The FTSE 100 closed up 0.03% Thursday as the Bank of England
announced the largest increase in interest rates in 27 years and
raised them by 0.50% to 1.75%. "Despite the dire outlook painted by
the Bank of England... the FTSE 100 has managed to hold up
reasonably well, although weakness in the oil price which is back
below $100 a barrel is holding it back," Michael Hewson of CMC
Markets said. Entain was the day's biggest riser, closing up 5%,
followed by Flutter Entertainment and Anglo American, up 4% and
3.2% respectively. Rolls-Royce was the day's biggest faller after
posting a swing to 1H pretax loss, down 8.1%, followed by Hikma
Pharmaceuticals and Mondi, down 6.3% and 5% respectively.
Companies News:
Petropavlovsk Gets High-Court Approval to Sell Main Assets for
$600 Mln to UMMC-Invest
Petropavlovsk PLC said Thursday that the High Court of Justice
in London has confirmed that the company's administrators can sell
the principal assets of the group to metal producer
UMMC-Invest.
---
Property Franchise 1H Revenue Rose 18% on Acquisition
Contributions
Property Franchise Group PLC said Thursday that its first-half
revenue rose 18% on the contributions of previous acquisitions.
---
Permanent TSB Appoints Nicola O'Brien as CFO
Permanent TSB Group Holdings PLC said Thursday that it has
appointed Nicola O'Brien as Chief Financial Officer with immediate
effect.
---
Empiric Student Property Appoints Donald Grant as CFSO
Designate, Executive Director
Empiric Student Property PLC said Thursday that it has appointed
Donald Grant as its new chief financial and sustainability officer
designate and executive director of the group.
---
Mears Group 1H Profit Significantly Rose; Hikes Full-Year
Expectations
Mears Group PLC said Thursday that its first-half pretax profit
significantly rose, and it raised its expectations for the full
year.
---
Duke Royalty 1Q Normalized Cash Revenue Rose to Record High
Duke Royalty Ltd. said Thursday that it expects to close the
first quarter of fiscal 2023 with significantly higher normalized
cash revenue, which is expected to increase further in the second
quarter.
---
City of London Group Appoints Jean Murphy as Chief Executive of
Recognise Bank
City of London Group PLC said Thursday that Jean Murphy has been
appointed as chief executive of Recognise Bank Ltd., its principal
operating subsidiary.
---
Instem 1H Revenue Rose, Inflation to Pressure Operating
Profit
Instem PLC said Thursday that it expects to report a 40%
increase in revenue for the first half of 2022, but that operating
profit growth is likely slow due to inflationary pressures.
---
Facilities by ADF Sees 1H Revenue Marginally Up on Robust
Demand
Facilities By ADF PLC said Thursday that it expects to report
revenue for the first half of 2022 that is marginally ahead on year
as demand was robust.
---
Ironveld Shareholder Withdraws Meeting Request to Remove
Chairman, CEO
Ironveld PLC said Thursday that shareholder Richard Jennings,
director of Align Research Ltd., has withdrawn his request to call
a general meeting of shareholders to remove Chairman Giles Clarke
and Chief Executive Martin Eales.
---
Sanderson Design Sees 1H Profit In line; Sales to Rise 1%
Sanderson Design Group PLC said Thursday that it expects to
report first-half profit in line with management views, with sales
rising 1% on year.
---
Secure Trust Bank 1H Pretax Profit Fell on Higher Impairments,
Cuts Dividend
Secure Trust Bank PLC said Thursday that pretax profit for the
first half fell on higher impairment charges, and reduced its
dividend payout.
---
Mobile Streams FY 2022 Revenue More Than Doubled on Strong
Growth
Mobile Streams PLC said Thursday that it expects to report that
fiscal 2022 revenue more than doubled due to continued strong
growth.
---
Falanx Group Expects FY 2022 Revenue Increase on Improved
Pipeline; Shares Rise
Falanx Group Ltd. shares rose on Thursday after the company said
that it expects to report an increased revenue for fiscal 2022
driven by services revenue and improved pipeline.
Market Talk:
Rolls-Royce's New CEO Facing Sizeable Task
1321 GMT - Rolls-Royce Holdings's 1H demonstrates the size of
the task facing newly-appointed Chief Executive Tufan Erginbilgic,
AJ Bell investment director Russ Mould says in a note. "The
pandemic was clearly a once-in-a-generation shock to the aviation
sector which Rolls serves, and it was always going to impact the
lucrative spares and repairs revenue, derived from the company's
base of installed engines. These are directly linked to how long
aircraft are in the air, so the fewer planes in the sky, the
greater the damage to revenue," Mould says, adding that the
problems predate Covid-19. Inflationary pressures and the impact
from the Ukraine conflict might force the company into a more
dramatic fix, he adds. Shares trade down 9.1% 82.50
pence.(kyle.morris@dowjones.com)
---
BOE Protects Credibility With 50Bp Interest Rate Rise
1329 GMT - The European Central Bank and the Bank of England are
in the same place as the U.S. Federal Reserve, says Ben Lord, fund
manager at M&G Investments. "If they want to hang on to their
credibility in the face of the high inflation we have at the moment
(which is a result of the policy errors made last year), then they
have to be tightening aggressively, even as growth slows and
unemployment rises," he says. In his view, the BOE needed to
deliver another "hawkish" shot in order to once again tighten
financial conditions and to reduce demand to less inflationary
levels, he says. (emese.bartha@wsj.com)
---
BOE's Reluctant Rate Rises to Address Supply Shocks May Not Help
Pound
1319 GMT - The Bank of England is reluctantly raising interest
rates to address supply side shocks and this isn't particularly
positive for sterling, ING says. The BOE delivered no surprises by
voting 8-1 for a larger 50 basis-point rate rise on Thursday but
the central bank's narrative of further forceful policy tightening
even as the economy faces a recession is a "tricky one" for the
growth-sensitive pound, ING analysts say. "GBP/USD remains
vulnerable to the strong dollar and a difficult risk environment,
but aggressive BOE tightening and an equally dim view for European
growth prospects suggests EUR/GBP may continue to trade in a
0.8350-0.8450 range over the coming weeks." GBP/USD falls 0.4% to
1.2103 and EUR/GBP rises 0.5% to 0.8418. (renae.dyer@wsj.com)
---
Gilt Market to Remain Volatile
1318 GMT - The U.K. gilt market will remain very volatile amid
uncertainty about the inflation and growth outlook, David Zahn,
head of European fixed income at Franklin Templeton, says after the
Bank of England raised interest rates by 50 basis points to 1.75%,
as broadly expected. "We remain defensively positioned in the near
term mainly due to influences on the gilt market from outside the
U.K.," he says. More interesting reading than the expected 50bp
interest rate rise was in the projections for a recession at the
end of the year that will be over a year long, Zahn says. He
expects the BOE Monetary Policy Committee's reaction function to be
much more reactive to economic data. (emese.bartha@wsj.com)
---
High Inflation May Prevent BOE Policy Pivot, But UK Equities
Still Have Appeal
1308 GMT - The potential for sticky underlying inflation in the
U.K. means that investors could be wrong in their expectations of a
policy pivot by the Bank of England in early 2023, says Hussain
Mehdi, macro and investment strategist at HSBC Asset Management.
The BOE raised interest rates by 50 basis points on Thursday, which
confirms the notion of a central bank determined to crush inflation
in the face of ongoing supply-side challenges, including a very
tight labour market and soaring energy bills, he says. This
outlook, including downside risks to profit performance, is
consistent with a defensive and selective investment strategy, he
says. "This includes a constructive view on U.K. equities--despite
domestic macro challenges--given index exposure to commodity,
value, and defensive names," Mehdi says. (emese.bartha@wsj.com)
---
BOE May Lift Rates Another 50bp Before Pausing Tightening
1300 GMT - The Bank of England could raise interest rates by
another 50 basis points in September but that may be the last rate
rise, ING says. Given only one policymaker voted against Thursday's
50bp rate rise and the BOE repeated its willingness to act
forcefully to curb inflation, there's a strong chance of another
similar move in September, ING analysts say in a note. However, the
BOE gave hints it might soon pause rate rises with inflation
expected to be well below target in coming years, they say. "The
window for further hikes further appears to be closing, not least
because outside of the jobs market, there are signs that some of
the key inflation drivers may be starting to ease."
(renae.dyer@wsj.com)
---
Tackling Inflation Is BOE's Short-Term Priority
1256 GMT - The Bank of England has upped the pace of monetary
policy tightening as it faces a continued trade-off between
ever-higher inflation and a deteriorating growth outlook,
confirming that the priority in the short term is tackling high
prices, says Hetal Mehta, senior European economist at Legal &
General Investment Management. After Thursday's 50 basis-point rate
increase the economist considers that further rate rises are likely
"as inflation remains uncomfortably high in the coming months." The
BOE's new economic forecasts signal a significant decline in GDP
stretching into 2024, although they will not have been able to take
into account any fiscal easing a new Prime Minister could deliver
in the autumn, she says. (emese.bartha@wsj.com)
---
Gilts Extend Rally as BOE Warns of Recession Risks
1250 GMT - U.K. gilts extend their rally as the Bank of England
expects the country's economy to enter into recession. The 10-year
gilt yield is trading close to 10 basis points lower at 1.832%,
according to Tradeweb. "The Bank [of England] knows further rate
rises make a future recession potentially deeper and longer but may
see it as a price worth paying to help bring prices under control,"
Ed Monk, associate director for personal investing at Fidelity
International, says. He adds that the BOE has a narrow path to
tread with inflation now forecast to hit 13% this year, while
growth is slowing. (emese.bartha@wsj.com)
---
Europe Stocks Gain After BOE Decision; US to Open Flat
1248 GMT - European markets gain after the Bank of England's
interest-rate rise and ahead of an expected broadly flat U.S. open.
The Stoxx Europe 600 and FTSE 100 advance 0.5%, the CAC 40 adds
0.8% and the DAX climbs 1.1%. Brent crude drops 0.2% to $96.55 a
barrel. IG futures data show the Dow opening at 32827, versus
Wednesday's close of 32812. The BoE predicted a U.K. recession
starting in 4Q this year and lasting through 2023, Validus Risk
Management says. "With [foreign minister] Liz Truss heavy favorite
to take the Tory leadership, she may find the position a poisoned
chalice as she takes the wheel just as the U.K. enters its worst
recession in over a decade," Validus's Shane O'Neill writes.
(philip.waller@wsj.com)
---
UK Labor Supply Issues Are Key Factor in BOE's High Inflation
Forecasts
1245 GMT - The Bank of England's expectations for inflation to
peak at just over 13% in the fourth quarter is driven by higher
energy prices but labor supply issues are also having an impact, JP
Morgan Asset Management says. Tight labor markets are driving
robust wage growth, and fears that these wage pressures may prove
persistent is a clear motivation for the BOE's decision to raise
interest rates by a larger 50 basis points to 1.75% on Thursday, JP
Morgan market strategist Hugh Gimber says in a note. "All in all,
with the Bank faced by an unenviable set of circumstances, a 50
basis point hike appears the appropriate course for the economy,
despite the risks to the growth outlook." (renae.dyer@wsj.com)
---
BOE's Pessimistic Forecasts Overshadow Big Rate Rise for
Investors
1239 GMT - The Bank of England's significantly greater pessimism
surrounding the outlook for the economy is a bigger focus for
investors than its expected decision to raise interest rates by a
chunky 50 basis points, causing sterling and long-dated gilt yields
to fall, says Shane O'Neill, head of interest rates at Validus Risk
Management. "The BoE has become significantly more pessimistic
about the state of the economy, predicting a recession that starts
in Q4 this year and lasts through 2023. Not just a technical
recession but...the worst performance for the economy since the
global financial crash should it come to pass," he says in a note.
(jessica.fleetham@wsj.com)
Contact: London NewsPlus, Dow Jones Newswires;
(END) Dow Jones Newswires
August 04, 2022 12:44 ET (16:44 GMT)
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