Every week at the Current we round up the biggest business stories. This week: oil supply is up, prices are down but gas prices are stagnant; Coca-Cola, Amazon and Starbucks surge ahead; Apple disappoints despite huge profits; the Bank of England holds interest rates; Uber faces Toronto lawsuit.
Oil production up, Gas prices stagnant
Oil prices fell slightly as US crude stocks rose by 2.5 million barrels last week, despite a predicted drop of 2.3 million barrels. The rise has increased fears of a global oversupply which could continue to erode prices even further. Low oil prices have hit Canada’s economy hard and suppressed the value of the loonie. Gas prices, unfortunately for consumers, have not dropped in proportion with oil prices – but oil refiner’s margins have hit 8 year highs.
Coca-Cola boosts profits
Coca-Cola’s earnings rose by 20% to $3.1 billion USD after it elected to raise product prices in Canada and the United States. The price rise was designed to compensate for overseas revenue dropping due to the strong US dollar. Coca-Cola earns 40% of its sales from foreign markets and, like many US based multinationals, the soft-drink specialists are concerned by the potential impact of a strong greenback on profits.
BoE holds rates
The Bank of England’s nine policymakers voted unanimously to hold interest rates at 0.5% in July. The minutes of the meeting reveal, however, that some members of the Monetary Policy Committee consider there to be a possibility of the UK inflation rate surpassing the 2% target over the medium term – which would prompt a rate rise. Low interest rates promote growth and investment but also devalue the price of currency. As the eurozone comes closer to reaching an agreement with Greece, the EU and British economies could receive a welcome boost in confidence from investors.
Apple Shares Fall
Despite a jump in third quarter profits, Apple shares fell 4.3%. This comes despite the positive reaction of CEO Tim Cook. Profits for the 3 month period ending on June 27th were up 33% year on year, with iPhone sales surging 35% and computer sales rising by 9%. Despite the positive numbers investors have remained uneasy about the company’s revenue projections.
Toronto Taxis Sue Uber
Taxi drivers in Toronto have launched a $400 million lawsuit against Uber, as well as an injunction to stop the ride-share app from operating in Ontario. The lawsuit cites Uber X and Uber XL as creating and encouraging a huge market for unlicensed and illegal transportation in Canada’s largest city. Uber has faced lawsuits across North America and the world, but has continued to thrive.
Amazon overtakes Walmart
Amazon shares jumped over 18% after surpassing profit expectations with a 20% rise in sales – the online retail giant has now surpassed Wal-Mart in market value. Starbucks too saw sales jump by nearly 20% last quarter – reaching a record high of $4.9 billion for the coffee giant. Meanwhile McDonald’s has acknowledged that it is considering implementing all day breakfast – a truly game-changing move. All in all it was a strong week for American companies, showing that despite the greenback’s strength global companies based in the US can still thrive.
Stay informed. Stay Current.