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)
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