percent to £9 million, with product sales accounting for 74 percent of total revenues.
The company still recorded a £1.5 million EBITDA loss for the year, an improvement on the £2.4 million loss seen last year, with loss before tax for the year was £3.8 million. This came despite attracting further investment of £3.5 million.
The company provides radiation detection products for the medical, security screening and nuclear markets, based on cadmium zinc telluride and other advanced technologies.
Shares in Kromek are currently trading down 9.13 percent at 32.83 (1058GMT).
IMF lower growth US growth forecasts on Trump uncertainty
The International Monetary Fund lowered their forecasts for US growth on Tuesday, down to 2.1 percent from their previous figure of 2.3 percent.
Following a review of U.S. economic policies, the IMF lowered their expectation for economic growth to 2.1 percent for both 2017 and 2018. Giving a reason for their decision, the body said that the Trump administration’s push for annual growth of over 3 percent for a sustained period was unlikely, partly because the labor market is already at a level consistent with full employment.
The IMF said they were uncertain over the efficacy of the Trump administration’s plans for the economy, with Alejandro Werner, director of the IMF’s Western Hemisphere Department, saying at a press briefing in Washington that they “have removed the assumed fiscal stimulus from our forecast”.
In a statement, the IMF said:“The U.S. is effectively at full employment. For policy changes to be successful in achieving sustained, higher growth they would need to raise the U.S. potential growth path.”
“The U.S. economic model is not working as well as it could in generating broadly shared income growth,” the IMF added.
“Most critically, relative to historical performance, post-crisis growth has been too low and too unequal.”
Capita shares rise after £888m sale of asset management division
Shares in outsourcing giant Capita (LON:CPI) jumped in early trading on Monday, after the company announced it had sold its fund administration business for £888 million.
Capita sold the division, which administers around £50 billion of fund assets, to Australian firm Link Administration Holdings. The asset management had presented problems for the company, showing stable growth but becoming costly after it provided administration services for the failed Arch Cru and Connaught funds.
“Capita has secured an excellent price for the disposal of Capita Asset Services,’ said Julian Cater, analyst at Numis, told Citywire.
“This will significantly de-gear the balance sheet”.
Shares in Capita rose on the announcement, currently trading up 2.68 percent at 710.00 (1255GMT). However, its shares have fallen nearly 30 percent over the past year, dropping out of the FTSE 100 in March after a spate of profit warnings.
UK business confidence jumps in May, driven by optimism in Wales
Business confidence has jumped to an 18-month high despite political turmoil from both Brexit and June’s general election, according to the latest report from Lloyds Bank.
Britain’s confidence index rose to 24 percent in May, above the average figure for the last 25 years which stands at 23 percent.
However, the number of companies that said they had found it hard to find skilled labour over the past six months rose to a 10-year high of 52 percent, up from 31 percent in January.
Lloyds Bank surveyed 1,500 UK companies, after the general election was called. Tim Hinton of Lloyds Banking Group said: “Although challenges remain in recruiting both skilled and unskilled labour, businesses are anticipating higher sales, increased profits and staffing levels to rise.
“However, the outlook remains mixed at best.”
Businesses based in the North East of England had a particularly optimistic view of the future, with their figure rising to an 18-month high of 33 percent. This was topped only by Wales, who have seen their confidence rise by 19 percentage points since the start of the year to hit 34 percent.
Businesses in Scotland, on the other hand, were less optimistic – the nation had the lowest score in the UK of just 19 percent and was the only place in Britain to experience a fall in confidence since January.
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Terms, Risk Warning & Disclaimer:
Although the author and publisher have made every effort to ensure that the information in this publication was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause. Investments can go up in value as well as down, so you could get less than you invested. This information does not constitute personal advice and you should speak to your financial advisor before committing to any pension product. Information in this document is for reference use only and its accuracy cannot be guaranteed and is subject to change.