Markets bracing for Fed rate hike – but is it too soon?

Miranda Wadham
-
0
Markets bracing for Fed rate hike – but is it too soon?

Global financial markets are bracing themselves for the Federal Reserve to hike rates, after Friday’s positive jobs figures left the way clear for a December rate rise.

At last month’s meeting the Federal Reserve gave their strongest hints yet that a rate hike was on the cards. Despite the uncertainty prompted by the resignation of Italian Prime Minister Matteo Renzi, most analysts now believe that the Fed will use their December meeting to make their second policy rate increase in 10 years

The markets are already pricing this in but according to deVere Group international investment strategist Tom Elliott, it may be premature.

“Financial markets are pricing in as a certainty a 25bp rate hike at the forthcoming FOMC meeting. This will take the key Fed funds rate up to a range of 50bp-75bps. Supporting the market’s view is the strength of the U.S. economy, with some strong data emerging last week that suggests inflation pressures are building.

“This data includes that third quarter GDP growth has been revised upwards from 2.9 per cent annualised, to 3.2 per cent; a key housing statistic (the Carelogic Cas Schiller National Price Index) passed its previous July 2006 high; November payroll data was strong at 178,000 new jobs created, while the unemployment rate fell to 4.6 per cent; and CPI inflation is at 1.6 per cent, which is in spitting distance of the Fed’s 2 per cent target.” Mr Elliott continues: “However, the markets’ pricing in of a rate rise at this stage could be premature. Indeed, we have seen similar market certainty of a rate hike several times before this year, notably in May. “The prime cause of uncertainty this time is not fear of a rash of weak economic data, but how the dollar behaves over the coming week. “If it continues to strengthen, in anticipation of higher Fed rates, the Fed may actually hold off. A strong dollar exerts its own form of monetary tightening because exports weaken, import prices fall and so put a downward pressure on domestic competitor prices. “The Fed may prefer to delay a rate hike, than impose a double-dose of higher borrowing costs on corporate America as well as a still- stronger dollar.” The next Federal Reserve meeting takes place on the 13th – 14th December.  

Drax soars 15% by midday after confirming plans to buy Opus Energy

UK Investor Magazine
-
0
Drax soars 15% by midday after confirming plans to buy Opus Energy
Drax (LON:DRAX) shares were being snapped up by investors this morning after confirming to the market the proposed acquisition of Opus Energy Group Limited (Opus Energy) for £340m and an agreement to purchase four Open Cycle Gas Turbine (OCGT) development projects. Drax outlined in their half year results this morning that the company has been exploring options to improve earnings and longer term growth after announcing full year EBITDA to be around the bottom of the range of market forecasts. A key aspect of this is looking to improve diversification across the markets in which it operates; pellet supply, generation and retail. Dorothy Thomson, Chief Executive Office of Drax Group said “Drax is already playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future. Today we are pleased to announce the proposed acquisition of Opus Energy, the UK’s leading challenger retail supplier in the SME market, creating a strong and competitive presence complementing our existing Haven Power offer.” Thomson went on to say “With the right conditions, we can do even more, converting further units at Drax to use sustainable biomass in place of coal. This is the fastest and most reliable way to support the UK’s decarbonisation targets, whilst minimising the cost to households and businesses. These initiatives mark an important step in delivering our strategy, contributing to stronger, more predictable, long-term, financial performance, through greater diversification of the businesses, delivering more opportunities right across the markets in which we operate.”

At the beginning of 2014 Drax shares were trading north of 800p a piece and were trading at lows ot 205 in January of this year, whilst confirming fully tear earnings to be below market forecasts the announcement of the Opus deal has seen the shares rally to 320p up over 15% on the day.

 

Revenue surge of 159% at online Estate Agency Purplebricks sees shares soar over 20%

UK Investor Magazine
-
0
Revenue surge of 159% at online Estate Agency Purplebricks sees shares soar over 20%
Online Estate Agency Purplebricks (LON:PURP) reported UK revenues increased from £7.2m to £18.3m over 6 months to the 31st October, an increase of almost 160%. In the update released earlier today Purplebricks also confirmed the launch into Australia was better than any of the regional UK launches to date with gross profits of £0.2m on revenues of £0.4m. Purplebricks has shrugged off the Brexit blues stating “Current trading is showing similar year-on-year instruction growth with no material slow-down from Brexit”. The fears across the property sector have been stated loud and clear by many market participants however newcomer Purplebricks, which was only founded in 2014, says it hasn’t been affected and has seen revenues soar. “Our strong results are testament to the seismic shift that is underway in the estate agency market. I am especially proud that currently we are agreeing a sale every 16 minutes, 24 hours a day and the number of properties sold in the first half is similar to the total number of properties sold during the whole of the previous year” says chief executive Michael Bruce. “These results demonstrate that the business model is working, with the UK generating a maiden half-year adjusted EBITDA profit whilst growing market share” he continues. The maiden profit Bruce refers to is a modest £300,000, which by itself might not sound great however compares favourably to the loss of £6m over the same period in 2015. Whilst instructions rose strongly the average revenue per customer also increased 21% to £1,000.    

Uk service sector defies projections

Nicole Jeary
-
0
Uk service sector defies projections

The UK service sector has seen its fastest growth since January, despite continued anxiety over Brexit uncertainties.

Despite an initial slowdown, British hotels and banks look to cap off the year with solid performances suggesting a resilient UK economy.

According to the Markit/CIPS, UK services PMI rose to 55.2 in November up from 54.5 the previous month. This proved a better-than-expected performance, with Reuters forecasts anticipating the sector to experience slowdown to 54.0. The index has now been above the 50-mark which indicates growth, as opposed to contraction for four consecutive months.

Chris Williamson, the chief economist for business at IHS Markit, stated:

“The further upturn in the vast services sector shows that the pace of UK economic growth remains resiliently robust in the fourth quarter, despite ongoing uncertainty caused by Brexit.

“The three PMI surveys collectively indicate that the economy will grow by 0.5% in the fourth quarter.”

The sector has benefited from a weaker pound, pushing up overseas demand and led to growth in employment levels. Nevertheless, sterling weakness also meant higher import costs and greater pressure as a result of higher food and fuel costs for British businesses within the services sector.

In addition, it was noted that the pressure from inflation and as political uncertainty starts to weigh upon business outlook, this may impact performance into the new year. Similar concerned were raised last week in respect to the UK’s manufacturing and construction industry.

“Rising prices – often linked to the weaker pound – are a big concern, however, and suggest that inflation is set to lift higher,” Williamson continued.

“The past two months have seen the steepest rise in businesses’ costs for over five-and-a-half years. These higher costs will inevitably feed through to consumers in the form of higher prices.”

The services sector remains a dominant contributor to the UK economy, making up over 75 percent.

Markets take Italy No vote to referendum in their stride, Renzi resigns

UK Investor Magazine
-
1
Markets take Italy No vote to referendum in their stride, Renzi resigns
In what many had tipped as being a volatile outcome for the struggling Euro nation financial markets after an initial bout of volatility have taken in their stride Italy’s resounding “No” to constitutional reforms. With Italian Prime Minister Matteo Renzi putting his head on the line on the outcome it will mean Italy is due to elect their 6th Prime Minister in 10 years. The reforms were broadly looking to assist in preventing the stalemate which can often occur in Italian politics with the two levels of Government having the same powers. The No vote was championed by populist party Five Star Movement (5SM) Francesco Oggiano, author of “Beppo Grillo Parlant” was quoted as saying “According to the 5SM, people won’t be able to choose their own representatives in the parliament and this is the most important point,” Oggiano explained. “The result (of a ‘yes’ victory) would be a parliament full of bureaucrats chosen from their parties that, once elected, will just get to satisfy their leader instead of people’s needs,” he added. Whilst the Euro initially saw heavy selling the negativity was short lived, shortly after the vote EURUSD was down over 1.5% however by midday had recovered those losses, with equity markets following a similar pattern.

Shares in Banco Monte dei Paschi di Siena, regarded as Europe’s most troubled large bank, recovered to only mild losses by midday. Jeroen Dijsselbloem, Eurogroup President said “If this is the market reaction, it doesn’t seem to require any emergency steps,” in response to a question about whether the European Central Bank should intervene ahead of a eurogroup meeting in Brussels.

“The process of dealing with some of the banks that have problems need to continue and will continue,” he added. “[Italy] is a strong economy, is one of the largest economies in the eurozone, it’s a country with strong institutions.”

Trading Indices vs Trading Individual Stocks

UK Investor Magazine
-
1
Trading Indices vs Trading Individual Stocks

Key Topics:

      • Index Value Influences

      • How Different Indices Are Correlated

      • Index Trading Strategies

        This report explores the benefits and risks of trading indices and lays out the strategies professional traders use to enhance their returns.

        You will discover the methodology of how different indices such as the FTSE 100, S&P 500 and Dow Jones are calculated, how your individuals shares impact them and what it means for your investments.

Download your copy now for free:

This offer has been issued and approved by Windsor Brokers Ltd UK Branch, which is EEA authorised & registered by the Financial Conduct Authority (FCA) and maintains a branch in the UK, FCA Reference Number: 463727. The FCA is an independent non-governmental body that regulates the financial firms within the UK. Financial firms authorized/regulated in their home country, within the European Economic Area (EEA), can offer certain products or services in other EEA countries through pass-porting the activities or through a branch. Windsor Brokers Ltd is authorized and regulated by the Cyprus Securities & Exchange Commission (License Number 030/04).
Trading with financial instruments on margin carries a high level of risk, and may not be suitable for all investors. Trading with financial instruments is not suitable for an investor seeking an income since profits are not guaranteed. It is recommended to seek independent investment advice if necessary .

UK manufacturing growth unexpectedly slow in November

Miranda Wadham
-
0
UK manufacturing growth unexpectedly slow in November
Growth in the UK’s manufacturing sector slowed unexpectedly in November, as factories suffer with the weak pound in the wake of the EU referendum. The manufacturing purchasing managers’ index (PMI) fell to 53.4, down 0.8 points since last month but still above the 50 point mark indicating expansion. The PMI figure dipped below 50 in July as confidence was spooked in the immediate aftermath of the Brexit vote. IHS Markit said the rate of growth remained “solid”, despite it being the second month of declining confidence in the sector.

Rob Dobson, senior economist at IHS Markit, said:

“Scratching beneath the surface of the data shows that rising consumer demand and business-to-business spending is helping manufacturing to grow at a robust clip.”

“The concern is that higher costs may in time offset any positive effect of the weaker exchange rate, especially given that export order book growth has already waned markedly from September’s five-and-a-half year high,” he added.

Oil prices jump as OPEC begin meeting in Vienna

Miranda Wadham
-
0
Oil prices jump as OPEC begin meeting in Vienna

Oil prices jumped over 5 percent on Wednesday morning on hopes that OPEC may agree an output cut at its meeting in Vienna.

The 14-country group, which accounts for a third of global oil production, is set to meet this morning at 0900GMT to finalise the first production cut in eight years, which was voted for in September.

Tensions between Iraq, Iran and Saudi Arabia have blighted hopes this week that an agreement will be voted for, with oil prices falling 4 percent yesterday. Some analysts believe the meeting may not produce a deal, but oil surprise jump this morning suggests that investors remain hopeful.

Yesterday Indonesian Energy Minister Ignasius Jonan told reporters that he was unsire as to whether Opec would be able to forge an agreement: “I don’t know. Let’s see. The feeling today is mixed.” 
30/11/2016

JD Sports sub-division kicks in and announces Go Outdoors takeover

UK Investor Magazine
-
0
JD Sports sub-division kicks in and announces Go Outdoors takeover
Shares in JD Sports Fashion PLC (LON:JD) closed Friday at 1594p, this morning they opened at 330p as the share dilution that was announced on the 1st of November came into effect splitting the ordinary shares of 1.25p each into shares of 0.25p. In old money, JD Sports shares are trading up almost 4% as the group announced the acquisition of Go Outdoors for £112 million, adding to it’s already significant exposure in the outdoor market through the Blacks, Millets, Tiso and Ultimate Outdoors businesses. The purchase sees Go Outdoors founders Paul Caplan and John Graham leave the business Through the purchase JD Sports adds 58 Go Outdoors stores to the group. With the majority of the stores being at out of town retail parks the Chief Exec Peter Cowgill confirmed “The minimal overlap in store locations and their out of town, one stop retailer approach complements the work we have done on the high street with Blacks and Millets and further strengthens our offering in the outdoor sector. I am excited by the future prospects this holds for the JD Group.” The addition to the group can also be seen as backing the potential boost for the staycation market as the pound weakens making international holidays that bit more expensive. With Go Outdoors reporting sales of £202m last year, this equates to approximately 10% of JD Sports’ expected sales for this year providing what could be a notable boost with little geographical competition through differing store locations.

“Perfectly credible” case for second referendum, argues Sir John Major

Nicole Jeary
-
0
“Perfectly credible” case for second referendum, argues Sir John Major
Former Prime Minister Sir John Major has argued that there is a legitimate basis for a secondary referendum, to ensure that those who voted to remain are fairly represented. During a private dinner, the former Conservative leader argued that the government should not impose its negotiations on the people without further consultation. “I hear the argument that the 48 percent of people who voted to stay should have no say in what happens,” he said. “I find that very difficult to accept. The tyranny of the majority has never applied in a democracy and it should not apply in this particular democracy.” The decision to leave the European Union was narrowly provoked by the June referendum result, with a slim majority of 51.9 percent of people voting Leave, against 48.1 percent casting their vote to Remain. During his time as Prime Minister, Sir Major faced dissent from the eurosceptic wing within his party, who condemned his moves to compound the UK further to Europe. The former leader previously claimed that his success in negotiating the Social Chapter, exclusion from the single currency and the Maastricht Treaty were “game, set and match for Britain”. Nevertheless, he was later defeated in Parliament on the matter, which significantly affected his authority and leadership. Theresa May has already announced her intended timeline for withdrawing from the EU, with the date for triggering the two year process of Article 50 said to occur in March 2017. However, the specifics regarding negotiations over single market access and passporting rights are yet to be clarified. According to the Chancellor, the government anticipates borrowing to increase to £122 billion as a result of Brexit. This comes amidst claims that the government is finding itself overwhelmed by the process. Reportedly, the civil service would have to see an increase of around 30,000 to accommodate the growing administration required to tackle ongoing negotiations regarding Europe. This follows former Labour Prime Minister Tony Blair’s announcement of his return to British Politics, as he calls for the people to mobilise against Brexit. Tony Blair remains Labour’s most electorally successful leader, having won three successive elections.
1...1,6611,6621,663...1,818Page 1,662 of 1,818