UK GDP Data Seen Supporting Rate-Rise Bets But Pound Little Moved

Sterling reacted modestly to stronger-than-expected U.K economic growth data as traders are focused on other matters such as bond market dynamics, Monex Europe says. However, the figures will act as the "first confirmation point" before next week's data deluge to allow the Bank of England to raise interest rates again in February, Monex currency analyst Simon Harvey says. "The probability of a Feb rate hike from the BOE has held around the 80% level for months now, while we expect data next week to push this higher along with front-end Gilt yield." The economy grew 0.9% month-on-month in November, versus the 0.5% expected by analysts in a WSJ survey. GBP/USD rises 0.2% to 1.3740 and EUR/GBP falls 0.1% to 0.8347.

 
Companies News: 

Bonhill Sees 2021 Revenue, Ebitda to Slightly Miss Expectations

Bonhill Group PLC said Friday that it expects revenue and earnings before interest, taxes, depreciation, and amortization for 2021 to slightly miss market expectations after Omicron coronavirus variant disruption, but 2022 has begun well.

---

Good Energy Urges Shareholders to Vote Down Resolutions Called by Ecotricity

Good Energy Group PLC said Friday that it urges shareholders to vote against resolutions removing Chairman William Whitehorn, and to direct the board not to dispose of the company's generation approval in a meeting in February.

---

Currys Lowers FY Guidance, Says Christmas Performance Was Challenging

Currys PLC said Friday that its performance during its peak Christmas period was hurt by lower demand, and that it has downgraded its guidance on its adjusted pretax profit for the financial year.

---

Foxtons Sells Douglas & Gordon Sales Business, Integrates Lettings Unit

Foxtons Group PLC said Friday that it has sold its Douglas & Gordon Ltd. sales business for a nominal consideration to D&G's Chief Executive James Evans, and integrated its lettings business into its network.

---

Global Petroleum Shares Rise on Favorable European Court Finding

Global Petroleum Ltd. shares rose on Friday after it said the European Court found that its four permit applications offshore Italy didn't contravene European Union law.

---

Sensyne Health Shares Fall on Financing Agreement to Continue Trading

Shares in Sensyne Health PLC fell on Friday after it said that it has signed a financing agreement for 6.4 million pounds ($8.8 million) with institutional shareholders as without financing it is unlikely to continue trading beyond early February.

---

Castillo Copper Drops Plans to Buy Additional Lithium Assets

Castillo Copper Ltd. said Friday that its board has decided to focus on developing the BHA's Project East Zone and drop plans to acquire the Litchfield and Picasso lithium assets in Australia.

---

Minds + Machines to Return GBP19 Mln to Holders via Tender Offer; Shares Rise

Shares of Minds + Machines Group Ltd. rose as much as 19% on Friday after the company said it plans to return up to 19 million pounds ($26 million) to shareholders via a tender offer.

 
Market Talk: 

Experian's Growing Trend Is Expected to Continue

1053 GMT - Experian's strong 3Q performance is set to continue into 2023 as the group enjoys a strategic position in the data-economy-driven sector, Shore Capital says. The U.K. investment group expects a strong and continued organic trend across the core North America business, while U.K. metrics will become Experian's focus of improvement. Shore Capital keeps a buy recommendation on the stock. Shares are down 1.4% at 3,109 pence.

---

UK's Strong GDP Expansion Unlikely to Last

1042 GMT - The 0.9% on-month growth for U.K.'s economy in November signals that private demand remained strong before Omicron, but the data aren't likely to be indicative of a trend improvement in the outlook, Citi economist Benjamin Nabarro says. Seasonality likely played a notable role in November data, with earlier Christmas shopping boosting transport and warehouse services in particular, he says. "We continue to see significant challenges as we move into 1H 2022," Nabarro says. Economic activity is likely to face further pressures associated with the cost of living crunch, and while accumulated savings and further post-pandemic normalization may prevent an outright contraction, momentum is expected to be subdued, he says.

---

Ferguson's Capital Markets Day Reassured on Many Fronts, Jefferies Says

1040 GMT - Ferguson's capital markets day served as a useful reminder of the company's strong market positions and business model, Jefferies says. The U.K.-based distributor of plumbing-and-heating products' newly released midterm expectations were particularly reassuring as they suggest scope for a step up in market outperformance and continued margin expansion from 2021's high base, the U.S. bank says. "While top line growth is seen to be the clearest driver of margin expansion, management also flagged the gradual benefits of selling more own brand products--currently c.9% of sales, but generating double the gross margin of other products--and productivity initiatives," Jefferies says, retaining its buy rating on the stock with a 15,212 pence price target. Shares are up 0.2% at 12,830 pence.

---

Marks & Spencer's 3Q Allays Concerns of Performance Being Temporary

1039 GMT - Marks & Spencer's 3Q crushed views that its recent improved performance was a "flash in the pan," Peel Hunt says. The U.K. retailer's food side was the real star of the period, rising 20% above fiscal 2020 and making the company a genuine option for food shoppers as opposed to the way pricing made it just an occasional treat in the past, Peel Hunt says. Furthermore, with strong sales in clothing helping margins, Peel Hunt says this has prompted a 3% rise in its adjusted pretax profit estimate for fiscal 2022 to GBP516.1 million. "The shares are not oblivious to the improvements but today's weakness is a buying opportunity," the U.K. brokerage says. Peel Hunt rates the stock buy and has a 260 pence target price.

---

Currys Drops After Profit Alert, But Outlook is Upbeat

0945 GMT - Shares in Currys drop 4% after the U.K. electrical-goods retailer reported lower demand during its peak Christmas period and downgraded full-year adjusted pretax profit guidance. While demand took a hit from the Omicron coronavirus variant, supply-chain disruption and a general weakening of tech demand among consumers, online sales rose strongly, trading firm eToro says. "Currys shares have been hit hard this morning as the firm lowered its full-year profit guidance, which is perhaps unsurprising," eToro analyst Adam Vettese says. "But looking further ahead, its position in the market is undisputed and we see a return to sales growth once Omicron and the global supply crisis ease."

---

Senior's Contracts Show Its Scope for Recovery

0937 GMT - Senior is well-positioned for a recovery in the medium term, and recent contract wins with Boeing and Honda highlight that it is very well regarded by its customers, Jefferies says. The U.K. engineering company's solid business update shows it has had a decent end to what was a difficult year, Jefferies says. "Looking further out, the strategy of focusing on its fluid conveyance and thermal management capabilities/technology will see Senior evolve with its customers and its markets. There is plenty of evolution ahead, but Senior is well-positioned to benefit from this," the U.S. bank says. Jefferies has a buy rating on the stock with a target price of 200 pence.

---

Omicron Hit to UK Economy Set to Be Modest

0906 GMT - The impact of the Omicron coronavirus variant to the U.K.'s economy is expected to be modest, relative to past waves, ING's developed market economist James Smith says. Cases have peaked, suggesting that Omicron's effect has been sharp but short-lived and staff shortages could ease soon Smith says, adding that consumer attitudes toward Covid-19 likely haven't changed much. "The hit to GDP across December and January may not amount to much more than half a percent, not least because the recent booster vaccine and testing expansions may help boost health spending yet further, offsetting weakness elsewhere," he says. In this context, a Bank of England rate increase in February is growing more likely, he says.

---

UK Gilts Stable as UK GDP Returns to Pre-Pandemic Levels

0900 GMT - U.K. borrowing costs trade steady after official data showed the U.K. economy returned to pre-pandemic levels in November, with month-on-month growth of 0.9%. "The economy now stands 0.7% larger than in February 2020, thanks to an upward revision in the growth rate in October," says Richard Carter, head of fixed interest research at Quilter Cheviot.he says. However, the discovery of the Omicron variant of Covid-19 in late November and early December is likely to weigh on growth, he says. The 10-year gilt yield is last at 1.113%, versus 1.111% Thursday, according to Tradeweb.

 

Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka Halas at sarka.halas@wsj.com

(END) Dow Jones Newswires

January 14, 2022 06:15 ET (11:15 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Feb 2024 to Mar 2024 Click Here for more FTSE 100 Charts.
FTSE 100
Index Chart
From Mar 2023 to Mar 2024 Click Here for more FTSE 100 Charts.