Share Price Recovery for AA

Wednesday, September 27: a weaker pound this morning helped push the FTSE 100(+0.38%) into green territory for the first time this week, as banking stocks moved higher on US interest rate rise rhetoric. The dollar rallied against both the euro and sterling in the aftermath of Yellen’s hawkish Fed comments last night and plans from the Republicans for a tax overhaul. Yellen believes “it would be imprudent to keep monetary policy on hold until inflation is back to 2%” defending the Fed’s projections for interest-rate increases despite concerns over US inflation. According to CME Group data investors are now pricing in an 83% chance that the Fed raises rates by the end of the year. Later on, it is also expected that the Republican party will release a blueprint for fiscal policy which involves tax cuts for businesses and individuals. It is rumoured that individual tax rates for the highest earner will be slashed to 35%, as reported by The Wall Street Journal. As the Donald entered office in late 2016, the dollar hit 14-year highs on the back of promised tax reform and fiscal stimulus, though gains have since been reversed as the administration hit roadblock after roadblock.

One of the largest gainers on the FTSE 250 was roadside assistance company the AA(+6.18%) which bounced back from a slump in share price following the issuance of its half-year results yesterday. The AA reported a 67% increase in pretax profit for the first half, whilst also announcing the appointment of Simon Breakwell as the company’s new CEO. AA declared profit for the six month period ended July 31 rose to £80m, up from £48m a year earlier, with concurrent revenue growth of 3% to £471m as the interim dividend was held constant at 3.6p. Interim results were described as in line with expectations, with guidance for 2018 EBITDA  remaining in the £390-395m region.

Across Europe, indices were higher at the close with the FTSE 100 +0.38%, the DAX 30 +0.41% and the CAC 40 +0.25%.

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