The early morning swagger in the European markets disappeared by the afternoon as US markets started buckling. However, the FTSE held up against the trend, buoyed by Astra Zeneca, and Coca-Cola. Retailers did surprisingly well, possibly because even amidst a general slowdown of the UK economy younger professionals are beginning to draw higher wages in their early jobs. Although the Brexit gloom continues to linger over the housing market there are hopes that higher wages will translate into better high street sales, particularly in the key pre-Christmas period. Burberry, Next, Marks & Spencer and Tesco were among the gainers.
Dollar firms ahead of “non-event” Fed
The greenback firmed up as the FOMC went into session, widely seen as a non-event that will end with rates unchanged at 2.25%. However, given that the inflation rate is rising and with jobless claims falling further today, the Fed will have little choice but to go ahead with a planned hike in December. It is probably too early for US central bankers to make any meaningful assessment of the economic impact of the change in the US Congress but they are likely to run through some scenarios in preparation for decisions later this year and in 2019.
Ryanair and cabin crew union reach deal
The beleaguered Irish budget airline is seeing the light at the end of the tunnel after a summer of strikes and nearly a full year of negotiations with a German cabin crew union. The two sides came up with a provisional deal Thursday but the proposal on the table has yet to be approved by Ryanair’s German staff next week. This is the closest to resolution the two sides came in a year that has cost the company lost flights during its key summer season. Ryanair, infamous for keeping wages tight and costs low, has been in a predicament like the rest of the airline industry because requests for higher wages have coincided with months of higher oil prices adding to the company’s costs. The shares slipped 0.77% instead of rising because the company is also facing a legal suit in the US from investors claiming the company’s CEO made wrongful claims about the financial health of the airline.
Draghi sounds a cautionary note on new risks
Speaking to Irish lawmakers, ECB governor Mario Draghi sounded less than ebullient today. While he was broadly positive about the economic prospects of the Eurozone, he admitted that recent sector specific data and survey data received by the ECB had been weaker than expected. The ECB is in the process of winding down the stimulus measures that it has been using to prop up the Eurozone for the last 10 years, and traders – and politicians – are obviously concerned the ECB does not have much left in the tank should another crisis come along, the Italian bond market being foremost in many minds. Draghi, however, seems more concerned about risks he has no control over, such as the introduction of a new tariffs regime by the US government, and the disruptive effect that could have. His remarks injected an element of pessimism into the EUR, which slumped against the USD, down to 1.409 in late trading.