Bullish BOE Boosts Sterling, Gilt Yields; Stocks Slip
The Bank of England's 7-2 split vote to keep the current GBP875
billion target of government bond purchases while "symbolic" it
does signify the central bank's increasingly hawkish stance on
monetary policy, says Oliver Blackbourn, multi-asset portfolio
manager at Janus Henderson Investors. This provides an important
sign as markets focus on the potential for an interest rate
increase in the first half of 2022, he says. Gilt yields rose
following the announcement causing the yield curve to flatten due
to greater increases on shorter-dated yields, he notes. The FTSE
100 trades slightly weaker as a stronger pound weigh on U.K.
multinationals that earn most of their profits overseas.
Companies News:
Xeros Technology 1H Pretax Loss Narrowed Slightly
Xeros Technology Group PLC on Thursday reported a slightly
narrowed pretax loss for the first half of the year, and said that
it is confident that revenue will grow in 2022 and beyond despite
suffering royalty income delays.
---
Eve Sleep 1H Pretax Loss Widened; Full Year on Track to Meet
Board's Views
Eve Sleep PLC said Thursday that its pretax loss widened for the
first half after booking higher costs, but that it was on track to
deliver the board's expectations for the full year.
---
Home REIT Raises GBP350 Mln via Share Issue, More Than
Planned
Home REIT PLC said Thursday that it has now raised 350 million
pounds ($476.6 million) via the previously announced share issue,
more than initially planned due to strong investor demand.
---
Marley Group to Proceed With London IPO
Marley Group Ltd. said Thursday that it will proceed with its
planned initial public offering on the London Stock Exchange, as
first indicated last week.
---
Distribution Finance Capital 1H Pretax Loss Narrowed
Materially
Distribution Finance Capital Holdings PLC reported on Thursday a
significantly narrowed pretax loss for the first half of 2021 and
said that momentum has started to build in growing its loan
book.
---
Eve Sleep 1H Pretax Loss Widened; Full Year on Track to Meet
Board's Views
Eve Sleep PLC said Thursday that its pretax loss widened for the
first half after booking higher costs, but that it was on track to
deliver the board's expectations for the full year.
---
GreenRoc Mining Prices IPO at 10 Pence a Share; Trading to Start
Sept. 28
GreenRoc Mining PLC on Thursday priced its initial public
offering on London's junior AIM at 10 pence a share and said that
trading is expected to start on Sept. 28.
---
Civitas Social Housing Shareholders Reject Pre-emption
Resolution at AGM
Civitas Social Housing PLC said Thursday that all resolutions
proposed at its annual meeting passed except for resolution 13,
which failed to receive enough shareholder support.
---
3i Infrastructure to Sell Four European Liquid Storage Terminals
to Evos
3i Infrastructure PLC said Thursday that it has agreed to the
conditional sale of a 45% stake in four European liquid storage
terminals to energy storage company Evos, and that this is expected
to be completed in the fourth quarter.
---
Lloyds Nonexecutive Directors Nick Prettejohn, Stuart Sinclair
to Step Down
Lloyds Banking Group PLC said Thursday that Nick Prettejohn and
Stuart Sinclair intend to step down as nonexecutive directors.
---
Navigator Holdings Names Von Appen Chairman as Butters Retires
>NVGS
Navigator Holdings Ltd. on Thursday said David Butters has
retired as executive chairman.
Market Talk:
UK Government Isn't Expected to Introduce Windfall Tax on Energy
Companies
1252 GMT - While the introduction of a windfall tax on U.K.
energy companies can't be ruled out, it would be very surprising if
the conservative government goes down this route, Citi's Jenny Ping
says. Such action would not only undermine investor confidence in
the U.K., it would also derail the government's commitment to net
zero emissions, she says. "Instead, we believe the U.K. government
will leverage the current situation to push for more speedy
diversification away from gas, more investment in different forms
of low carbon generation, especially those with stable baseload
production," Ping says.
---
BOE Could Raise Rates Before Market Expects
1226 GMT - The Bank of England could raise interest rates before
the market anticipates, says Jesus Cabra Guisasola, associate at
Validus Risk Management, following the BOE's policy announcement
earlier. The BOE signaled that the case for tighter monetary policy
has strengthened, despite lowering growth forecasts, causing
sterling to break above a key chart level against the dollar at
$1.3700, he says. "Money markets are betting for a hike in interest
rates of 15 basis points by March 2022. However, if the economy
grows at a faster pace, with inflation above the 2% target and
jobless rate falling, we could see the BOE acting sooner rather
than later," he says. GBP/USD is last up 0.6% at 1.3707, up from
1.3683 before the BOE's announcement.
---
BOE Likely to Be First Major Central Bank to Raise Interest
Rates
1221 GMT - The Bank of England looks poised to become the first
major central bank to raise interest rates, says Ambrose Crofton,
global market strategist at JP Morgan Asset Management. "We expect
the Bank of England to be the first major central bank to achieve
interest rate lift-off in the first half of next year," he says.
Whether inflationary pressures prove entirely temporary depends in
part on the labour market, he says, adding that there is huge
demand for labor and job vacancies are at a historical high,
leading businesses to raise wages to attract and retain workers.
"This could lead to more sustaining price pressures in the medium
term" and prompt the BOE to raise interest rates, he says.
---
UK Faces Post-Brexit Supply-Chain Crisis, Data Show
1218 GMT - U.K. retailers face widespread shortages and a fifth
of road hauliers have collapsed or suspended trading following the
U.K.'s exit from the EU, parcel-delivery website ParcelHero says.
Some 30% of accommodation and food-service companies and 23% of
retailers and wholesalers reported lower-than-expected stocks,
according to Office for National Statistics data covering August
23-Sept. 5 and cited by ParcelHero. Transport and storage companies
reported similar problems, with 20% of businesses closing entirely
or pausing trading. A post-Brexit exodus of continental European
citizens and the U.K. government's refusal to give EU-based drivers
temporary skilled-worker permits has left the U.K.'s entire supply
chain facing a major crisis, ParcelHero says. "This is yet another
problem Brexit has created for British importers and exporters,"
ParcelHero's David Jinks says.
---
BOE's Tightening Message Signals Growing Inflation Concerns,
says Aberdeen SI
1212 GMT - The Bank of England's policy message suggests the
central bank sees a stronger case for tightening monetary policy,
signaling growing concerns over the inflation outlook, says Luke
Bartholomew, senior economist at Aberdeen Standard Investments.
"The most striking message in the Bank's statement today was that
it believes the case for tightening monetary policy has
strengthened since August. This is despite the fact that the Bank
also downgraded its growth forecasts," he says. "It therefore seems
clear that it is becoming more concerned about the inflation
outlook." He says investors should prepare for the prospect of
interest rates increasing next year.
---
Fuller Smith & Turner's Estate Still Facing Covid-19
Challenges
1153 GMT - Fuller Smith & Turner's results show that
customers are heading back to pubs in decent numbers, Russ Mould of
AJ Bell says. Whereas food-led rural and out-of-town venues lead
the way, helped by the surge in domestic tourism, the performance
of city-center establishments is still foggy, Mould says. Still the
pubs-and-hotels business's central London estate shows signs of an
improvement in the situation, Mould says. "However, there is no
escaping the reality that the whole sector could face a difficult
few months of uncertainty given the specter of reintroduced
restrictions or even just increased levels of infection reducing
peoples' ability or willingness to go out and have a few pints,"
Mould says.
---
UK Recession Risk May Weaken Case for Rate Rise for Another
Year, says Raymond James
1146 GMT - The risk that the U.K. might slide back into
recession is likely to weaken the case for the Bank of England to
raise interest rates at least for another year, says Jeremy
Batstone-Carr, part of European Strategy Team at Raymond James.
"The bigger risk for the Monetary Policy Committee is not
prevailing inflationary pressure so much as the possibility that
the U.K. economy might slide back into recession, likely rendering
the case for a base rate hike irrelevant for at least another
year," he says. The BOE decided to leave current interest rates and
asset purchases unchanged, as economic growth fizzles out due to
supply shortages and Brexit complications, he says.
Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka
Halas at sarka.halas@wsj.com
(END) Dow Jones Newswires
September 23, 2021 09:17 ET (13:17 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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