Every Friday the Current rounds up the biggest business stories of the week. This week; the Apple Watch was unveiled, the Federal Reserve is no longer patient, the Euro rebounds, the Bank of Korea cuts interest rates, China shows signs of slowing, Yahoo pulls out of China, and Lufthansa pilots strike.
Apple unveils the Apple Watch
Apple held its first major new product unveiling since the death of Steve Jobs. The Apple Watch (often mistakenly referred to as the iWatch) was unveiled with the usual drama and excitement that has defined the tech giants other popular product releases. Prices will range from around $350 to upwards of $17,000 for luxury models. Unlike conventional watches the Apple Watch will, like its iPhone cousins, need to be charged approximately every day to day and a half. Mark your calendars, because the Apple Watch launches on Friday, April 24.
The Federal Reserve drops patient
Ms Yellen, the Federal Reserves Chairwoman, finally dropped the word ‘patient’ from her announcement. The highly anticipated exclusion indicates that the central bank intends to raise interest rates in the future. Although the word ‘patient’ was omitted the message did not diverge greatly from previous press conferences. Yellen suggested that the Fed would wait until the labor market made further advances before raising rates which have sat at 0% since 2008. Despite the omission the message was that cheap money would still be available over the medium term. The Dow Jones rose by 0.9% and the S&P followed suit with 1% jump at the news. The USD however slumped, losing ground to the euro and other major currencies.
The ECB implements QE, the Euro could rebound
The ECB (European Central Bank) announced that it had begun to implement its quantitative easing program. The ECB will buy €60 billion worth of assets per month through September of next year. Both Britain and the United States have previously employed QE in order to cultivate economic growth. Prior to being approved on January 22nd there had been some opposition to QE on the grounds that the ECB did not have the authority to institute such a policy. Regardless, the ECB claims that the program’s success is already being felt.
Earlier this month the euro hit a 12 year low against the US dollar when it plunged to just under $1.06. But the euro ended a losing streak this week after surging against the USD on Wednesday following the US Federal Reserve’s announcement .
The Bank of Korea cutting interest rates
The Bank of Korea (BOK) cut its interest rate to 1.75%. joining over 20 other central banks around the world that have also cut interest rates. It is the first cut in rates by the BOK in 5 months and comes in response to the deflationary effects of low oil prices and the won recently hitting a 20 month low.
China shows signs of slowing
House prices in China declined year on year by 5.7% in February following 5.1% and 4.3% drops in January and December respectively. Overall prices fell in 66 of the 70 biggest cities in China while stagnating in 2 others and rising marginally in the remaining 2. Official numbers have also revealed sharp slow downs in the growth of industrial production, retail sales and investment. Growth overall has fallen to the lowest level in nearly a quarter of a century. Meanwhile China’s finance ministry has sought to tackle growing local-government debt by exchanging expensive high interest debt totaling $160 billion (40% of GDP) for low-cost bonds. This move is all the more important considering the risk posed by excess debt in a slowing economy.
Yahoo ends Chinese operations
Yahoo closed its last remaining office in mainland China on Thursday. The internet giant sold the bulk of its operations to the emerging Chinese tech superpower Alibaba in 2005. Yahoo claims that roughly 350 jobs will be lost in what is part of a global cost cutting consolidation. The move can also be interpreted as indicative of the rise of Chinese tech companies replacing the transplanted Western companies that had previously dominated the sector.
Ryanair abandons transatlantic flight proposal
Just days after enticing eager travelers and europhiles with promises of flights to Europe for as low as $15, Ryanair has abandoned its proposed transatlantic operation.The budget Irish airline’s board had approved such a plan but the company has since released a statement claiming that it has not put any plans into place or even considered it as a possibility.
Lufthansa Pilots strike
Lufthansa – the de facto flag carrier airline of Germany – pilots went on strike on Wednesday and have extended their action through Friday. The pilots are protesting a proposal by Lufthansa to scrap a retirement program that allows pilots to retire at 60% of their pay at 55 before reaching statutory retirement at 65.
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