Just as the markets sighed with relief following some Paul Ryan-spearheaded Republican opposition to Trump’s tariff plans, they got a shock on Tuesday night as the President’s top economic adviser – and calming presence – Gary Cohn announced he was quitting the White House.
Cohn’s departure is directly related to Trump’s intransigence over his wish to impose blanket tariffs on steel and aluminium imports, something that has (re)spooked the markets and has left the Dow Jones facing a pretty nasty, near 300 point drop when the bell rings on Wall Street later today.
With little else to go on – most of the week’s real good stuff, i.e. the ECB meeting and non-farm jobs report, is saved for Thursday and Friday – the stench of negative sentiment emanating from the US soured the European open this Wednesday. The FTSE was the best performer, dipping 0.3% to fall back below 7150, while the DAX and CAC both fell half a percent.
Interestingly there wasn’t that much movement on the forex markets. The dollar was flat against the euro and down 0.1% against the pound; admittedly it struggled against the yen, dropping 0.5% against the Japanese currency.
Elsewhere there were some huge movements from a couple of UK companies. Following a steady decline over the last few months, Rolls-Royce (LON:RR) Holdings shot up by more than 11% this Wednesday as investors cheered a 25% increase in full year underlying pre-tax profit to £1.1 billion and a 6% jump in reported revenue to £15.1 billion. CEO Warren East’s commitment to a ‘more fundamental restructuring programme’ set to deliver ‘a significant reduction in costs’ also helped get investors back on board, news that follows on from the 5-to-3 units consolidation announced in January.
The restaurant sector is in dire straits at the moment, with a barrage of bad news from high street eateries like Jamie’s Italian and Prezzo. On the surface Frankie & Benny’s-owner Restaurant Group’s (LON:RTN) 26.4% plunge in pre-tax profit and 4.4% decline in revenue puts it in the same ballpark as its troubled peers. However, the fact both figures outperformed analysts’ estimates, alongside the promise of ‘improving volume momentum’ and a ‘leaner, faster and more focused organisation’ from CEO Andy McCue, sent the stock nearly 14% higher.
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