UKX FTSE 100 Index

Pound Likely to Rise Vs Euro as BOE to Lift Rates Before ECB

Sterling should strengthen against the euro as the Bank of England is likely to tighten its monetary policies before the European Central Bank, Societe Generale says. "EUR/GBP seems to us to have moved to a post-Brexit era and is tracking [interest] rate differentials and shifting growth expectations rather more confidently now," SocGen currency strategists say. EUR/GBP has moved in harmony with yield differentials since the initial Covid-19 volatility calmed down, having diverged from yields in 2019 during heightened Brexit uncertainties, they say. That means EUR/GBP will fall given the BOE is likely to raise rates before the ECB, they say. SocGen expects EUR/GBP to drop to 0.81 by the third quarter of 2022 from 0.8629 currently.

 
Companies News: 

Gresham Technologies 1H Revenue Rose; Says FY Market Expectations Are On Track

Gresham Technologies PLC said on Wednesday that first-half revenue rose 19%, and that it was on track to achieve full-year market expectations.

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Tricorn Shares Drop 25% After It Issues Going-Concern Warnings Over Funding

Tricorn Group PLC shares fell sharply Wednesday after it issued warnings over its ability to continue as a going concern, and said its current funding facilities wouldn't be sufficient to return the company to profitability.

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Bakkavor 2Q Sales Rose as Covid-19 Restrictions Eased

Bakkavor Group PLC said Wednesday that it saw strong sales growth in the second quarter as coronavirus restrictions were eased, with reported revenue rising on year.

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Barclays Names Colizzi Head of European Investment Bank -- Financial News

Of Financial News

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H&T Group Experiencing Good Momentum Since April

H&T Group PLC said Wednesday that it has experienced good momentum since coronavirus-related trading restrictions were relaxed in April.

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Mulberry Swung to FY 2021 Profit; Current Growth Boosted by UK, Asia Performance -- Update

Mulberry Group PLC reported Wednesday a swing to pretax profit for fiscal 2021 on lower costs and said that its year-to-date performance has been boosted by its U.K. operations and continuing growth in Asia.

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VTEX IPO of 19 Million Shares Priced at $19 a Share

VTEX said Wednesday that its initial public offering of 19 million shares has priced at $19 a share.

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Hurricane Energy Shareholder Crystal Amber Fund Increases Stake; Shares Rise

Shares in Hurricane Energy PLC rose on Wednesday after shareholder Crystal Amber Fund Ltd. increased its stake in the oil-and-gas company.

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Chipotle, AMC, Carnival: What to Watch When the Stock Market Opens Today

Stock futures edged higher Wednesday, suggesting major indexes will extend their rebound following a volatile stretch of trading sparked by worries about the spread of coronavirus. Here's what we're watching ahead of the opening bell. Read our full markets wrap here.

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Norcros Remuneration Report Approved With Minority Opposition at AGM

Norcros PLC said Wednesday that a resolution to approve its directors' remuneration report for fiscal 2021 was approved with significant minority opposition at its annual general meeting.

 
Market Talk: 

UK Public Borrowing Expected to Reach GBP210B in FY2021-22

1235 GMT - U.K. public borrowing is likely to total between GBP200 billion and GBP210 billion in fiscal year 2021-22, or around 10% of GDP, as the pandemic weighs on government spending, says Pantheon Macroeconomics. "We think that the government will need to hike corporation tax and to increase the effective income tax rate by freezing existing thresholds, as planned in March, if it wants to ensure that public borrowing declines to 3% of GDP in the mid-2020s," says chief U.K. economists Samuel Tombs. After a record jump in debt servicing costs, a looming further rise in the retail price index--to which index-linked government bonds are pegged--will boost interest payments towards the end of this fiscal year, while extra healthcare expenditure will likely be needed in the winter to combat Covid-19, he says.

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UK Local Authorities Likely to Need More Support

1159 GMT - Most U.K. local authorities are likely to remain under significant financial pressures brought about by the pandemic, says Moody's Investors Service in a report. Analyst Zoe Jankel expects reserve buffers used to manage budget volatility, and exposure to commercial revenues, will increasingly differentiate credit profiles. Citing estimates by the National Audit Office, she says the pandemic triggered a total funding gap of GBP9.7 billion in fiscal year 2021, which were mostly covered by transfers from the U.K. government. However, distribution has been unequal, with some local authorities continuing to report major funding shortfalls.

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Compass, Sodexo Look Set to Benefit From Revenue Boost

1156 GMT - Shares in Compass Group rise 5% to 1483 pence after Jefferies upgraded the contract caterer to buy from hold and raised its price target to 1660p from 1440p. The brokerage also raises its recommendation on Sodexo to buy from under-perform and its target to EUR85 from EUR70, boosting the French caterer's shares by 4% to EUR73.04. Re-opening uncertainty has propelled caterer shares back to post-Covid relative lows, Jefferies says. "However, balance sheets were de-risked last year and first-time outsourcing has emerged more rapidly than expected, so industry revenue is likely to be bigger at next peak," Jefferies analysts say. "With risk/reward now more favorable, we upgrade Compass and Sodexo."

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Anglo American Shares Should Recover Before Year End

1145 GMT - Anglo American shares should recover before year-end and investors should buy them now, Jefferies says. The recovery in diamond demand and prices bodes well for the miner, and this is supported by strength in iron ore, copper and platinum group metals, the U.S. bank says. Importantly, Anglo American seems to be operating well at most assets, although capital and operational expenditure inflation will be a factor for all miners going forward, Jefferies adds. Shares in Anglo American have risen since its trading update on Tuesday but still are down 6% over the last three months.

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UK Economic Recovery Looks Fragile, says RBC CM

1121 GMT - The lifting of the remaining Covid-19 restrictions in the U.K. earlier this week is unlikely to significanlty boost economic growth further, says RBC Capital Markets. "The final step of the U.K.'s reopening plan which was implemented on Monday was probably the least significant of the four steps in terms of economic activity," analysts at the bank say. Entering the summer months, the more up-to-date data suggest that after the initial surge in activity in response to the reopening "we are experiencing something of a 'great plateauing'," they say. With Covid-19 inflections on the rise again and the end of some fiscal support measures, the outlook for the beginning of the third quarter is uncertain.

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UK Faces Fiscal Squeeze in Coming Years

1119 GMT - The U.K. faces a fiscal squeeze in coming years, says Capital Economics. While the fiscal deficit is expected to decrease as the economy recovers from the pandemic slump, the London-based consultancy says it suspects the government "will 'bank' any improvement in the deficit rather than scale back the planned tax hikes and spending cuts set to hit the economy." And given Treasury chief Rishi Sunak is reportedly eyeing a 1 percentage point rise in National Insurance Contributions to pay for reforms to social care, any increases in expenditure may "be fully funded by spending cuts elsewhere/tax hikes," says senior U.K. economist Ruth Gregory. "So there is still likely to be a fiscal squeeze over the coming years," she says.

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Close Bros Might Be Running Out of Share Drivers

1114 GMT - Shares in Close Brothers Group rise 1.4% after the merchant-banking group said its loan book increased 9.6% in the 11 months to June 30. The pre-close update confirmed continued strong trading, Panmure Gordon says. "However, for the first time in a while, we find no reason to make significant changes to our estimates," Panmure analysts say. "To us, the company remains a well-managed business. However, the business model in its key division, banking, is no longer unique and a key driver of its loan growth this year has been the government Coronavirus Business Interruption Loan program, which has limited volumes still in pipeline."

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Inflation Uptick Drives U.K. Debt Servicing Costs Higher

1106 GMT - U.K. debt servicing costs jumped by GBP8.7 billion in June as inflation rose sharply in recent months, increasing the country's total expenditure, says Capital Economics. "A rise in Retail Price Index inflation (to which index linked gilts are pegged) from 1.5% in March to 2.9% in April meant that debt service costs rose by GBP8.7bn [in June]," the highest monthly payment since the series began in 1997, says senior U.K. economist Ruth Gregory. But while debt servicing costs will stay higher than the Office for Budget Responsibility expects over next few years, the public finances should reap the benefits of a fuller recovery in gross domestic product, meaning the deficit will still fall faster, she says.

Contact: London NewsPlus, Dow Jones Newswires; +44-20-7842-931

(END) Dow Jones Newswires

July 21, 2021 09:42 ET (13:42 GMT)

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