The Business: Thursday April 17 2014
Company news, markets and financial talking points, available from 8am Monday to Friday
Interest rates will rise sharply next year, predict analysts, as fresh official figures herald the end of the squeeze on wages. In a survey of City economists by the Treasury, the consensus was that rates will rise. Some forecast that the rates may more than triple to 1.75%. The prime minister said that hundreds of thousands of people have been given the “hope of a brighter future” after official figures showed wages are going up faster than prices.
Flight prices at Heathrow will soar unless a new runway is built, claims an independent report commissioned by the airport. Frontier Economics claims that political deadlock on a third runway is leading to rising prices for passengers because supply cannot keep up with demand. The average cost of a return flight could rise by as much as £320 by 2030 unless a third runway is built. It claimed that with a third runway the cost could fall by as much as £300 by the same stage.
Shares in Google have dropped amid worries over advertising income. The shares fell 5% despite the web giant reporting a first-quarter profit rise of 3%. Although profits reached $3.45bn (£2.05bn), investors are concerned by Google's inability to maintain advertising prices. The average "cost per click", a widely watched measure, was down 9% from a year earlier. Google's chief executive, Larry Page, was bullish: "We completed another great quarter," he said in a statement.
“The numbers aren’t as good as people would like. They’re not as good as I would like. They’re not as good as my colleagues would like. They’re not as good as investors would like. But I see the strategy as being very concrete and very deliverable.” Tesco boss Philip Clarke stands by his plan.
Hedge funds have suffered their worst start to a year since the financial crisis began in 2008. The average hedge fund reported a gain of 1.23% in the first quarter, according to data from Preqin reported in the Financial Times. This is the lowest first quarter return since the start of 2008 when the onset of the credit crunch shook financial markets. Political uncertainty in Ukraine, sharp falls in UK technology and a whipsaw reversal in the value of the yen are among the factors cited.
Burberry has reported healthy sales growth with total revenue up 19% to £1.3bn in the second half and retail up 13% to £928m. With full year sales reaching £2.3 billion, the luxury brand has defied fears of a slowdown in China. Chief executive Angela Ahrendts, presiding over her last trading update, told shareholders the handover to Christopher Bailey is “well under way”. Bailey will replace her next month, when she leaves to run Apple’s shops.
FTSE-100: up +0.65 to 6584.17
Dow Jones: up +1.0 to 16424.85
Dax: up +1.57 to 9317.82
Cac-40: up +1.39 to 4405.66
Nikkei: up +0.24 to 14452.57
Hang Seng: up +0.28 to 22760.34
US dollar: buys €0.72250 and £0.59410
Sterling: buys $1.68320 and €1.21610
Oil: $109.56 up +0.2