Janet Yellen keeps US interest rates on hold
Last night Janet Yellen and her colleagues at the Federal Reserve announced they were to keep the US benchmark interest rate at a record low after a much anticipated two day meeting.
Going into the meeting the futures markets had priced in around a 30% chance of hike and a survey of economist also pointed to keeping rates unchanged.
As expected, Janet Yellen blamed the recent market volatility stemming from Chinese growth concerns;
“Developments we saw in financial markets in August partly reflected concerns of downside risk to Chinese economic performance and the deftness with which policymakers are addressing those concerns” said Chairwomen Yellen.
US stock initially rallied but later fell back after the press conference.
Janet Yellen said the committee was also held back by the low rate inflation which is well beneath the Federal Reserve’s 2% target, the primary mandate of the FOMC.
Another mandate of the Federal Reserve, Full Employment, was a variable they seemed satisfied with, they noted the jobs market continued to improve as the unemployment rate fell and the quality of jobs increased.
Taking into consideration the comments of Yellen during the conference, it appears that in absence of the market volatility three weeks ago , there would have been a rate hike last night.
“We’d like to have a little bit more confidence,” Yellen says.
In a market reaction to the decision, the Dollar weakened and European stocks fell over the China concerns Yellen raised.
Antofagasta forced to halt copper production following earthquake
FTSE 100 Copper miner, Antofagasta (LON:ANTO), has been forced to shut down one of its mines following an 8.3 magnitude earthquake in Chile.
Chile is the world’s largest copper producing nation and the disaster overnight helped lift the price of copper to two month highs in Asian trading.
There is not yet any indication of when the mines will be back online.
Codelco was also forced to shut down ones of their mines, the combined output of the Antofagasta mine and Codelco is roughly 600,000 tonnes per year.
If there is any lasting impact on production it would add to Glencores removal of 400,000 tonnes of production put in place earlier this month by closing African operations.
The possible 1m tonnes of halted production would equate to roughly 5.5% of global production (International Copper Study Group). Some analysts see the reduced output as a potential catalyst for a move to the upside if the global economy, particularly China, improves.
“Anything that has potential to restrict supply will have more of an effect on the price when things pick up,” said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance
So far, doubts over the strength of the Chinese economy have kept a cap on prices and copper remains in a medium term downtrend.
Disappointing data fuels fears of slowdown in Japan
Disappointing data released on Wednesday by the Bank of Japan has fuelled fears that the country is seeing an economic slowdown on the back of the recent troubles in China.
The bank said in its monthly report that Japanese factory output will remain flat in the current quarter. Although factory output was originally expected to pick-up in October-December is clouded with uncertainty as shipments to Asia take a hit from falling demand in China.
The bank said in a statement:
“Based on surveys we are conducting on companies, industrial output is expected to move sideways in July-September from the previous quarter. Output is expected to rebound in October-December, although there is strong uncertainty on overseas developments.”
This data furthers concerns that Japan will find it harder than previously anticipated to recover from a shrinking economy in the second quarter.
However, Asian shares were up on Wednesday, following a similarly strong performance from Wall Street.
Japan’s benchmark Nikkei 225 index ended up 0.8% at 18,171.60 and Chinese shares also traded higher, recovering some of the ground lost on Tuesday when the mainland benchmark index lost 3.5%.
The Shanghai Composite was up by 1.9% to 3,062.15, while Hong Kong’s Hang Seng index gained 2.2% to 21,938.13.
However, investors remain cautious ahead of the decision by the US Federal Reserve on Thursday as to whether rates will rise for the first time in nearly ten years.
Inditex profit soars on strong Spanish demand
Shares in Spanish retail giant Inditex (BME:ITX) are up nearly 3.5 percent this morning, after the group announced strong half yearly results.
Profits at the world’s largest clothes retailer were up 26% on the year at €1.16bn (£853m) in the second quarter. Like-for-like sales also rose 7%.
The group cited a strong revival in Spain and warm weather in Europe as reasons for the positive change. The company added 10,000 jobs worldwide, with 25% of them in Spain, and the addition of several stores in new countries means they now sell their products online in a total of 28 markets.
The Inditex group, who own Zara, Pull & Bear, Massimo Dutti, Bershka and Oysho, have an advantage over competition in that they source their products close to the point of sale, making it easier to keep up with changing demands. Their results come just after rival Hennes and Mauritz disclosed its weakest monthly sales growth in August in more than two years.
Crowdfunding: how can your business make the most of social media?
Businesses utilising social media to market and grow themselves is not a new concept; many companies now employ a specialist social media team to monitor their social media channels. Not only is a strong social media presence helpful, it’s now essential.
But do we really know how to extract the most from the wealth of data out there? Whilst using social media such as Twitter used to be about watching, listening and monitoring the conversation to seek out what the public think about your business, it now delves much deeper. To truly utilise social media for the benefit of your business, you need to be responding and integrating with the conversation.
Similarly, when it comes to raising investment for your business, whether you choose the crowdfunding or angel funding route your business needs to have a solid social media presence. The bigger your online presence is, the easier you’ll reach your funding target; engaging with potential investors and sharing your campaign as far as possible are both key elements to securing your goal.
London’s Social Media Week is currently in full swing, and this morning’s talk by Sysomos covered this topic in full. Their social media monitoring programme delivers the insight you need to develop new strategies, uncover opportunities and make smarter decisions. Sysomos market themselves as the ultimate social media solution for businesses. With their platform, you get instant and unlimited access to all social media conversations. The ability to see what’s happening, why it’s happening, and who’s driving the conversations. And the power to uncover meaning in the data – not only from the tone of conversations, but from advanced sentiment analysis by gender, age and location. During the talk, Sysomos explained the three most important ways that their service can help businesses tap into social intelligence. Firstly, their programme offers an authority score, which analyses those who are tweeting about your subject area or business and differentiates tweeters who are influential in your field from those that aren’t. Through this, you can easily choose which individuals and brands to communicate with and targets to get your message out there, rather than wasting time sending your message out to hundreds of people that aren’t relevant to you. Their service also offers the ability to benchmark events. Through this, you can analyse how well your recent promotion has been received, compared to your last one, as well as comparing your social media presence to others in a similar industry. The most important point that the speakers were intent on the audience taking home was the importance of using social media intelligence to gauge and monitor consumer happiness; essentially, it’s all about responding, rather than just listening. A recent, well documented case of companies going the extra mile through social media was between Three and 02. The tweets that followed show just how easy it is for companies to connect with customers on Twitter:https://twitter.com/O2/status/628244580102742016@dpmay @O2 we'll #makeitright Dan. Pizza & Ice-cream on the way 🙂
— Three UK (@ThreeUK) August 3, 2015
In an age where businesses can network and engage with clients with just a few clicks of a mouse and consumers use Twitter as their first port of call for a complaint, social media is an indispensable tool; a slow response can make or break a company’s reputation. Twitter is a global platform with 304 million monthly active users; harnessing that data is essential for any business in the 21st century. Even for small businesses, using a service such as Sysomos can cut time and costs and connect you with the people that will enhance your network, and in terms of investment, help you reach your goal and grow your business in the right direction.
Miranda Wadham on 15/09/2015
Kingfisher adjusts profit downwards, shares fall 3 percent
Retail giant Kingfisher plc (LON:KGF) are trading down nearly 3 percent this morning after releasing their interim results.
Whilst sales were up 3.5% and retail profit up 5.0% in constant currencies, the company adjusted their pre-tax profit downwards £384m, a decline of 2.3%. In a statement, Karen Witts, Chief Financial Officer, highlighted Kingfisher’s strong prospects in the medium to long term:“Our balance sheet remains strong, enabling us to continue investing for growth and to return so far this year, GBP160 million via share buyback. We are also today announcing growth in the interim dividend, ahead of earnings, reflecting our confidence in our medium term prospects.”
The company also disclosed intentions to open another 200 Screwfix stores in the UK. The Screwfix arm of the company remains strong; in the first half like-for-like sales at the chain rose 16.5% to £494m.
Kingfisher shares dropped 2.5 percent at market open. They are currently trading down 3 percent at 349.30 pence per share (1230GMT)
UK inflation falls back to 0%
The UK rate of inflation has dropped back down to 0% in August, as oil prices continue to affect price growth in England.
The rate has fallen from 0.1% in July, according to figures released today by the Office for National Statistics.
Oil prices hit a six-and-a-half year low of around $42.50 per barrel in late August, causing speculation that price pressures will remain low over the next six months. The figures are the latest in a series of disappointing economic data releases, which means the Bank of England is likely to push back a rate rise.
“With consumer price inflation flat in August and core inflation easing back to 1.0%, there is little immediate pressure on the Bank of England to start raising interest rates,” Howard Archer, chief UK and European economist at IHS Global Insight told the BBC.
“Further reason for Bank of England caution on interest rates is the recent evidence that the economy has hit a soft patch during the third quarter,” he said.
Consumer prices rose 0.2 percent on the month but were unchanged from a year earlier, the Office for National Statistics said, in line with economists’ expectations for a slight fall in annual inflation from 0.1 percent.
Core inflation, which ignores volatile moves in the price of energy, food, alcoholic drinks and tobacco, rose by an annual 1.0 percent in August.
Asian trade mixed on Monday, mainland China takes a hit
Shares in Asia were choppy on Monday, with disappointing economic data released on Sunday causing mainland Chinese shares to fall.
Figures released showed that growth in both fixed-asset investment and factory output – at 6.1% – were below analysts’ expectations.
The Shanghai Composite index closed down 2.67% at 3,114.80, while Hong Kong’s Hang Seng was flat, up just 0.16% at 21,538.97. The Shanghai index has lost nearly 40% since its peak in mid-June. The Chinese government also announced plans to restructure its state-owned enterprises, including partial privatisation, as the Prime Minister makes further moves to bring the rapidly spiralling Chinese economy under control. Further details on the plans were sparse, with guidelines issued by the Communist Party’s Central Committee and the State Council announcing that there were plans ‘clean up and integrate some state firms’. Arguably, reform of state-owned enterprises is one of China’s most pressing needs. “China’s economy faces relatively big downward pressure, so investor sentiment remains weak,” said Gu Yongtao, strategist at Cinda Securities told Reuters. Elsewhere in Asia, investors remain cautious in advance of the Federal Reserve meeting this week. Economists are split on whether the US is likely to raise rates for the first time in ten years on Thursday.India and Britain to strengthen ties with ‘FinTech bridge’
Britain’s Minister of State for Trade & Investment Francis Maude has announced an agreement with India which will strengthen commercial ties between India and the UK.
India and Britain will collaborate to create a ‘FinTech bridge’ between the two countries. Led by Alok Vajpeyi and Britain’s Startupbootcamp, it will encourage close partnership and investments in Britain and Indian FinTech companies, and help them expand globally.
Britain and India have always had strong business links; in 2014-15 India emerged as Britain’s third biggest job creator, creating 7,730 new jobs. Opportunity for investment in India is blossoming, with its economic growth rate at 6.4 percent – well above the global rate of 3 percent. Many UK firms in this sector are already well established in India, including Standard Chartered and HSBC.
In the announcement, made to over 200 students at the IIT Bombay, Francis Maude said:
“Our Government is committed to an enhanced partnership with India. I will be meeting Indian Government and business leaders to discuss how we can support Indian PM Modi’s aspirations for India’s economy.
“It will encourage close collaboration and investment in UK and Indian Fintech companies and help them expand globally. Whether their focus is financial inclusion or access to lending, Fintech companies are creating global solutions.”
The initiative will be called ‘FinTech20 India’, in close partnership with FinTechCity of the UK, and will search for the twenty best FinTech innovators in India. Companies will be selected by a panel of experts from the UK and India and will be promoted in the FinTech50 2016 when it is released to a world-wide audience next year.
Prime Minister Modi, whose goal is to elevate India’s status globally as a country for investment, has described India’s engagement with the UK as an “unbeatable combination”.
UK Investor have partnered with Charles Hanover Investments to offer a free report detailing further the investment opportunity in Asia. To download it, click here.
Wetherspoons pubs disclose 2% profit drop
Pub chain JD Wetherspoons (LON:JDW) disclosed a 2 percent drop in full year profit before tax on Friday, citing higher costs and new cut price food and drink offers as reasons for the added pressure.
Underlying sales grew 3.3 percent and total sales rose by 7.4 percent to 1.5 billion pounds. The group’s profit before tax was£77.8m, down from £79.4 last year.
Chairman Tim Martin highlighted the excessive taxes placed on pub food in comparison to supermarkets and restaurants, and the negative effects of the disparity; citing the fact that pubs have lost 50 percent of their alcohol sales to supermarkets over the last 35 years due to this.
He said in a statement:
“As previously stated, a number of factors likely to influence our trading performance this financial year are difficult to quantify at this early stage. Positive aspects include an increase in pub numbers, a better economy and slightly lower interest rates; less favourable aspects include heightened competition from supermarkets and restaurant groups and increased staff, repairs, bar and food costs. We continue to anticipate a trading performance similar to, or slightly above, that achieved in the last financial year.”
Wetherspoons is currently trading up 1.78 percent at 732.78 pence per share (0910GMT).