Federal Reserve raises US interest rates for the first time this year

FEderal Reserve
The Fed is expected to raise interest rates for the only the third time since the financial crisis

Fed raises US interest rates to stop boom and bust

The Federal Reserve hiked US interest rates by another 25 basis points yesterday in its third upward move since the financial crisis.

Janet Yellen, chair of the Fed’s board of governors, said the economy is on a healthy footing as unemployment is falling, and so rates need to go up to limit rising inflation. She expects the central bank to increase rates twice more this year, accelerating from the single rate hikes in both 2015 and 2016.

Ms Yellen stressed that the rate rises will be gradual and signalled in advance – and that it is vital to move rates upward to avoid a boom and bust.

“Waiting too long to scale back some accommodation could potentially require us to raise rates rapidly some time down the road which in turn could risk disrupting financial markets and pushing the economy into recession,” she said. “The trajectory you see as the median in our projections which this year looks to a total of three increases, that certainly qualifies as gradual.”

The policymakers are now targeting an overnight interest rate of between 0.75pc and 1pc.

The median projection noted by Ms Yellen indicates the target rate will rise to 1.4pc by the end of the year. “My comfort in using the term gradual comes back in part to my judgement that the neutral level of federal funds rate, the level that keeps the economy operating on an even keel, neither pressing on brake nor pushing on accelerator, that level of interest rates is quite low. At present I see monetary policy as accommodative, below the neutral rate, but not very far below the neutral rate,” she said.

“We’re closing in on our unemployment objective, we’re coming closer to the inflation objective, and as we reach them, particularly as we see the outlook as roughly balanced at this point, it looks to us to be appropriate to gradually raise the federal funds rate back in the direction of neutral.”

The Fed’s central forecast is for economic growth of 2.1pc this year, up from 1.9pc in 2016. Officials expect this pace to be maintained in 2018 before slowing to 1.9pc again in 2019.

Economists are more sceptical, however, and believe the economy may grow less strongly.

“Our base case is only one more hike this year. This is because we are likely reaching a cyclical peak soon, and the likelihood of a China slowdown weighing on global inflation, markets and growth is fairly high,” said Anna Stupnytska, global economist at Fidelity International. “The Fed looks unlikely to ‘take away the punchbowl’ from global growth any time soon.”

The dollar slid against the euro on Ms Yellen’s dovish statements.

Fidelity sceptical of three rate hikes in 2017

Janet Yellen insists there will be two more rate hikes this year, but not all analysts are convinced.

The FOMC boss could be overestimating the growth trajectory according to Fidelity International's global economist Anna Stupnytska.

"The Fed looks unlikely to ‘take away the punchbowl’ from global growth any time soon," she said.

"Our base case is only one more hike this year. This is because we are likely reaching a cyclical peak soon, and the likelihood of a China slowdown weighing on global inflation, markets and growth is fairly high.”

Yellen: Businesses not investing more just yet

The stock market might be at record highs but businesses are not going on an investment binge just yet.

“Many of my colleagues and I note a much more optimistic frame of mind amongst many businesses in recent months... but many of the business people we talk to also have a wait and see [stance]," said Janet Yellen.

“If we were to see a major shift in spending reflecting those expectations, that could very well affect the outlook. I’m not seeing it at the moment but the shift in outlook is obvious and notable.”

Yellen: We mean it, we will keep hiking

Janet Yellen says markets may be out of sync with the Fed because the public has become used to the idea there will only be one rate hike per year, as there was in 2015 and 2016.

"It is  important for the public to understand we’re getting closer to reaching our objectives," she said, noting rising inflation and falling unemployment.

"We have an accommodative stance of monetary policy…[it will be] appropriate to move to a more neutral stance if we continue to move along the path we’re on."

Yellen: No reaction yet to Trump's big spending plans

Asked about Donald Trump's plans to cut taxes and increase spending, Janet Yellen said the plans are, as yet, too uncertain to build into the Fed's interest rate plans.

"We’ve not discussed in detail potential policy changes that could be put in place, and we’ve not tried to map out what our response could be to particular policy measures," she said.

Yellen: Expect two more rate hikes this year

"I think the trajectory you see as the median in our projections which this year looks to a total of three increases, that certainly qualifies as gradual," said Janet Yellen.

"My comfort in using the term gradual comes back in part to my judgement that the neutral level of the Federal funds rate, the level that keeps economy operating on an even keel, neither pressing on the brake nor pushing on the accelerator, that level of interest rates is quite low. At present I see monetary policy as accommodative, below the neutral rate, but not very far below the neutral rate," she said, indicating that the scale of any rate hikes will remain very limited.

"We’re closing in on our unemployment objective, we’re coming closer to the inflation objective, and as we reach them, particularly as we see the outlook as roughly balanced at this point, it looks to us to be appropriate to gradually raise the Federal funds rate back in the direction of neutral."

Yellen live

The press conference can be seen here

 

Yellen: Interest rates are still very low

“Even after this increase, monetary policy remains accommodative,” she said, arguing that this will help maintain economic growth.

But some rate rises are needed to stop the economy overheating, resulting in sharp rate hikes which could cause an economic crash, Ms Yellen said.

“Waiting too long to scale back some accommodation could potentially require us to raise rates rapidly some time down the road which in turn could risk disrupting financial markets and pushing the economy into recession,” she said.

Yellen: This is not a reassessment

Janet Yellen stressed that there is no reason to get excited by the rate hike.

“Today’s decision does not represent a reassessment of the economic outlook,” she said.

The economy is on track to keep growing steadily, the FOMC chair said.

"Business investment which was soft for much of last year has firmed," said Ms Yellen.

"We continue to expect the economy will expand at a moderate pace... We expect that job conditions will strengthen further.”

 

Experts react: You didnt need to be a fortune teller to predict today's hike

This is what the experts had to say in light of this evening's rate rise: 

Jeremy Cook, chief economist at the international payments company, World First, said:

“We've had hawkish hikes and dovish hikes and today's is more owlish than anything; there is a lot of water that needs to flow under the bridge before the judgement of the Federal Reserve shifts to price in a subsequent change in the US business cycle and the US is seen as running at strength. There has been no change in the economic estimates and US economy watchers should be ready to see inflation rise above 2pc. Today's statement shows that the Fed expects that somewhat soon but is fairly unconcerned about when and how it gets there."

"This hike in March is a tacit endorsement of the economic growth that we have seen in the past 6 months and the Trump rally but a continuation of this positivity in line with market expectations will only stem from an increase in throughput from the Trump administration on taxes and infrastructure."

Tom Stevenson, investment director for personal investing at Fidelity International, said:

"With the US economy continuing to flex its muscles and with inflation on the rise, all eyes have been on the US Federal Reserve today and you didn’t need to be a fortune teller to predict today’s decision to hike rates from a 0.5-0.75pc range to 0.75-1.0pc. The Fed’s rate-setters have been providing broad hints for some time that they were minded to tighten policy today.

"So far markets have reacted positively to the decision which suggested the Fed remains cautious about normalising monetary policy. The key question is how investors will react over the longer term to the latest ‘dot plots’, the chart which indicates the rate predictions of the rate-setters on the open markets committee. The latest charts suggest we could see a modest acceleration in the tightening of rates, but not enough to unsettle investors.

"Rising interest rates tend to be bad news for bond prices. We have already seen yields rise on the assumption that rates would be hiked today and if rates and yields continue to rise, we would expect bond prices to continue to be under pressure. However, the Fed is clearly erring on the side of caution which provides some support to fixed income investors.

"Rising US interest rates have also traditionally been viewed as bad news for emerging markets as higher US interest rates mean a strengthening of the dollar which depresses emerging market currencies, making it harder for these countries to service their debts which are typically denominated in USD. However, the start of a US interest rate tightening cycle can actually be good for emerging markets to the extent that it reflects a strengthening global economy.

"Ultimately, rising rates in the US and a higher US dollar can help foster an equity friendly environment. That’s because investors tend to focus in the early phase of a tightening cycle on the reason for rates rising rather than on the ultimate impact of higher rates on economic activity. With this in mind, investors may want to consider a global equity fund."

Kully Samra, UK Managing Director of Charles Schwab, said:

“Today’s decision is a defining moment in US monetary policy heralding the end of the “lower for longer” era. We expect the Fed to continue on this rate-raising path for the foreseeable future and Janet Yellen’s intention to increase rates three times this year demonstrates a bullish confidence in the strength of the US economy.“

“When the Fed makes monetary policy decisions it is primarily looking at encouraging maximum sustainable employment and attempting to keep prices of goods and services either steady or rising very slowly. With the unemployment rate holding below 5pc – a level many consider close to full employment - and with most inflation measures currently above 2pc, there’s room for the Fed to raise rates in an effort to prevent the economy from overheating.”

“We expect three rate hikes this year, including today’s, and a further two in 2018. There are, however, a lot of unknowns that could change our longer-term view. For instance, if White House plans for deregulation, tax cuts and more government spending are realised, then growth and inflation could be stronger than expected and lead to more hikes. On the other hand, potential border taxes, trade tariffs and tighter monetary policy could slow growth and inflation.”

Interest rate futures traders see two more Fed rate hikes in 2017

US short-term interest rate futures rose after the Fed raised interest rates for the second time in three months but gave little sign it saw a need to raise rates faster than the pace it had laid out in December.

After the Fed's policy meeting, traders continued to see a better-than-even chance of three rate hikes this year, including today's, with about a one-in-four chance of a fourth hike, based on the price of fed funds futures contracts.

Fresh economic forecasts little changed from December meeting

Fresh economic forecasts released with the statement showed little change from those of the December policy meeting and gave little indication the Fed has a clear view of how the policies of Donald Trump's administration may impact the economy in 2017 and beyond.

"With gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace," the Fed said, maintaining language it has used in previous statements.

The Fed's projections showed the economy growing by 2.1pc in 2017, unchanged from the December forecast. The median estimate of the long-run interest rate, where monetary policy would be judged as having a neutral effect on the economy, held steady at 3.0pc.

The unemployment rate Fed officials expect by the end of the year was unchanged at 4.5pc, while core inflation was seen as slightly higher at 1.9 percent versus the previous 1.8pc forecast.

Report from Reuters

Markets react to Fed rate rise

Here's how markets reacted to the widely expected rate rise: 

  • Dollar slides and euro jumps to $1.0681;
  • Spot gold extends gains after Fed statement, up over 1pc at $1,212.01 per ounce;
  • US short-term interest rate futures rise after Fed meeting;
  • US stocks add to gains after Fed policy statement. 

FOMC statement

Here is the full text of the statement released by the Federal Reserve's Federal Open Market Committee following a two-day meeting:

Information received since the Federal Open Market Committee met in February indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate was little changed in recent months. Household spending has continued to rise moderately while business fixed investment appears to have firmed somewhat. Inflation has increased in recent quarters, moving close to the Committee’s 2 percent longer-run objective; excluding energy and food prices, inflation was little changed and continued to run somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action was Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate.

Fed target rate now at 1pc for the first time since 2008

Fed did not flag any plan to accelerate pace of monetary tightening 

The FOMC did not flag any plan to accelerate the pace of monetary tightening, after raising interest rates for only the third time since the financial crisis. 

Although inflation is "close" to the Fed's 2 percent target, it noted that goal was "symmetric," indicating a possible willingness to allow prices to rise at a slightly faster pace.

In its policy statement, it said further rate hikes would only be "gradual". 

Officials stuck to their outlook for two more rate hikes this year and three in 2018. 

In 2016, the US central bank raises interest rates once. 

But the decision wasn't unanimous.... 

Minneapolis Fed President Neel Kashkari was the only Fed official to dissent in today's decision, saying he preferred to leave rates unchanged.

Breaking: Fed raises rates as expected 

The US Federal Reserve raised interest rates  for the second time in three months, a move spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank's target.

The decision to lift the target overnight interest rate by 25 basis points to a range of 0.75pc  to 1.00pc marked one of the Fed's most convincing steps yet in the effort to return monetary policy to a more normal footing.

More to follow...

Fed watch: Five minutes to go... 

What to look for in the Fed's statement

With just ten minutes until the Fed announces its decision on interest rates, here's what to look out for in the statement courtesy of IG: 

Countdown begins: March rate hike a done deal

Ahead of the looming US interest rates hike this evening, FXTM Research Analyst Lukman Otunuga, says the March rate hike is a done deal. 

"Investors may direct their attention towards the FOMC statement and economic projections which could provide markets some clarity on rate hike timings this year.

"A hawkish tone in this evening’s FOMC press conference coupled with a potential upwards shift in the “dot plot” could reignite the bull rally as speculations heighten over the Federal Reserve raising US rates on repeated occasions in 2017. With the improving sentiment towards the U.S economy supporting the Greenback, Dollar Index bulls could be back in action once 101.50 has been properly conquered."

Gundlach: The influence of the Fed has greatly increased 

DoubleLine Capital CEO Jeffrey Gundlach has said the Fed's influence has greatly increased.

In an interview with CNBC, he said: "The bond market is listening. The influence of the Fed has greatly increased and the market, it is getting kind of old school where the market listens to what the Fed says."

US stock markets hit session high ahead of Fed rate announcement

US stocks hit session highs this afternoon, with just over an hour to go until the Fed rate announcement. The Dow Jones rose 0.4pc, the S&P 500 added 0.5pc and the Nasdaq advanced 0.4pc.

Back in Europe, bourses also closed higher as investors awaited the expected Fed rate hike. The German DAX closed up 0.2pc, the FTSE 100 ended the day 0.15pc higher and the CAC 40 in Paris added 0.23pc.  

Interest rates in focus - US expected to pull further away from UK

Within the next 24 hours we will see interest rate decisions from central banks in the US and the UK. 

The market is currently pricing in a 100pc chance of a US rate hike, while in the UK it’s pricing in a 0pc chance of a rate hike. 

The chances of at least one more US rate hike this year, following today's decision, currently stands at 90pc, while the market is pricing in a 75pc chance that interest rates will still be at 0.25pc in the UK by the end of the year. 

Laith Khalaf, of Hargreaves Lansdown, said: "UK interest rates look set to stay anchored to zero for the foreseeable future, and the prospect of a Scottish referendum, on top of Brexit, does little to encourage the Bank of England to peak its head above the parapet.

"Likewise the latest official pay growth figures were distinctly unimpressive, and suggest there is little momentum in the underlying economy which is going to force the bank’s hand in raising interest rates.

"Meanwhile across the pond the central bank is facing a very different set of circumstances, and is expected to hike rates several times this year.

"Further divergence in monetary policy can be expected to continue to underpin the strength of the dollar, though this may be a limiting factor for the Fed when it considers raising interest rates, as it may not wish to push the currency too far ahead of its peers lest it damages the US economy.

"Higher US interest rates will also push up the yield on US Treasuries, and that can be expected to have a knock on effect on the gilt market and UK government borrowing costs.

"However that will be tempered by interest rate expectations in the UK, which is why the 10 year US Treasury already commands a healthy premium to the 10 year UK gilt, offering a yield of 2.6pc compared to 1.2pc respectively."

Atlanta Fed cuts first quarter GDP forecast ahead of Fed rate decision

With less than two hours to go until a widely-expected Fed rate hike, the Atlanta Fed has cut its first quarter US GDP forecast to 0.9pc, down from 1.2pc. 

Pound back above $1.22 ahead of Fed rate decision 

As the US rate decision nears (6pm) the dollar has weakened and the pound has climbed back above the $1.22. 

Earlier today, the local currency faltered after data from the ONS showed that wage growth had weakened. 

Fed fund futures factoring in a 94pc chance of a rate rise this evening.

The pound is currently up 0.43pc at $1.2218 against the US dollar. 

Credit: Bloomberg

Dollar slips as markets await Fed rate hike

The dollar slipped 0.1pc this afternoon, as investors awaited a widely-expected Fed rate hike, but grew cautious about the rate outlook this year given lingering uncertainty with the Trump administration's fiscal policy.

With Fed fund futures factoring in a 94pc chance of a rate rise this evening, the focus has now shifted to whether the Fed is set for regular quarterly rate increases.

Connor Campbell, of SpreadEx, said: "Part of the currency’s problem is that the market has so thoroughly priced in a rate hike; the sources of any major movement after the much-anticipated FOMC statement, then, may lie in a) when the central bank hints the next increase could come and b) if it suggests the potential number of hikes in 2017 has risen from 3 to 4." 

ING: The Fed won't raise rates again in June

The Fed hasn't even raised rates yet but strategists at ING are already setting out reasons why they don't see the US central bank hiking again at the June meeting (that's of course after the widely expected hike this evening). 

Here's why ING are not pencilling in a June rate hike: 

  1. The US economy often has a mid-year lull;
  2. Trump's fiscal plans may be being watered down by the Congressional budget;
  3. Wage growth may struggle to push above 3pc until the June figures are released in July;
  4. Political upheaval in Europe may not be fully out of the pipeline. 

US oil stockpiles decline after nine-week rising streak

US oil stockpiles fell last week snapping a nine-week rising streak, data from the Energy Information Administration showed this afternoon. 

Crude inventories fell by 237,000 barrels in the last week, compared with forecasts of a 3.7m barrel increase. 

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.13m barrels, EIA said. Meanwhile, gasoline stocks fell  by 3.1m barrels, compared to a 2m drop. 

Danske Bank thinks the Fed will signal three hikes this year

Natixis Global Asset Management: Expect little change in Yellen’s tone

David Lafferty , Chief Market Strategist, Natixis Global Asset Management, looks at the implications of the likely rate rise: 

  1. A 25 bps hike (to 0.75pc – 1.00pc) is effectively priced in for today’s FOMC.  The Fed standing pat (i.e., no hike) or a 50 bps hike would be truly newsworthy for its hawkish or dovish implications, but neither is likely (less than 5pc chance for either in my view).
  2. As the Fed’s signaling mechanism has become stronger over the years (the Fed rarely surprises the market 1994-style), most of the action occurs in the Chair’s press conference and/or the updated economic projections (including the “Dot Plot”). With the implied probability of a hike priced at 100pc, we expect today to be no different.
  3. We expect little change in Yellen’s tone, reiterating data-dependence and indicating there is “no set path” for the future of policy rates.  
  4.  The stock market’s reaction will be dependent on the perception of whether this process is a “good tightening” (consistent with real economic growth) or a “bad tightening” (falling behind the curve on inflation). This however is happening in an environment where the future of equity gains is being handed off from monetary policy to fiscal policy in the US. What the FOMC says and does remains important, but the market has rallied strongly on fiscal hopes and promises from the Trump administration. 
  5. The consensus for a stronger US dollar may be faltering (as we’ve been saying for a while). It is naïve to think that monetary divergence between the Fed and other central banks will drive the dollar up going forward. This divergence has been universally acknowledged for some time and been priced-in by markets with the US dollar already up by more than 25pc since mid-2014. The future direction of the dollar will be driven by the marginal change in Fed expectations and real interest rate differentials.  
  6. We do not expect Chair Yellen to tread on fiscal policy implications (as it would be inappropriate to do so), but she will reiterate that monetary policy must react to fiscal policy within the context of their dual mandate (as it affects both the inflation outlook and slack in the labor market). 

How the world's central banks have set interest rates since the financial crisis 

 A useful chart ahead of the expected Fed rate rise this evening: How the world's central banks have set interest rates since the financial crisis

It's also worth noting that we've monetary policy updates from the The Bank of Japan, Swiss National Bank and Bank of England tomorrow. 

Here's the full story: How the world's central banks have set interest rates since the financial crisis - in one chart  

US stocks open higher buoyed by rebound in oil as attention shifts to Fed

US stocks opened higher this afternoon as oil prices rebounded following a sharp fall yesterday. However, investors remained cautious ahead of an expected Fed rate hike. 

At the opening bell on Wall Street:

  • Dow Jones: +0.16pc
  • S&P 500: +0.2pc
  • Nasdaq: +0.18pc 

Philip Hammond’s national insurance U-turn leaves £2bn hole in public finances 

Here's our full report by Tim Wallace on Hammond abandoning the planned hike in NICs announced during last week's budget: 

Philip Hammond’s U-turn to scrap a planned hike in taxes on the self-employed will leave a £2bn hole in the public finances over the next five years.

He promised to “fund all additional spending decisions” instead of borrowing more, so he will need to raise an alternative tax or cut spending if he wants to stick to that pledge.

But Mr Hammond has told MPs they will have to wait until the autumn Budget to find out exactly how he will fill the gap.

All the times Cameron pledged a five-year lock on National Insurance Watch | All the times Cameron pledged a five-year lock on National Insurance
00:56

The Chancellor’s controversial increase in national insurance contributions was billed as a way to make the tax system fairer, but backfired spectacularly as it broke a Conservative election pledge not to increase NICs.

It was also perceived as an attack on small businesses and on those setting out to be their own boss.

In overall fiscal terms the tax was only designed to raise a relatively small amount of money - an extra £325m next year, just 0.04pc of the total tax haul of £744.2bn.

But that extra NIC revenue was due to rise over the coming years, totaling more than £2bn by 2021-22, a gap which will need to be filled somehow. 

Read the full story here

All eyes on the Fed now after US economic data

Weighing in on the inflation and retail figures released earlier in the US, Naeem Aslam, of Think Markets, said the only bummer was the retail sales number which fell short of forecast.

"Perhaps, this is telling you that investors are responding to increase in the CPI. The retail sales basically explain the underlying fundamentals about the consumer habits and also a lot about their consumer confidence.

"All eyes will be on the Fed now, especially given that Core CPI and CPI m/m both numbers have improved. Staying ahead or behind the curve will very much drive the interest rate move given that the rates have been so low for so long time. However, both numbers are soft if you compare them to previous readings, but that has a lot to due to the weakness in the oil price."

Taxpayer stake in Lloyds Banking Group goes below 3pc

The taxpayer's stake in Lloyds Banking Group has been cut to below 3pc as the Government continues to sell down its shareholding.

UK Financial Investments, which manages the stake in Lloyds, cut its holding by around 1pc to 2.95pc, seeing the bank edge another step closer to full private ownership.

The sale means more than £19.5bn has now been returned to Government coffers since the lender's £20.3bn bailout at the height of the financial crisis.

This includes around £500m in payouts to shareholders since the bank resumed paying dividends in 2014 as it has returned to profit growth in recent years.

Lloyds chief executive Antonio Horta-Osorio said: "Today's announcement moves Lloyds another step closer to full private ownership, and we are pleased that the group's strong financial performance has kept us on track to return more money to taxpayers than was put in."

Read the full story here

US retail sales post smallest gain in six months

 US retail sales recorded their smallest increase in six months in February as households cut back on motor vehicle purchases and discretionary spending, the latest indication that the economy lost further momentum in the first quarter.

The Commerce Department said retail sales edged up 0.1pc last month, the weakest reading since August. January's retail sales were revised up to show a 0.6pc rise instead of the previously reported 0.4pc advance.

Sales were also likely held back by delays in issuing tax refunds this year as part of efforts by the government to combat fraud. Compared to February last year retail sales were up 5.7pc.

Excluding automobiles, gasoline, building materials and food services, retail sales gained 0.1pc after an upwardly revised 0.8pc jump in January. 

Signs of cooling domestic demand will probably not prevent the Federal Reserve from raising interest rates later today against the backdrop of firming inflation and a tightening labor market. The US central bank is expected to raise its overnight benchmark interest rate by 25 basis points to a range of 0.75pc to 1.00pc. It increased borrowing costs last December and has forecast three rate hikes in 2017.

February's retail sales added to January's weak reports on trade, construction and business spending that have pointed to sluggish economic growth in the first quarter.

Report from Reuters

US consumer prices rise marginally as gasoline drops

Ahead of the expected US Fed rate hike, data from the Labor Department showed that US consumer prices barely rose in February as the cost of gasoline recorded its biggest drop in seven months, but the underlying trend remained consistent with rising inflation.

The Consumer Price Index ticked up 0.1pc last month, the weakest reading since July, after jumping 0.6pc in January.

In the 12 months through February, the CPI accelerated 2.7pc, marking the biggest year-on-year gain since March 2012. The CPI rose 2.5pc in the year to January.

The Fed has a 2pc inflation target and tracks an inflation measure which is currently at 1.7pc.

US stocks are poised to open higher as attention shifts to Fed

US stocks are set to open slightly higher as investors shift their attention to this evening's Fed rate announcement. 

The Fed will release its latest policy statement at 6pm, followed by a press conference with Janet Yellen at 6.30pm. 

Traders have priced in more than a 90 percent chance of a 25 basis points increase, according to Fed fund futures, but the market will look for clues that could point to a more hawkish tone from the Fed.

Although the rally in commodities is seen supporting US indices, Craig Erlam, of OANDA, says "overall caution is likely to remain".

"It’s quite clear that investors have been gearing up to today’s decision from the US Federal Reserve ever since the blackout period began a little over a week ago. Market expectations have been raised dramatically ahead of the meeting by a coordinated onslaught of hawkish commentary from policy makers, to the point that a rate hike is now around 94pc priced in. The upside on the hike itself therefore looks very limited which means we’re relying on the dot plot and Janet Yellen if we’re going to see much of a strengthening in the US dollar or Treasury yields."

Half-time update: European bourses climb ahead of Fed rate decision

European bourses have made gains today supported by commodity stocks. Investors are also eyeing this evening's expected Fed rate hike. 

Here's a snapshot of the current state of play: 

Credit: Reuters

 Connor Campbell, of SpreadEx, noted: "In the Eurozone the DAX and CAC were pretty quiet, and for good reason. The Netherlands is currently voting in an election that could see Geert Wilders – who is anti-EU like his far-right compatriots across the continent – take office, an outcome one imagines most investors are hoping to avoid."

PMQs: Government U-Turns on plans to raise national insurance

Head over to our live politics blog: Government U-Turns on plans to raise national insurance 

Laura Hughes reports: 

Theresa May kicks off PMQs by wishes everybody a happy St Patrick's Day this Friday.

She then makes the unavoidable move of raising the Government's U-turn on NICs. 

"We will bring forward further proposals, but we will no bring forward proposals to NICs in this Parliament."

Reaction to Chancellor Hammond's u-turn on NICs: 

Economist Simon French of Panmure Gordon reckons Hammond's u-turn on NICs "will fuel intensive lobbying against future substantive tax reform".  

 During the Budget last week, Chancellor Hammond quipped that  24 years ago Norman Lamont was sacked nine weeks after he presented what was then billed as "the last Spring Budget". 

Theresa May abandons plans to raise national insurance in wake of rebellion by Tory MPs

Theresa May abandons plans to raise national insurance in wake of rebellion by Tory MPs. Our deputy political editor Steven Swinford has the details: 

Theresa May has abandoned plans to raise national insurance for self-employed workers in this Parliament after admitting that it breached the "spirit" of the manifesto.

Philip Hammond, the Chancellor, provoked a furious reaction from Tory back-benchers after using his Budget to announce plans to raise NI contributions for the self-employed by 2 per cent. 

Mr Hammond has written to Tory MPs saying that while the changes are justified the Government has chosen not to go forward with the rise in "class 4" national insurance contributions. 

It represents a huge blow to Mr Hammond and the most significant Budget u-turns in modern times.

He said in the letter: "It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit, of the commitments that were made.

"In light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measures set out in the Budget. There will be no increases in NICs from April 2018."

Read the full story here

Fed to take 'a victory lap' later this evening

Ahead of the Fed rate decision later today, Kully Singh Samra, Managing Director at Charles Schwab, said the markets have priced in a benevolent rate hike. 

However, as attention turns to the pace of rate hikes this year, he sees three rate rises on the cards in 2017. This compares to other analysts who are suggesting four rate rises and the possibility one rate hike will be a rise of 50 basis points, something Mr Samra thinks is "highly unlikely". 

He also flags that there are "downward pressures on inflation". Medical costs are not expanding as quick as they were, which will feed though, while the impact of Storm Stella is likely to feed into next month's jobs figures. 

Nevertheless, he expects the Fed will "take a victory lap" later this evening. 

Shares in Premier Oil bounce 10pc in early trade

Premier Oil’s shares bounded over 10pc higher in early trade to just below 61p after the company said that it has locked up agreement from its private lenders to support its long-awaited $4bn debt refinancing package.

However, the market-battereed company’s value remains well below the 86.5p a share seen last month due to a combination of sinking oil prices and niggling concern over the backing of its convertible bondholders, of which just over 50pc have locked up.

The company has said that the vast majority of the convertible bondholders are in agreement with the terms and but for internal compliance reasons are not permitted to enter into a lock up agreement. This means Premier may need to take the terms to a vote in order to secure a 75pc approval.

Hong Kong-based Pyrrho Investments is the only fund to have publicly warned that it would vote against the deal, but the fund said that “a number of other convertible bondholders” also harboured concern about the restructuring process and the terms on offer.

Premier brushed off any concern that the deal might not go through, saying it expects the deal to conclude by April.

The new terms, once finalised, guarantee a $4bn debt facility for the next four years and push its maturities out to 2021, allowing the explorer to move ahead with developing projects that hold a potential 700 million barrels of oil reserves.

Report from Jillian Ambrose

Resolution Foundation: 2010s the weakest decade for pay growth since the Napoleonic wars

Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, weighs in on the UK jobs report: 

“On jobs the UK economy continues to perform well, with employment remaining at a record high and unemployment hitting a 41-year low.

“But this labour market tightening is not feeding through into wage pressure with all the signs now pointing to an end to Britain’sa short lived pay recovery. Weak pay rises and rising inflation mean that a fresh squeeze is due later this year, and has already begun for some workers, especially in the public sector.

“The incredibly poor outlook for pay has pushed a return to pre-crash earnings back well into the next parliament, making the 2010s the weakest decade for pay growth since the Napoleonic wars.”

Who is complaining about low unemployment? 

Berenberg’s Senior UK Economist, Kallum Pickering, tackles the question 'Who is complaining about low unemployment': 

"The continued fall in unemployment amid the drop in annual wage growth hints at more slack in the labour market. But monthly data are volatile and should be taken with caution. The broad trend over the last year is one of slowing employment gains and accelerating wage growth – suggesting the labour market is getting tighter. If the economy can sustain a sufficient level of real output growth amid Brexit risks, firms’ labour demand should remain strong. The continued high level of vacancies supports this view.

"If wage growth remains subdued because firms can find the workers to fill the vacancies, and the unemployment rate falls much lower than expected, that is good news. In such a scenario, although the acceleration in wage growth would take more time to come through, the total level of employment would be higher. That is undoubtedly a good thing. But if, as the broader trend over the last year indicates, employment gains are slowing despite high vacancies, then workers wage bargaining power will begin to increase and nominal wage growth can begin to accelerate. As our base case, we project real GDP growth of 2pc in 2017 and 1.7pc in 2018. Such growth should enable firms to continue to hire if they can find the workers, or alternatively, offer increases in nominal wages to work existing staff harder or to find better suited labour. Either way, the outlook remains positive."

TUC: Theresa May must stop Britain drifting into new living standards crisis

With this morning's ONS data showing that real earnings growth at its slowest rate since November 2014, and nominal earnings growth at its slowest rate in five months,  TUC General Secretary Frances O’Grady said:

“Workers are facing the double whammy of rising prices and slower pay growth. But Theresa May seems content to leave Britain drifting towards a new living standards crisis.

“Working people in Britain have seen their pay take a proper hammering in the last decade. It’s long past time the government took action.

“We need more investment in skills and infrastructure to build strong foundations for better paid jobs. And it’s time to scrap the pay restrictions hitting hardworking teachers, nurses and other public servants.”

LLoyds:  There remain scant signs that rising employment is obliging firms to pay more

Adam Chester, Head of Economics at Lloyds Bank Commercial Banking, highlights that there remain scant signs that rising employment is obliging firms to pay more.

Data from the ONS showed annual pay growth in the latest three months dropped to 2.2pc, from 2.6% the month before. The latest reading is the lowest since April last year.

He added :"The softening is all the more surprising given headline inflation has risen from just above zero to nearly 2pc since last spring.

“The combination of firm jobs growth and weak pay supports the Bank of England’s contention that there may be more space capacity in the labour market than previously thought.  In early February, the Bank revised down its estimate of the so-called equilibrium rate of unemployment from just over 5.0pc to 4.5pc. 

“Still, with the unemployment rate now hovering just above this level, it may not take much more jobs growth to start pushing wage growth up more sharply – especially with headline inflation set to rise towards 3.0pc by the end of the year.

“For now, however, the markets have focused on the benign implications of today’s weak pay data. The pound has dropped back and bond yields have softened on expectations that the Bank of England will keep interest rates firmly on hold.”

Number of workers on zero-hours contracts rose to 905,000 by end of 2016

It's also worth noting that the number of workers on zero-hour contracts in Britain rose by 101,000 to 905,000 at the end of last year .

Self-employment increased by 29,000

The ONS jobs report also points to a jump in self-employed. Here are the details: 

  • employees increased by 144,000 to 26.83m (84.2pc of all people in work)

  • self-employed people increased by 148,000 to 4.80 million (15.1pc of all people in work)

  • unpaid family workers increased by 29,000 to 127,000 (0.4pc of all people in work); 

  • people on government-supported training and employment programmes were little changed at 91,000 (0.3pc of all people in work). 

Slowing wage growth supports the MPC’s loose policy stance

Experts weigh in on the UK jobs report: 

Samuel Tombs, of Pantheon Macroeconomics, points to the wage growth weakness. 

"This weakness does not just reflect a squeeze on bonuses; year-over-year growth in regular wages also slowed, to 1.9pc in January—its lowest rate since March 2016—from 2.3pc in December. This weakness was broad based, with wage growth moderating in the financial and business services, distribution, construction and public sectors.  

"All told, the combination of meagre wage growth despite very low unemployment supports the MPC’s view that enough slack remains in the labour market to warrant keeping rates on hold during the imminent period of high inflation.  Indeed, this report hints that the equilibrium unemployment rate could even be below the 4.5% rate suggested by the MPC in February." 

Meanwhile, Ipek Ozkardeskaya, of London Capital Group, said the slowdown in wages growth is a sign of stabilization in the labour market according to Bank of England (BoE) Governor Mark Carney and should have a gradually decreasing impact on inflation.

"As a result, the BoE could keep its policy stance loose to walk the UK through a possibly potholed Brexit road ." 

Suren Thiru,of the British Chambers of Commerce,notes that average pay growth continues to slow, and it appears increasingly likely that inflation will outstrip earnings growth in the coming months, which will put further pressure on consumer’s spending power.

“With Article 50 set to be triggered shortly, it is vital that more is done to provide greater clarity and stability for firms, including certainty on the residence rights of their existing EU workers, and clarity on the regime for hiring from EU countries during the negotiation period. Further action is also needed to ease the burden of upfront costs and taxes of doing business in the UK, which limit companies’ ability to invest and grow.”

Howard Archer, of IHS Markit,said the labour market is currently seeing decent improvement, reflecting the economy’s resilience through the second half of 2016.

"However, markedly slowing earnings growth reinforces the squeeze on consumers coming from rising inflation – and this is likely to increasingly weigh down increasingly on economic activity. Indeed, there is currently mounting evidence that consumers are now limiting their spending as their purchasing power is being diluted." 

Analysts react to UK jobs report

UK jobs report: Key charts

Here are the key charts from the ONS jobs report: 

The first chart shows the quarterly and annual changes in the number of people in the UK labour market (seasonally adjusted). 

Credit: ONS

Figure 2 shows the employment rates for people, men and women aged from 16 to 64 since comparable records began in 1971.  

UK Employment rates (aged 16 to 64), seasonally adjusted Credit: ONS

The chart below shows how the estimates for full-time and part-time employment by sex for the 3 months to January 2017 compare with those for a year earlier.

Figure 4- Changes in people in employment in the UK between the 3 months to January 2016 and the 3 months to January 2017, seasonally adjusted Credit: ONS

 The next chart shows the number of non-UK nationals from EU and non-EU countries working in the UK from October to December 1997 to October to December 2016.

Figure 6a- Non-UK nationals working in the UK, not seasonally adjusted Credit: ONS

The chart below shows changes in the number of jobs by industrial sector between December 2015 and December 2016. 

Figure 8- Changes in the number of jobs in the UK between December 2015 and December 2016, seasonally adjusted Credit: ONS

UK jobs report: Key points

Here are the main points from the ONS jobs report for the three months to January 2017: 

  1. There were 31.85m people in work, 92,000 more than for August to October 2016 and 315,000 more than for a year earlier.

  2. There were 23.34m people working full-time, 305,000 more than for a year earlier. There were 8.52m people working part-time, 10,000 more than for a year earlier.

  3. The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.6pc, the joint highest since comparable records began in 1971.

  4. There were 1.58m unemployed people (people not in work but seeking and available to work), 31,000 fewer than for August to October 2016 and 106,000 fewer than for a year earlier.

  5. There were 867,000 unemployed men, 21,000 fewer than for August to October 2016 and 56,000 fewer than for a year earlier.

  6. There were 717,000 unemployed women, 10,000 fewer than for August to October 2016 and 50,000 fewer than for a year earlier.

  7. The unemployment rate was 4.7pc, down from 5.1pc for a year earlier. It has not been lower since June to August 1975. The unemployment rate is the proportion of the labour force (those in work plus those unemployed) that were unemployed.

  8. There were 8.87m people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 34,000 fewer than for August to October 2016 and 59,000 fewer than for a year earlier.

  9. The inactivity rate (the proportion of people aged from 16 to 64 who were economically inactive) was 21.6pc, slightly lower than for August to October 2016 (21.7pc) and lower than for a year earlier (21.8pc).

  10. Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.2pc including bonuses, and by 2.3pc excluding bonuses, compared with a year earlier.

Wage growth deteriorates 

Data from the ONS showed this morning that between the three months to January 2016 and the 3 months to January 2017, in nominal terms, regular pay increased by 2.3pc. This was lower than the growth rate between October to December 2015 and October to December 2016 (2.6pc), reflecting lower pay growth across a broad range of industrial sectors.

Between the 3 months to January 2016 and the 3 months to January 2017, in nominal terms, total pay increased by 2.2pc. This was lower than the growth rate between October to December 2015 and October to December 2016 (2.6pc), reflecting lower pay growth across a broad range of industrial sectors.

Pound slips back below $1.22 after UK jobs report

The pound has halved its gains for the day, skidding below $1.22, after data from the ONS showed that wage growth had deteriorated in the three months to January. 

Total pay growth slipped to 2.2pc in the three months to January, the weakest since the three months to April last year. However, the unemployment rate fell to its lowest level since 1975, to 4.7pc, during the same period. 

The pound dropped to $1.2194, up just 0.24pc on the day, having hit an intraday high of $1.2258 in early trade. 

Credit: Bloomberg

 Meanwhile, the FTSE 100 extended its gains, and is now up 0.27pc at 7,378.92.

Breaking: UK unemployment rate falls to lowest level since 1975 but wage growth weakens

Britain's unemployment rate fell unexpectedly to its lowest in over 40 years in the three months to January, but pay growth worsened in an unpromising sign for the economy ahead of its divorce with the European Union.

Here are the key findings from the ONS report: 

  • Unemployment rate fell to 4.7pc from 4.8pc, lowest level since 1975 (analysts expected no change);
  • Total pay growth slipped to 2.2pc in the three months to January, marking its weakness three months since April last year;
  • Adjusted for inflation, pay growth halved to just 0.7pc - the lowest since October 2014.

 More to follow... 

Why did the pound spike in early trade? 

The pound jumped above $1.22 against the US dollar when Europe came into market, Anthony Cheung, of Amplify Tradinghighlights in his morning briefing. 

There were a couple of catalysts at play including order flow going through the market as Europe came in and thin liquidity. 

Mr Cheung points out that others are citing the Scottish situation. A survey released this morning shows support for Scottish independence has hit a record high. 

Euro edges up 0.11pc as Dutch polls open

The euro edged up 0.11pc against the US dollar to $1.0633 this morning as concerns about the Dutch elections offset market speculation the ECB could be poised to wind down its stimulus programme. 

The Dutch began voting  this morning in an election seen as a test of anti-immigrant and nationalist feeling, magnified in the last few days by a spat with Turkey, and as one of three polls this year that will gauge the strength of the ties that bind the European Union together.

Credit: Bloomberg

The centre-right VVD party of Prime Minister Mark Rutte, 50, will vie with the PVV (Party for Freedom) of anti-Islam and anti-EU firebrand Geert Wilders, 53, to form the biggest party in parliament.

FX investors will be mainly looking at how Geert Wilders’ anti-establishment PVV performs to refine their judgement on Marine La Pen’s chances of winning the French presidential elections. It will also be viewed as a gauge of sentiment in a big European economy following the shock Brexit vote and Donald Trump victory last year.

Jordan Hiscott, Chief Trader at Ayondo Markets,said: "The possibility of the PVV coming to power, with its anti-EU stance, could have had a dramatically effect on the EUR FX and Dutch equities markets, both largely negative.

“However, if we look a little closer at how the Netherlands’ Parliament is constructed, it would seem that even if the PVV were to win, the structure of the voting system means several parties will have a proportional section of the overall vote - meaning a coalition has to be built. This would be very difficult, considering all of the main parties have already pledged not to work with Geert Wilders.”

Dollar off recent highs ahead of expected Fed rate hike

The dollar came off recent highs overnight as investors waited cautiously to see what clues the Fed would reveal on its monetary policy outlook for the rest of the year. 

Fed futures markets are pricing in more than a 90pc chance of a rate hike later today. As such, investors focus has now shifted to the Fed's statement on the pace of hikes this year. 

The Fearless Girl statue stands in the snow on Wall Street Credit: AFP

"With a rate increase already priced in, we will be watching to see whether the Fed gives any hints about changing its outlooks for inflation or growth," said Kumiko Ishikawa, FX market analyst at Sony Financial Holdings.

"There is a small chance the Fed will signal plans to raise rates four times instead of three this year, which would lift the dollar," she said.

Overnight US inflation data cemented rate hike expectations with US producer prices rising more than expected last month. 

Quotes from Reuters

UK jobs preview: What the experts say

Ahead of the UK jobs report due for release at 9.30, analysts previewed the data: 

Connor Campbell, of SpreadEx, thinks wage growth will once again be in focus thanks to inflation's recent climb. 

"Worryingly the reading is set to drop from 2.6pc to 2.4pc, marking the second month of contraction."

Meanwhile, Simon French,of Panmure Gordon, said: "The read across to consumer discretionary spending will be on the average weekly earnings where we expect a bifurcated picture between skills deficient and policy-influenced sectors  and the wider labour market.

"Forward prospects from the BoE’s employment expectations survey indicate a pick-up in employment growth during Q1 as demand stimulus continues to support output expansion." 

Credit: Panmure Gordon

Strategists at London Capital Group think the average earnings in Britain are expected to have eased to 2.4pc year-on-year in three months to January from 2.6pc printed a month earlier.

"The slowdown in wages growth is a sign of stabilization in the labour market according to Bank of England (BoE) Governor Mark Carney and should have a gradually decreasing impact on inflation. The BoE meets tomorrow and is expected to maintain the status quo. Traders remain seller on rallies as the Brexit uncertainties weigh on the sentiment."

Pound jumps above $1.22 ahead of UK jobs report

After slumping to an eight week low yesterday on Brexit and Scotish referendum angst, the pound has gained ground in early trade. 

The local currency has jumped above 0.53pc to $1.2229 against the US dollar as investors await the UK jobs report and the expected Fed rate hike. 

Credit: Bloomberg

Strategists at MUFG said: "Once again, pound selling momentum fades. We are not surprised to see the pound selling momentum fade again, which we believe underlines our view that much of the negative news in relation to the triggering of Article 50 is already in the price." 

MUFG also highlighted: 

  1. The added complication of a Scottish referendum on independence is not hugely important at this point in time;
  2. Pound direction will be more determined by how Brexit negotiations proceed with a Scottish referendum secondary.

European bourses gain on basic resource and oil stocks

European bourses opened higher this morning thanks to a boost from basic resource and energy stocks. A recovery in oil prices following a sharp fall sparked a relief rally. 

Meanwhile, investors remained cautious ahead of potentially divise elections and a US Fed rate hike. 

Here's a snapshot of the current state of play: 

Credit: Reuters

Mike van Dulken, of Accendo Markets, said: "Calls for a positive open come thanks to a rebound in oil (surprise US API drawdown; Saudi comments) that has helped revive Energy sector sentiment overnight. This offsets a negative US close and helps explain Australia’s ASX outperformance, Miners getting a sentimental boost from Oil’s gains whilst simultaneously welcoming a nudge higher by base metals thanks to a USD pull back." 

Hong Kong stocks edge lower ahead of Fed decision 

Overnight, Hong Kong shares eased, with investors focussed on what the Federal Reserve will say about tightening monetary policy during the rest of the year with markets already pricing in an immediate rise in U.S. interest rates.

The Hang Seng index fell 0.2pc, to 23,792.85 points.

The China Enterprises Index lost 0.4pcto 10,272.83 points, as traders said there were few surprises from Premier Li Keqiang's news conference at the end of the annual meeting of China's parliament.

Analysts say the market has priced in the probability that the Fed will raise its short-term interest rate when its two-day policy meeting ends later in the global day.

Sector performance was mixed, with energy shares leading the decline as lower oil prices dragged down the sector, while property stocks continued to outperform.

Hong Kong Exchanges and Clearing  rose as much as 2.7pc to hit a two-week high, aided by news that China is considering setting up debt market links between Hong Kong and the mainland this year. 

China Longyuan Power slid 4.2pc to a five-week low, after the company posted lower-than-expected profit growth for 2016. 

Report from Reuters

Agenda: UK jobs report, Fed rate decision, Dutch elections 

Good morning and welcome to our live markets coverage. 

It's a big day for financial markets with the UK jobs report, expected Fed rate hike and the Dutch elections. 

A raft of positive economic data and a barrage of hawkish rhetoric from Fed policymakers has cemented the case for a US rate rise today. 

With the futures market pricing in more than a 90pc chance that it would raise interest rates, investors' main focus turned to what the Fed's statement today will say about the pace of hikes this year.

The Fed will announce its decision at 6pm GMT, followed by a press conference with chair Janet Yellen at 6.30pm. 

Before that, we have the UK jobs report. Wage growth is set to drop from 2.6pc to 2.4pc, marking the second month of contraction.

Meanwhile, investors are also nervous ahead of today’s closely-watched election in the Netherlands. Although the risk of a eurosceptic party coming to power in the Netherlands is small, FX investors will be mainly looking at how Geert Wilders’ anti-establishment PVV performs to refine their judgement on Marine La Pen’s chances of winning the French presidential elections. 

Also on the agenda: 

Full-year results: Marshalls, Fusionex International, Gem Diamonds, Robert Walters, StatPro Group, Cape, Hikma Pharmaceuticals, Polymetal International, Forterra

Interim results: Thinksmart, Clinigen Group, Brooks Macdonald Group

Economics: Average earnings index 3m/y (UK), unemployment rate (UK), claimant count change (UK), BOE quarterly bulletin (UK), Empire State manufacturing index (US), retail sales m/m (US), CPI m/m (US), business inventories m/m (US), FOMC economic projections (US), Federal funds rate (US), FOMC statement (US), FOMC Press conference (US), employment change q/q (EU)