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FTSE Down, Gilt Yields Hit Fresh Highs as Investors Bet on November Rate Rise

10/18/2021 | 07:51am EST

Gilt Yields Hit Fresh Highs as Investors Bet on November Rate Rise

U.K. short-term borrowing costs climb to fresh highs Monday as investors bet the Bank of England will raise its base interest rate as soon as November. The yield on the two-year benchmark gilt, which is more sensitive to changes in interest-rate expectations, hits 0.749%, the highest level since May 2019, according to Tradeweb. The wagers are being fueled by comments from BOE Governor Andrew Bailey over the weekend saying that the central bank will "have to act" to contain inflation. Markets are now pricing in a 65% chance that the BOE will raise the bank rate from a historic low of 0.1% in November after hawkish comments from Governor Bailey, says IG's Joshua Mahony.

 
Companies News: 

Tristel FY 2021 Pretax Profit Fell on Lower Revenue

Tristel PLC on Monday reported a fall in pretax profit for the fiscal 2021 as the Covid-19 pandemic hit sales growth, but said it expects a better performance in the year ahead.

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Severstal PAO Third-Quarter Profit and Revenue Rose

Severstal PAO said Monday that its net profit and revenue for the third quarter of 2021 rose significantly on the back of higher sales and prices.

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Pod Point to Hold GBP120 Mln IPO in London

U.K. electric-vehicle-charger provider Pod Point said Monday that it intends to hold an initial public offering on the London Stock Exchange next month, in which it expects to raise 120 million pounds ($165.0 million).

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Future Metals to Float in London on Thursday

Future Metals NL said Monday that it expects to float in London on Thursday.

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Bioventix FY 2021 Pretax Profit Fell Slightly

Bioventix PLC on Monday reported a fall in pretax profit for fiscal 2021 on currency woes, but said the business should revert to an established trajectory once the Covid-19 pandemic ebbs.

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Scholium Chairman to Retire in November; David Harland Named Successor

Scholium Group PLC said Monday that Chairman Jasper Allen will retire from the company on Nov. 8, and David Harland has been appointed as successor.

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7Digital Group Increases Credit Line; Shares Rise

Shares of 7Digital Group PLC rose 11% on Monday after the company said it has doubled its revolving credit line with Investec Bank PLC, providing it with the cash needed while the company moves back into profit.

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Life Settlements Assets Declares $2.5 Mln Special Dividend

Life Settlements Assets PLC said Monday that it has declared a special dividend of $2.5 million, or 5.017 cents a share.

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Zillow, State Street, Valneva, Coinbase: What to Watch When the Stock Market Opens Today

Stock futures are slipping after China's third-quarter economic growth came in below economists' forecasts. Here's what we're watching ahead of Monday's opening bell.

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Informatica Sets IPO at 29 Million Shares, Sees Pricing at $29-$32 Each

Data-software company Informatica Inc. on Monday said it plans to sell 29 million shares at between $29 and $32 apiece in its initial public offering.

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Castelnau Group Shares Rise in Stock-Market Debut

Shares of Castelnau Group Ltd. rose 8% on Monday as the company started trading on the London Stock Exchange, implying a market capitalization of 191.8 million pounds ($263.7 million).

 
Market Talk: 

McBride Costs to Face Spotlight in Update

1103 GMT - McBride investors are likely to eye costs in a trading update from the detergent and cleaning-product maker on Tuesday. Numis Securities expects the company to indicate that consumer demand patterns continue to follow a similar path to that reported at its full-year results, with cleaning-product volumes normalizing, but laundry-product volumes still below historic levels. "But the focus will be on the comments about the cost environment and its ability to achieve cost recovery. We think there is a low risk to forecast changes given the recent downgrades," Numis analyst Damian McNeela says.

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Bellway Shares Aren't Pricing in Positives

1005 GMT - Bellway shares don't fully reflect the U.K. house-builder's upbeat prospects, Numis Securities says ahead of the company's full-year results Tuesday. While the results are unlikely to contain any major surprises, Numis says longer-term forecasts are set at a very cautious level and estimates could rise more than peers. That reflects the strength of the forward order book, an aggressive land-acquisition strategy since the first lockdown and also greater scope for margin recovery, the brokerage says. "In our view, the potential upside surprise is not factored into the current rating," Numis analyst Chris Millington says.

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Drax's BECCS Project Likely to Get Government Fast Track Status Soon, Jefferies Says

0913 GMT - While the green credentials of biomass with carbon capture and storage are debatable, the strategic and political importance of Drax's U.K. generation is clear, and there is a high chance that the company's BECCS project will get government fast track status within weeks, Jefferies says. Drax is a partner in the East Coast Cluster project, which offers by far the largest potential carbon capture and the largest job creation. In order to reflect higher power price forecasts and the addition of Drax's BECCS project, Jefferies raises the target price to 660 pence from 280 pence and upgrades the FTSE 250 power generation company to buy from hold.

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Great 3Q Performance May Not Push Oil Majors Much Higher

0805 GMT - The strength of third quarter results may not matter much for integrated oil companies' performance if energy prices weaken from here, HSBC says. Current gas prices look unsustainable and there are downside risks to oil, the bank's analysts warn. "As strong as the near-term financial outlook is for the sector, we aren't convinced the oil and gas prices driving the latest rally are sustainable, or whether they could enable further sector outperformance from here in the face of continued valuation headwinds over energy transition risks." HSBC has a buy rating on Total, and a hold recommendation on BP, Chevron, ExxonMobil, Shell, ENI, Repsol and Equinor.

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Major Oil Companies' 3Q Cash Flows to Double from 2020 on Strong Prices

0838 GMT - Major oil companies are set to reach combined third quarter operating cash flow of around $60 billion in the third quarter, which would be up 14% from the second quarter and more than double that of the same period in 2020, HSBC forecasts. The latest spike in crude prices won't have really affected third quarter results, as it only started in the latter part of September, HSBC says. However, gas markets showed signs of real tightness for much of the quarter, the bank adds. "We can expect this to translate into another solid quarter for debt reduction, as well as plenty of confident messaging on cash distributions."

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Polymetal Achieving First Production at Nezhda Marks Important Milestone

0832 GMT - The successful launch of the Nezhda gold-silver mine marks an important milestone for Polymetal, RBC Capital Markets says. Shares in the mining company rise 1.6% after it reported that first production was achieved on Saturday. Now, RBC expects Polymetal to continue accelerating its growth pipeline. "Next up is Prognoz, a silver mine expected to enter production in Q3 23. The gold mine Veduga is also expecting board approval by the end of the year. Following these two projects is a potential POX-3 plant that will significantly upgrade downstream in-house processing capacity of refractory ore," RBC says.

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Schroders' 3Q Update Seen to Leave Sentiment Unchanged

0814 GMT - The trading update on the third-quarter performance of Schroders PLC's assets under management is not expected to drive material changes to consensus estimates, Citi says. The FTSE 100 asset manager's assets under management division performance missed consensus by 1%, but the performance of its wealth management division was 2% higher than anticipated, the U.S. bank notes. The company's wealth management division performance should encourage investors of the positive momentum on flows in wealth, Citi adds. Citi has a target price of 37.50 pence a share and a neutral rating on SDR shares.

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

(END) Dow Jones Newswires

10-18-21 0750ET

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