Canada’s surprise move to a rate of 4.75% fuelled another rise in global bond yields, with gilts back near mini-Budget levels on fears of three or even four more interest rate hikes in the UK.
FTSE 100 Live Thursday
Rate rise worries dampen markets
FirstGroup shares surge as profits beat hopes
Fintech CAB eyes £1bn valuation in London IPO
Issa brothers’ EG Group launches huge $6.1 billion refinancing deal as debt deadlines loom
Thursday 8 June 2023 16:08 , Simon Hunt
The Issa brothers’ EG Group has embarked on a staggering $6.1 billion debt refinancing deal as it faces looming deadlines over billions of pounds of loans.
The firm said today it had entered into discussions with lenders to extend the length of its loans as well as its overdraft facilities as it reported a first quarter drop in earnings.
The deal comprises loans of €2.12billion (£1.82 billion), $2.79 billion (£2.23 billion), £600 million and A$378 million (£202 million), according to Bloomberg data.
EG Group said: “The Group has launched a three year amend & extend of its term loans. The Group has already initiated a process with key relationship banks seeking both an extension of its RCF and banking facilities, and has received good support in this process.”
The firm today reported first-quarter EBITDA of $228 million, a fall of 13% on the previous year, which it said was a reflection of “competitive market pressures following oil price decreases in the quarter.”
In today’s Standard...
Thursday 8 June 2023 16:01 , Daniel O'Boyle
...CAB Payments float, Wizz Air losses and Jonathan Prynn on why the London IPO market isn’t back just yet
Pick up a copy at the nearest tube station.
Marks & Spencer brings beauty recycling scheme to 40 shops
Thursday 8 June 2023 15:50 , Daniel O'Boyle
Marks & Spencer is introducing a new beauty packaging recycling scheme to 40 stores, including a number of London branches.
The high street giant is partnering with Handle Recycling in an initiative it is estimated will see the latter collect over two tonnes of empty beauty packaging from participating shops within the first 12 months.
M&S said this will help hard to recycle beauty packaging materials and components that commonly end up in landfill be recycled and turned into new packaging and products.
FTSE slides in afternoon session
Thursday 8 June 2023 15:38 , Daniel O'Boyle
The FTSE 100 is down 0.4% to 7597, falling in the afternoon after higher US jobless claims.
The index of London blue-chips had been flat for most of the day but fell as low as 7590 this afternoon.
BT boss Jansen bags £1.8m bonus as group plans to slash workforce
Thursday 8 June 2023 15:31 , Daniel O'Boyle
BT has revealed its boss took home a £1.8 million bonus last year as the telecoms giant plans to shed up to 55,000 jobs by the end of the decade.
Philip Jansen, the group’s chief executive, secured the annual bonus despite the firm’s sweeping cost-cutting plans raising the alarm among unions.
He bagged the £1.8 million in cash and share awards, on top of his £1.3 million fixed pay, taking his total pay packet for the latest financial year to £3.1 million.
US shares flat, Gamestop plunges
Thursday 8 June 2023 14:55 , Daniel O'Boyle
US shares are roughly flat in early trading on Wall Street after higher-than-expected jobless claims, while “meme stock” Gamestop plunged by almost 20%
Click through the tabs to see all the key market data
US shares seen flat amid higher jobless claims
Thursday 8 June 2023 14:00 , Daniel O'Boyle
Shares in US-listed firms are set for a flat opening this morning, after jobless claims hit their highest level in 18 months.
There were 261,000 claims for unemployment insurance in May, the highest since October 2021 and ahead of expectations.
Commenting on US Initial Jobless Claims, Tom Hopkins, Portfolio Manager at BRI Wealth Management, said: “US initial jobless claims came in at 261,000. 26,000 higher than consensus expectations and 28,000 higher than the previous weeks data. This is the highest figure since October 2021 suggesting mounting layoff announcements are starting to translate into job cuts and a sign that the US labour market may be softening as the Fed wants.
“The Fed meets next week to decide interest rates with the market currently pricing in a 68% chance of holding, with the balance predicting a 25-basis point rise.
“Today’s reading may come across as confusing given that data last week showed US jobs growth was almost twice as strong as forecast in May, in an unexpected sign of the resilience of the US economy, however today’s data points to the opposite. Today’s data will definitely give the Fed something to think about and Investors will be watching closely to the CPI figures that are also due next week.”
Dow Jones futures are down 30 points to 33679, while S&P 500 futures are up three points to 4277. Nasdaq futures are up 0.2% to 14359 after the rate-sensitive tech index fell yesterday.
Inside Barclays’ ‘Succession-like’ infighting that forced sale of Telegraph
Thursday 8 June 2023 13:06 , Simon English
When the Barclay brothers bought the Telegraph titles in 2004 the new ownership was supposed to usher in a period of stability after their predecessor, the Canadian press baron Conrad Black, was sued by his own company.
He was eventually sentenced to six and a half years in a US prison for fraud before being granted a pardon by Donald Trump.
And at first the new proprietors — Sir Frederick and Sir David — enjoyed success. They were well known in the City but were regarded as secretive.
They were tough negotiators and had already dabbled in the press with the doomed Sunday Business, but their main interests seemed to be in property.
Their most obvious trait was a desire for privacy. What did they want with a newspaper?
Barclays’ sale of Daily and Sunday Telegraph could take months to complete
Thursday 8 June 2023 12:52 , Simon English
The sale of the Daily and Sunday Telegraph and The Spectator magazine could take weeks or even months to resolve, bankers warned on Thursday, due to regulatory issues and concerns about the complex finances of the business.
AlixPartners have seized the assets in a row about loan payments to Lloyds Bank, which in turn has hired storied City bank Lazard to oversee a process that is unlikely to be straightforward.
Key market data with shares flat
Thursday 8 June 2023 12:29 , Daniel O'Boyle
Shares are close to flat as of lunchtime today, with Vodafone and Sainsbury’s among the biggest fallers as they traded without their dividends.
Latest floats are good news, but London’s IPO sector isn’t back yet
Thursday 8 June 2023 11:14 , Daniel O'Boyle
Is London’s moribund IPO market finally starting to perk up?
Today Sutton-based fintech firm CAB Payments unveiled its plan to float in a listing that could value it at as much as £1 billion.
That comes hard on the heels of WE Soda, which could be worth as much as £6.5 billion.
London venture capital firm Triple Point hit by tech slump
Thursday 8 June 2023 10:44 , Simon Hunt
Triple Point today became the latest private equity firm to lament a downturn in tech valuations after it reported a slump in the value of shareholder assets.
The London-based company’s listed tech investment fund, Triple Point VCT 2011, saw its net asset value per share slump just over 10% to 102p in the year to the end of February, while total return per share fell 7% to 111p.
Susannah Streeter, Head of money and markets at Hargreaves Lansdown, said: ‘’Start-up tech companies are labelled as growth stocks and much of their value comes from the anticipation of future earnings. But as interest rates have ramped back up to tame wild inflation, that affects how those future revenue streams are calculated and valuations have been sideswiped.
“There is still significant liquidity washing around the financial system, and although clearly there is more caution given the macro-economic climate, there are bright spots of investment. Companies in health-tech, logistics and innovations centred on improving how human resources are managed still attracting venture capital interest and the funding to match.
Eurozone in mildest possible recession
Thursday 8 June 2023 10:29 , Daniel O'Boyle
The Eurozone entered the shallowest possible recession over the winter, according to new revised data.
GDP across the currency union was down by 0.1% in the first quarter of 2023, after declining at the same rate in the last three months of 2022.
Tom Hopkins, Portfolio Manager at BRI Wealth Management, said: “We believe the eurozone’s performance will remain subdued in the second and third quarters as softer bank lending pulls down investment and consumer confidence remains fragile.”
Rate rise worries dampen markets, FirstGroup shares up 20%
Thursday 8 June 2023 10:15 , Graeme Evans
Higher-for-longer interest rate expectations following surprise hikes in Australia and Canada today put more pressure on markets.
Traders now see an increased chance that the US Federal Reserve will resist the opportunity to pause rate rises next Wednesday, with hopes for cuts before the end of the year also diminishing.
The speculation comes after Canada’s move to 4.75% as rate setters worry that inflation could get stuck materially above their 2% target.
The tightening followed Australia’s 0.25% increase on Tuesday and fuelled a surge in global bond yields, with gilts at mini-Budget levels on fears of three or even four interest rate hikes by the Bank of England.
AJ Bell investment director Russ Mould said: “Canada and Australia don’t often have a central role in moving the markets but their decision to resume rate hikes has reverberated through the financial system and helped stoke fears about sticky inflation.”
Wall Street investors last night rotated away from growth stocks most exposed to higher rates, with their worries feeding into a lacklustre session for London shares today.
The FTSE 100 index stood 9.29 points lower at 7615.05, in keeping with the rest of Europe. Stocks trading without their latest dividend award also weighed on the top flight, with Vodafone, Sainsbury’s and Centrica on the fallers board.
Support came from BP, which lifted 4.5p to 478.25p, and from stronger mining stocks. Positive broker comment as Citigroup raised Rio Tinto to a “buy” rating with 6000p target price helped the iron ore giant to lift 54p to 5157p.
The FTSE 250 index added 9.06 points to 19,161 as a results-day bounce of 20% for FirstGroup was accompanied by a rise of 2% or 1.9p to 114.3p for National Express.
Outsourcing firm Mitie fell 1.3p to 95.1p as in-line annual results provided the moment for some investors to bank profits from a 50%-plus rise for shares in the past year. Revenues topped £4 billion and operating profits jumped 44% excluding Covid work a year earlier.
M&G eyes further costs savings as City redundancies hit its target
Thursday 8 June 2023 09:58 , Michael Hunter
City asset manager M&G said today that its voluntary redundancy programme received more than the 200 applicants it targeted and pledged to continue with plans to “streamline” the business.
It also reported net client inflows of £400 million for the first quarter of the year and assets under management and administration of £342 billion, up £2 billion. It said much of the growth came from the UK market, “ending a long period of subdued performance”.
The inflows also came despite redemptions triggered by what the company called the “mini-Budget crisis” in September during Liz Truss’s short-lived government, which M&G said today it had “absorbed”.
Crest Nicholson sales tumble but boss predicts mortgage rate volatility may have reached its peak
Thursday 8 June 2023 09:28 , Daniel O'Boyle
The boss of housebuilder Crest Nicholson has predicted the recent mortgage rate volatility will calm and may have reached its peak, but he warned customer demand and confidence could cool if interest rates continue to rise.
Peter Truscott’s comments came as the FTSE 250 company published first half results that pointed to good underlying demand and a bullish stance on land buying, but that also showed sales tumbled by more than a fifth as challenging market conditions hit.
Rio Tinto upgrade boosts shares, FirstGroup leads FTSE 250
Thursday 8 June 2023 08:34 , Graeme Evans
The FTSE 100 index has crept into positive territory, up 4.25 points to 7628.59, as the lacklustre pattern of trading continues.
Support has come from BP, which lifted 6.15p to 479.9p, and NatWest after analysts at JP Morgan placed the lender on positive catalyst watch. Shares rose 1.9p higher at 262p.
Positive broker comment after Citigroup raised Rio Tinto to a “buy” recommendation and 6000p target price also helped the mining giant to lift 76p to 5179p.
Stocks trading without the right to their latest dividend award weighed on the top flight, with Vodafone, Sainsbury’s, Centrica, WPP and Johnson Matthey on the fallers board as a result.
FirstGroup was the star performer in the FTSE 250 as shares jumped 11.3p to 130p following annual results. House broker Liberum said the better-than-expected results reflected a clear margin recovery in bus and surprising strength in rail operations, driven by the open access services Hull Trains and Lumo.
Wizz Air rose 1090p to 2878p following its results, but there was no such bounce for housebuilder Crest Nicholson as its latest half-year figures sent shares 13.8p lower to 235.6p. The FTSE 250 stood 4.91 points lower at 19,147.36.
Key market data as FTSE 100 opens flat
Thursday 8 June 2023 08:30 , Daniel O'Boyle
The FTSE 100 started the day level today amid further concerns about interest rate hikes.
Click through the tabs to see all the key market data.
Fintech firm CAB payments eyes £1 billion valuation in London IPO
Thursday 8 June 2023 08:08 , Simon Hunt
A London fintech has become the latest firm to announce plans for an initial public offering in fresh signs of a resurgence of activity in the capital’s stock exchange.
Sutton-based CAB Payments Holdings, which provides business-to-business cross-border payments and foreign exchange services, said it was preparing to float shares on the London Stock Exchange’s main market.
It could fetch a valuation of between £800 million and £1 billion, according to an estimate by Merger Market. CAB did not comment on the firm’s expected market cap.
Bhairav Trivedi, CEO of CAB Payments, said: “I am tremendously excited to take the step of listing CAB Payments’ shares via a premium listing.
“Our intention to list on the London Stock Exchange is a sign of confidence in the high quality offering we provide to our customers in a large and growing market; confidence in our strong financial profile backed by a track record of revenue and Adjusted EBITDA growth, as well as cash generation; and confidence in the UK as the home for innovative and growing global businesses.
£2 cap on bus fares helps FirstGroup profits beat forecasts
Thursday 8 June 2023 07:59 , Michael Hunter
The £2 fare cap on bus travel in England helped annual profit at transport operator FirstGroup beat forecasts today, amid strong demand for cut-price travel.
Passenger volumes rose by a fifth on its bus operations, taking revenues from that part of the business up to £660 million from £570 million.
Overall, adjusted operating profit fell to £185.2 million from £806.1 million, but held above forecasts of £149.1 million.
The company, which also runs the South Western Railway services in and out of London’s Waterloo station, also announced plans to return an additional £115 million to investors after its exit from North America.
Gilt yields back towards mini-Budget levels
Thursday 8 June 2023 07:23 , Daniel O'Boyle
Gilt yields near mini-Budget levels again as investors continue to fear that three or even four interest rate hikes might be on the way.
The Bank of Canada’s surprise decision to hike interest rates yesterday sent yields up, as markets are now expecting interest rates to stay at 5.25% or higher until the Autumn of next year.
Two-year gilt yields rose to 4.56% yesterday, higher than any end-of-day figure in late May, when yields soared on the back of higher-than-expected inflation figures. The only time in recent years that yields were higher was in the wake of Kwasi Kwarteng’s catastrophic mini-Budget.
Rate rise jitters slow tech stocks, FTSE 100 seen lower
Thursday 8 June 2023 07:23 , Graeme Evans
Tech stocks underperformed on Wall Street yesterday after Bank of Canada’s latest rates hike fuelled expectations that the US Federal Reserve may follow suit next week.
The Nasdaq Composite fell 1.3% from its recent one-year high and the FANG+ index of mega caps dropped almost 3% as investors rotated away from growth stocks most exposed to higher rates.
Canada’s central bank took the country’s interest rate to 4.75% in response to persistent excess demand, warning that inflation could get stuck materially above the 2% target.
The surprise hike contributed to a surge in global bond yields as traders positioned for further action by policymakers elsewhere. Deutsche Bank said futures markets now priced a 35% chance of a hike by the Federal Reserve on 14 June, up from 19% on Tuesday night.
Investors are also more sceptical that the Fed will end up cutting rates this year, with the interest rate priced in by the December meeting up to 5.03% at the highest point since the start of the US regional banking crisis.
The FTSE 100 index closed four points lower last night and is forecast by CMC Markets to fall 12 points to 7612 at today’s opening bell.
Fuel costs leave Wizz Air stuck in red
Thursday 8 June 2023 07:15 , Daniel O'Boyle
Wizz Air’s losses barely improved in the year to 31 March, despite record passenger numbers.
Revenue more than doubled to €3.90 billion at the low-cost carrier thanks to record passenger numbers, but fuel costs and capacity issues offset the growth, leading an to operating loss roughly level with the previousyear at €466.8 million.
“The effects of fuel price increases and structural capacity issues at airports remained features throughout the year, but we are mitigating these through decisive actions which helped to improve ex-fuel cost performance,” boss József Váradi said.
““As we look ahead, we are optimistic for the current financial year and our focus continues to be on returning to net profit in F24. This will be driven by low cost, operational excellence, including continued high aircraft utilization, productivity improvements and increased flight completion factors.”
Recap: Yesterday’s top stories
Thursday 8 June 2023 06:52 , Simon Hunt
Good morning, Here’s a summary of our top stories from yesterday:
The boss of drinks giant Diageo, Ivan Menezes has died after a short illness.
City banks are racing to hire AI experts in their thousands.
WeSoda, the world’s largest producer of natural soda ash, has confirmed its IPO in a boost to the London market.