Morning business news - June 18Wednesday 18 June 2014 12.30
Since Bank of England governor Mark Carney's speech last week, when he indicated that interest rates could rise sooner in the UK than markets have been expecting, sterling has been on the rise. This is exactly what Mark Carney wanted - signalling interest rate rises led to aggressive strengthening of the pound against most other currencies.
Paul Sommerville, of Sommerville Advisory Markets, says that a stronger pound is good news from an Irish perspective - both for Irish exporters and for luring more tourists from the UK to our shores. With regard to the euro, the ECB would like the currency to weaken a little after being fairly strong for the last few years.
On the stock markets, Mr Sommerville says that investors are not really not taking much notice of the trouble situations in both Ukraine and Iraq and continue to trade new all time highs, despite last week's "wobble". He says this is due to the fact that savers all around the world are seeing very low interest rates and are desperate for anything that will give a decent yield. Markets worldwide are seeing a rush of liquidity, he adds.
The analyst said he believes that oil prices will rise a little because of the current situation in Iraq. Iraq is the second-biggest oil exporter in the 12-nation Organisation of Petroleum Exporting Countries (OPEC) after Saudi Arabia and produces about 3.3 million of barrels of oil a day.
The US Federal Reserve has been meeting over the past two days and is due to release its interest rate and monetary policy decisions later tonight. Mr Sommerville describes this month's meeting as "fascinating" and predicts the Fed will cut its outlook on the US economy after both the IMF and World Bank cut their US growth forecasts in recent weeks. He also says to remain alert to something "peculiar" from the Fed tonight.
MORNING BRIEFS - SolarCity - the rooftop solar power company backed by technology entrepreneur Elon Musk - has announced plans to build one of the world's biggest solar panel plants in New York state - defying the recent trend for Asia based manufacturing. Yesterday the company said it will buy panel business Silevo for up to $350m, and diversifying into making panels - in addition to its existing business of installing and supporting energy systems for homes and businesses. SolarCity is already in talks with New York state about building its first factory. The cost of solar power has fallen steeply in recent years, helped by heavy investment in panel manufacturing in China, which created global overcapacity. That made it difficult for US-based manufacturers to compete, and led to manufacturing plants closing.
*** Ryanair is to offer a range of discounts for parents travelling with children. The service includes a free 5kg infant bag allowance, reduced infant fees, a 50% reduction on allocated seating charges for children and discounted priority boarding. This follows the introduction of fully allocated seating in February. The previous system, of sitting anywhere, was not great for families, as they could not be sure they'd be able to sit together. Earlier this year the airline made some changes after shareholders complained the company's reputation for customer care was costing it financially.
*** YouTube is about to start a cull of music videos by artists like Adele and the Arctic Monkeys, after a number of independent record labels refused to sign up to the licensing terms for its new subscription service. In the next few days the Google-owned company will start blocking videos, it says, to ensure that all content on the new platform is governed by its new contractual terms.