31 January 2019

Katie Stanton

31 January 2019

Good morning,

Me again. But fear not, I’ve ditched the Brexit bother in favour of a dash more certainty (well, kind of).

And while our dare-devil prime minister might be willing to risk it all, the US Federal Reserve is erring on the side of caution. After contributing to a considerable downturn in the financial markets at the tail end of last year, the Fed is hedging its bets on a steadier course over the next few months. 

At its first rate-setting meeting of 2019, the Fed voted to keep interest rates unchanged in an effort to be “patient” on policy – a marked shift in sentiment from its December statement, which suggested “gradual” increases. Holding the target range for the federal funds rate at 2.25-2.5%, chairman Jerome Powell argued that “the case for raising interest rates has weakened somewhat” but stressed that inflation would continue to be a key factor in decisions going forward.

Now the Fed has a tough job. Last year’s efforts to normalise monetary policy rocked the markets and a global growth slowdown, coupled with increased market volatility, has pushed the Fed back into “wait-and-see-mode”. Following four rates hikes in 2018, analysts now expect the Central Bank to wait until Q3 or Q4 to resume.

However, the Fed has no pre-set course. Should they see continued wage growth, positive corporate earnings reports and cooling tensions with China, then they may feel more comfortable in stabilising monetary policy and raising interest rates sooner than expected.

For now, it seems that the bank is prioritising fluctuations in the economy over the impact of significantly higher inflation. The Fed is nowhere near suggesting that inflation levels could lead to a recession and sustained growth is forecast.

So, while Britain will most certainly spend 2019 bound in Brexit bedlam, I manage to find some small solace in the knowledge that the global markets might have a steadier future.

News

The government will introduce new powers to control suspects thought to be involved in knife crime in a bid to stem rising violence. Knife Crime Prevention Orders would impose sanctions on suspects, including social media bans and curfews. According to the latest figures, knife possession rose by almost a third in five years.

Theresa May is preparing to offer Labour MPs cash injections for deprived areas in order to garner support for her Brexit deal. The prime minister’s allies believe she needs the backing of around 20 Labour MPs to ensure her modified deal is not rejected. Coalfield communities that voted Leave are thought to be the targets. (£)

A polar vortex gripping the US has claimed at least eight lives. A blast of icy polar air brought dangerously low temperatures to the US midwest yesterday and residents have been urged to stay indoors. The UK is also forecast wintry weather over the next few days, with weather warnings imposed and disruption expected across the country.

Business & Economy  

Mark Zuckerberg has claimed that Facebook’s past scandals are “behind us” following the announcement of fourth-quarter results that exceeded Wall Street’s expectations. Shares in the technology company rose following the news, despite scandals over the past few years, including the accusation that it failed to stop Russian propaganda on its social network before the US elections. (£)

Unilever announced falling sales but growing profits in its results this morning. Sales were down 5.1%, while pre-tax profit grew from $8.1 billion to $12.3 billion. The results are its first since new chief executive Alan Jope took the reins and the company was forced to abandon plans to relocate its headquarters to Rotterdam.

Tesla announced the unexpected resignation of its chief financial officer yesterday following the release of financial results that showed a brief respite from the financial pressure that has made it a favourite of Wall Street’s short-sellers. The news brought an immediate four per cent slip in Tesla’s stock. 

Markets

What happened yesterday?

The FTSE 100 closed higher yesterday following the decision by MPs to reject an amendment that would enable the UK to leave the EU with a no-deal. The index closed 1.6% up, with American Tobacco bolstered another 4.4% on top of yesterday’s gains.

The FTSE 250 was also ahead 0.7%, with winners including TI Fluid Systems, which climbed 6.3% after analyst Peel Hunt reiterated its “buy” rating on the firm’s stock.

In the US, Wall Street shares were trading higher as the Federal Reserve voted to keep interest rates unchanged. The Dow Jones Industrial Average was 1.8% ahead and the S&P 500 was up 1.5%. A string of positive results for US firms added to gains, with Apple rising six per cent in light of its first-quarter results. Boeing was also up, after reporting record full-year revenues.

On the currency markets, the pound moved higher against the dollar, up 0.28% at $1.31. But analysts warn that this upswing will only last for so long and the markets will want to see progress on Brexit soon. Sterling was also up against the euro at €1.14. 

Finals

Infrastrata

Primary Health Properties

Premier Oil

Redhall Group

Samsung Electronics Co Ltd (ATT) GDR (Reg S)

Unilever

Interims

Angle

Alumasc Group

Diageo

Rank Group

Renishaw

Q3 Results

BT Group

Q4 Results

Royal Dutch Shell “A”

Samsung Electronics Co Ltd (ATT) GDR (Reg S)

AGMs

Avon Rubber

Hollywood Bowl Group

Britvic

Connect Group

Infrastrata

Utilitywise plc

UK Economic Announcements

(00:01) GFK Consumer Confidence

Int. Economic Announcements

(07:00) Retail Sales (GER)

(08:55) Unemployment Rate (GER)

(10:00) GDP (Preliminary) (EU)

(10:00) Unemployment Rate (EU)

(13:30) Continuing Claims (US)

(13:30) Initial Jobless Claims (US)

(13:30) Personal Consumption Expenditures (US)

(14:45) Chicago PMI (US)

Columns of Note 

The Financial Times Big Read this week asks: how did Joseph Kabila lose then win Congo’s election? Tom Wilson and David Pilling examine Kabila’s family dynasty, which came to prominence in 1997 and has taken the country from civil war to mining investment hub. Nonetheless, genuine stability for the nation is lacking and corruption is rife; in December Kabila lost the first election the country has seen since 1960. But with his family dynasty still clinging to some levers of power, has anything really changed in the DRC? (£)

Writing in the Evening Standard, Laura Weir sets out the latest frontier in gender politics: the humble pocket. Women’s clothing all too often excludes pockets, possibly because they are thought to add bulk to the female figure – which of course must be entirely streamlined at all times. But the power of pockets is overlooked: not only are they practical, but they can be empowering. Why can’t women be hands-free and ready for action? 

Did you know?

Out of 364 papers on animal genitalia published from 1989 to 2013, around half were exclusively devoted to studying male genitalia and only eight per cent to studying female. 

Parliamentary highlights

TODAY 

House of Commons 

Oral Questions

Digital, Culture, Media and Sport (including Topical Questions)

Attorney General

Business Statement

Business Questions to the Leader of the House of Commons – Andrea Leadsom

Backbench Business

Settling the debt owed to the victims of the Equitable Life scandal – Bob Blackman

Sustainability of maintained nursery schools – Lucy Powell

Adjournment

State pension age for women born in the 1950s – Tonia Antoniazzi

House of Lords 

Oral Questions

Proposals for a review of the powers of the Lord Speaker – Lord Grocott

Progress made in implementing the female offenders’ strategy – The Lord Bishop of Gloucester

Restrictions on commercial companies seeking to digitally map towns and cities in the UK – Lord Fox

Debate

Long-term commitment to increased provision of social housing to help to reduce housing costs, homelessness and housing benefit expenditure – Lord Whitty

Short Debate

NHS Long Term Plan, and the case for a fully funded, comprehensive and integrated health and care system which implements parity of esteem, preventative health and standards set out in the NHS Constitution – Lord Hunt of Kings Heath 

Scottish Parliament

General Questions

First Minister’s Questions

Members’ Business

The Royal Society of Edinburgh’s Tapping all our Talents 2018 Progress Report of Women in STEM

Debate: Budget (Scotland) (No.3) Bill

TOMORROW 

House of Commons

No business scheduled.

House of Lords

Legislation

Organ Donation (Deemed Consent) Bill – Committee stage – Lord Hunt of Kings Heath

Civil Partnerships, Marriages and Deaths (Registration Etc.) Bill – Committee stage – Baroness Hodgson of Abinger

Scottish Parliament

No business scheduled.