US shares slide
Shares on Wall Street are down today following new jobs and inflation data.
The S&P 500 has fallen by 0.5% to 4116, while the Dow Jones is down 1% to 33,197 as Disney stocks plunge. The Nasdaq has fared better, but is still down 0.1% to 12293.
The slide comes as US initial jobless claims reached the highest level since October 2021, while producer price inflation came to 0.2% in April, slightly lower than expected.
Revolut CFO quits weeks after auditor BDO warning on accounts
The CFO of Revolut has quit the firm just weeks after its auditor said it was unable to independently verify three-quarters of the revenue in the company’s 2021 accounts.
Mikko Salovaara, who was first appointed CFO in April 2021, said he was leaving the London fintech for personal reasons.
Heathrow and airlines granted permission to appeal CAA cap
Heathrow Airport and three major airlines have been granted permission to appeal the Civil Aviation Authority’s cap on the amount the airport may charge airlines that operate flights from there.
The CAA announced the cap, which will last until 2026, in March, but Heathrow bosses quickly slammed the decision and said they would appeal.
However, major airlines British Airways, Delta and Virgin also won permission to appeal.
Pound falls back from highs
The pound has fallen back against the dollar amid the latest rates outlook, after hitting its highest level in a year.
A pound now buys $1.2544, still well above where it has been for most of the past year but down almost 1.5c from its highs yesterday. Sterling buys €1.1488 and 168.17 yen.
Where will interest rates go next?
Paul Dales, chief UK economist at Capital Economics, still believes that today’s rate hike will be the last of the current cycle. However, he then expects rates to be held at 4.5% for a long period, before a fairly aggressive period of cutting.
“Today’s 25 basis point rise in interest rates from 4.25% to 4.50% takes rates to our long-held forecast and may be the last hike, although one or two more hikes are possible,” he says. “We suspect the subsequent holding phase will be fairly long, lasting until the first half of next year. But we think the future cutting phase will be more aggressive than market pricing with rates falling to 3.00% by end-2024 rather than to 4.00%.”
US shares in for mixed start
Shares in US-listed companies are in for a mixed start today, after higher-than-expected jobless claims.
Dow Jones futures are down 0.4% to 33459, while S&P 500 futures are close to level at 4147. However, Nasdaq futures are up by 0.2%, to 13433.
Among the biggest premarket risers is 1-800-FLOWERS, while regional lender PacWest is among the biggest losers.
Highest US jobless claims since 2021
US weekly jobless claims rose to 264,000 in the past week,, ehad of expectations that claims would remain flat.
“Initial jobless claims figures came in much higher than expected, at 264k versus 245k expected – the highest print since 2021,” Ryan Brandham, Head of Global Capital Markets, North America at Validus Risk Management, said. “The impact from the 2022-23 rate hiking cycle in the US might finally be impacting what has been a surprisingly tight labour market, and also reinforces the Fed’s plans to pause further rate hikes.”
FTSE down on rate rise expectations
The FTSE 100 has fallen after today’s Bank of England interest rate decision, mostly due to increased expectation that the Bank will raise rates further.
The index of London blue-chips is down 0.4% to 7708, despite going into today’s meeting close to flat.
More London workers eye job change as cost-of-living crisis makes them restless
Millions of Britons and around one-in-six Londoners are looking to change jobs in the next six months according to new research, in a sign that the UK’s labour market could get even more competitive.
Around one in seven workers questioned by Barnett Waddingham, the professional services consultant, predicted they would have different work in six months time. That’s around 14%, and would add up to about 4.2 million people nationally, in a jobs market with just over 1 million live vacancies.
‘Inflation is becoming entrenched’
George Lagarias, chief economist at Mazars, says the Bank has little alternative but to keep raising rates to avoid inflation becoming entrenched.
“The hike was hardly news,” he says/ “The UK boasts the fastest wage growth and one of the tightest labour markets within developed markets. This means that inflation is becoming entrenched. The Bank of England has little alternative other than tightening the money supply, in order to curb consumer demand.
“Homeowners who were eagerly waiting for their refinancing rates to drop may be in for a disappointment. Unless we see a financial accident that could affect the banking sector, or some sort of other systemic event, we expect the central bank to continue to tighten rates, despite the economic slowdown.”
