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he Federal Reserve has upped key US interest rates by a quarter of a percentage point to a range between 5% and 5.25%., in a move that comes alongside hopes that tonight’s quarter point increase will be the last in the current cycle.
However, jobs data from ADP and service sector inflation statistics from S&P suggest the US economy is still running hot.
Closer to home, the FTSE 100 index today regained some lost ground during a busy session for blue-chip updates, but remains well below where it started the week.
Alongside the latest developments at Lloyds Banking Group, Flutter Entertainment and Barratt Developments, markets have reacted to the FCA’s decision last night to reform listing rules in order to make it easier for companies to list in London.
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Federal Reserve hikes US interest rates by a quarter-point
The US central bank has lifted interest rates by a quarter of a percentage point to a range between 5% and 5.25% in a widely expected move that investors hope will be the last move higher of the current cycle.
The Federal Open Market Committee has been fighting inflation with a the longest run of rate rises since the 1980s. It is the tenth US rate rise in just over a year and the third quarter-point hike in a row.
Investors are now hoping that the series of increases is now over, at least for a while, although there are still signs that the US economy is running hot. But Wall Street and City experts think further hikes are unlikely next month.
Unilever shareholders vote down CEO’s €5.1 million pay packet
Shareholders of Magnum-to-Marmite consumer goods giant Unilever have rejected the company’s pay policy, which would have handed CEO Alan Jope up to €5.1 million (£4.5 million) this year.
Shareholders representing 58% of voting shares rejected the policy, which included a €1.6 million base salary for Jope, who will retire at the end of the year, as well as a bonus of up to 225% of the base salary. That policy was unchanged from last year, but a 42% increase from the year before that.
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FTSE closes at 7788 after modest gains
The FTSE 100 closed at 7788 after modest gains today.
The index of London blue-chips regained some of the ground it lost yesterday, but still remained around 1% below where it started yesterday’s session.
Pearson was the biggest gainer after heavy losses on Tuesday, while Lloyds was the biggest faller despite beating profit estimates.
Trivago boss cautions over strike hit to travel sector amid summer chaos fears
The boss of accommodation search website Trivago has cautioned over the impact of strikes across the travel sector in Europe as warnings mount over a summer of chaos for passengers.
Trivago chief executive Axel Hefer told the PA news agency that if the current wave of strikes become the “new norm”, it may start to impact holidaymaker demand for overseas travel.
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US shares flat as early gains disappear
Shares in US businesses are flat as early gains disappeared ahead of the Federal Reserve’s decision.
The S&P 500 is down by less than a single point to 4118.7, while the Dow Jones is down 0.1% to 33646.57. The tech-focused Nasdaq has performed better, though, up 0.3% to 12115.54.
The top risers included cleaning products firm Clorox and food giant Kraft-Heinz.
‘A recipe for bad lawmaking’ — company bosses slam ‘Brexit bonfire’ bill
A bonfire of EU laws is likely to create more problems than it would solve, according to an Institute of Directors (IoD) survey.
A poll of 949 company bosses asked which policy area offered the greatest opportunity for the UK to “reduce the regulatory burden” of EU law.
However, most respondents who gave an answer said there was no such policy area. When excluding the 8% who said they didn’t know, 51% said their “preference is for regulatory stability in the current framework”.
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Pearson bounces back from sell-off sparked by AI fears
Textbook publisher Pearson has rebounded strongly from yesterday’s steep declines sparked by fears of the impact of AI on its business.
However, shares are still well below Friday’s close.
Pearson shares fell by as much as 15% yesterday after US rival Chegg said that te rise of ChatGPT had meant it was seeing a slowdown in new customers.
But a note from Deutsche Bank arguing there was limited read-across to Pearson helped steady the ship, with shares back up to 822.8p.
US service sector price rises gaining pace ahead – S&P
Hopes that a rate rise today will be the Federal Reserve’s last could be weakened, after a closely watched indicator found that service sector selling prices in April quickened to the fastest since August 2022.
According to the S&P Global Services PMI, price inflation was the highest in almost a year.
“There are indications that resurgent demand for services is reigniting inflationary pressures,” Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said. “Average rates charged for services are now rising at the sharpest rate for eight months, as firms report a greater ability to pass increased costs on to customers.”
Addison Lee owner back in black as cab bookings surge
The company that owns London’s private hire cab firm Addison Lee has broken into profits as passenger revenue surged by a third.
Accounts filed at Companies House this week show that parent company Atlas Topco made an operating profit of £12.4 million in the year to end August, compared with an £8.9 million loss in the previous year.
However after financing costs are taken into account the company remained £2.3 million in the red compared with a loss of £23.2 million previously.
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Wall Street tentative ahead of Fed decision
Little movement is expected when trading starts on Wall Street, as investors await a signal on the Federal Reserve’s next moves.
The central bank is widely expected to raise interest rates by 25 basis points today, but markets are hopeful that chair Jerome Powell will give an indiciation that this rate hike will be the last one.
According to futures markets, the Dow Jones is expected to rise by less than 0.1% to 33792, while the S&P 500 is set to rise by 0.1% to 4142. The Nasdaq, which contains a number of the most rate-sensitive stocks, is expected to rise by 0.2% to 13207.
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