Pound Still Likely to Weaken if BOE Lifts Rates

The Bank of England could start raising interest rates in November but the pound is still likely to depreciate in coming months, MUFG Bank says. "GBP is more likely to weaken heading into year-end given the more challenging backdrop of slowing global growth, higher inflation and tightening liquidity conditions, which should be less supportive for risk assets and high beta currencies like the pound," MUFG currency analyst Lee Hardman says. BOE policy tightening could also be viewed as a policy mistake if the U.K. economy slows more notably, which would dent sterling, he says. GBP/USD rises 0.4% to a one-month high of 1.3789, according to FactSet.

 
Companies News: 

YouGov Annual Profit Increased on Higher Revenue; Chairman to Step Down

YouGov PLC on Tuesday reported a rise in pretax profit for the fiscal 2021 on higher revenue, and said that its Nonexecutive Chairman Roger Parry will stand down in 2022.

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RHI Magnesita Warns Cost Inflation Is Hurting Profitability

RHI Magnesita NV on Tuesday warned that third-quarter profitability was weaker than expected as costs continue to increase.

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Oxford Metrics Says FY 2021 Should Come in Stronger Than Expected

Oxford Metrics PLC said Tuesday that it expects to report stronger-than-expected outturns for fiscal 2021.

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Greencoat Renewables Raises EUR165 Mln via Initial Placing

Greencoat Renewables PLC said Tuesday that it has now raised 165 million euros ($191.6 million) via the initial share placing announced earlier this month.

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Providence Resources CEO Steps Down

Providence Resources PLC said Tuesday that chief executive officer and director Alan Linn stepped down from the board on Monday.

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Bank of Ireland Reduces Credit Risk Exposure to Irish Mortgages

Bank of Ireland Group PLC said Tuesday that it has executed a credit risk transfer transaction in relation to a portfolio of 1.4 billion euros ($1.63 billion) of Irish mortgages to reduce its credit risk exposure though a risk sharing structure.

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Gresham House Calls for Return of Liquidity from Gresham House Strategic

Gresham House PLC said Tuesday that a five-month strategic review into Gresham House Strategic PLC has failed to deliver a solution for all shareholders, and requisitioned a meeting to call for a return of liquidity.

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Salt Lake Potash Says London Trading Has Been Voluntarily Suspended Amid Fundraising Uncertainity

Salt Lake Potash Ltd. said Tuesday that the trading of its shares on London's Alternative Investment Market has been suspended on the company's request, given uncertainty over the successful completion of a fundraising.

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GetBusy Acquires New Assets for Its SmartVault Platform

GetBusy PLC said Tuesday that it has bought two software products--Quoters and DocDown--that will be part of its SmartVault platform, and said its performance in the second half of fiscal 2021 remains robust.

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Life Science REIT to List on AIM Market Via Share Placing, Subscription, Intermediaries Offer

Life Science REIT PLC said Tuesday that it intends to launch an initial public offering on the London Stock Exchange's AIM market via a share placing, offer for subscription and intermediaries offer.

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Alinda Capital Partners Chases London IPO With GBP350 Mln Raise

Alinda Capital Partners LLC said Tuesday that it intends to float on the London Stock Exchange, raising up to 350 million pounds ($480.5 million) through an offer and subscription late next month.

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Legal & General Capital Appoints Ernst & Young's Gareth Mee as CFO

Legal & General Group's Legal & General Capital said Tuesday that it has appointed Gareth Mee as its new chief financial officer.

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Supermarket Income REIT Doubles Target Size of Initial Share Placing to Up to GBP200 Mln

Supermarket Income REIT PLC said Tuesday that the board has decided to double the target size of its initial share placing from around 100 million pounds ($137.3 million) to up to GBP200 million.

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Candela Medical Sets IPO at 14.7 Million Shares; Sees Pricing at $16-$18 Each

Candela Medical Inc. on Tuesday said it plans to sell about 14.7 million shares at between $16 and $18 apiece in its initial public offering.

 
Market Talk: 

Government Bond Yields Are Still Low Historically, Likely to Rise, Says Kempen

1041 GMT - Despite the sharp upturn in 10-year U.S., German and U.K. government bonds, yields are still historically low and likely to rise further, says Joost van Leenders, senior investment strategist at Kempen Capital Management. "We therefore believe that yields will rise further and see the greatest risk of this happening in the U.S.," the strategist says. Kempen assumes that any excessive increases in government bond yields will be countered by policy adjustments. With this view in mind, Kempen continues to hold a negative outlook for government bonds.

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Ryanair's Share of Europe's Short-Haul Market to Rise in 2023

1033 GMT - Ryanair's capacity share of Europe's short-haul market will increase 7 percentage points to 24% in 2023 as its competitive overlaps ease and it benefits most from capacity cuts at Norwegian and Alitalia, Berenberg says. The budget airline's top 10 competitors' share of its network fell from 150% in 2019 to 100% in 3Q, and flag carriers will struggle to recover ground after 2022 as Ryanair's cost leadership will be extended after the delivery of new aircraft, Berenberg says. "The fleet's transition to the MAX-8 aircraft will provide an annual 0.8 percentage point unit cost tailwind for fiscal 2022 to fiscal 2024 estimates," the German bank says. Berenberg rates the stock buy and raises the target price to EUR21 from EUR20.

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UK Growth Expected to Slow in Short-Term; Inflation to Edge Up

1007 GMT - The U.K. economy is likely to experience a taste of stagflation for the next six months as the worsening product and labor shortages will put the brakes on economic growth and at the same time higher energy prices will drive up inflation, Capital Economics' chief U.K. economist Paul Dales says. The coincidence of low economic growth and high inflation won't be anywhere near as severe or as persistent as in the 1970s, he says. Inflation is expected to accelerate to around 5% in April 2022 before falling back to the 2% target in late 2022, but the Bank of England's growing fear that some of this rise in inflation becomes embedded will prompt a rise in interest rates for the first time since the pandemic, Dales says.

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EasyJet Is Well Placed for the Next Phase of Recovery

0944 GMT - With a balance sheet fit to weather a weak winter period easyJet is well placed for the next phase of recovery as the prospect of a potential dilutive equity raise no longer hangs over its shares, Berenberg says. The budget airline is well-placed to capitalize on improving industry pricing, when looking beyond the next six months, with ancillary initiatives such as bag fees bolstering its unit revenue outlook, the German bank says. Furthermore the uncertainty surrounding British Airways's plans at Gatwick Airport represent an opportunity for the airline as it could purchase BA's slots for around EUR1 billion, the bank says. "Not only could this help pricing, but economies of scale would drive cost efficiencies at the airport," Berenberg says.

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EasyJet Has the Characteristics of an Attractive Takeout Target

0935 GMT - EasyJet's attractive market access, relatively inflated cost base compared with other budget airlines and recently expanded cash balance make it an appealing takeout target, Berenberg says. If Wizz Air was to acquire the airline, it could achieve annual cost synergies of around EUR440 million, the bank says. This would easily warrant a premium of around 35% to easyJet's current share price, which has an implied equity value of around GBP6.6 billion, it says. "The pro-forma entity would be the second largest contributor to European shorthaul capacity, driving consolidation and healthier capacity discipline." Berenberg raises its rating on the stock to buy from hold, and the target price to 800 pence from 720 pence.

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Centamin Production Expected to Continue Improving in Coming Quarters

0906 GMT - Centamin's production for the third quarter was slightly below forecasts, but output rates should continue to improve in the coming quarters especially as the company's knowledge of the Sukari orebody increases, RBC Capital Markets says. According to RBC, third quarter performance was solid, with the open pit delivering a quicker-than-anticipated return to higher gold grades. "We continue to see an improving underlying backdrop for gold equities as macro uncertainty continues to grow. Centamin, following the market's rebasing of expectations, we believe is in a strong position to benefit from this trend," the bank says.

 

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

(END) Dow Jones Newswires

October 19, 2021 07:10 ET (11:10 GMT)

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