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FTSE Edges Higher, Pound Expected to Fall in 4Q on Weaker Growth Outlook

10/04/2021 | 07:25am EST

Pound Expected to Fall in 4Q on Weaker UK Growth Outlook

Sterling could fall in the final quarter of 2021 as supply constraints and weaker consumer confidence weigh on the near-term U.K. economic outlook, MUFG Bank says. With "economic downside risks outweighing upside inflation risks," the market may think its decision to price in three rate increases in 2022 is excessive, MUFG analysts say. Alternatively, the Bank of England could raise interest rates to stem inflation in an "uncertain growth environment," they say. MUFG now expects GBP/USD to fall to 1.3370 and EUR/GBP to rise to 0.8600 in the fourth quarter, compared to its previous forecasts of 1.4040 and 0.8550 respectively. GBP/USD last trades at 1.3581 and EUR/GBP is at 0.8547.

 
Companies News: 

Riverstone Energy Increases Buyback Program to GBP40 Mln

Riverstone Energy Ltd. said Monday that it has increased it buyback program to 40 million pounds ($54.2 million).

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VP Performing in Line With Board's Expectations; Revenue at 96% of Pre-Pandemic Levels

VP PLC said Monday that it was performing in line with the board's expectations, and that revenue was running at 96% of pre-Covid-19 levels.

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Caledonia Mining Raises Quarterly Dividend by 8%

Caledonia Mining Corp. said Monday that it is increasing its quarterly dividend by 8%.

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BrandShield Systems Agrees on $2.5 Million Loan With Israeli Bank

BrandShield Systems PLC said Monday that it has agreed on an eight million Israeli shekel ($2.5 million) loan with Leumi Bank, and that it will use the funds to support the company's growth.

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Great Southern Copper to Float on London Stock Exchange

Great Southern Copper PLC said Monday that it is planning to float on the London Stock Exchange.

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Aura Energy Says Trading on ASX Has Been Halted Temporarily, Shares in London Rise

Shares in Aura Energy Ltd. rose Monday after it said the Australian Securities Exchange approved a halt in the trading of its shares on the ASX at the close of business on Oct. 4, but that trading on the AIM continues as usual.

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Zoltav Resources Shares Fall on New Credit Facilities, Potential Delisting

Zoltav Resources Inc. shares fell Monday after it said it has entered two non-revolving credit facilities with Sberbank Rossia, which it said will require it to materially reduce overheads and potentially drop its AIM listing.

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Petrofac Puts Bribery Case to Rest With GBP77 Mln Fine, Shares Rise

The Southwark Crown Court on Monday fined Petrofac Ltd. 77 million pounds ($104.3 million) in relation to bribery offences.

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United Oil's North Sea License Buyer Unwilling to Invest Further

United Oil & Gas PLC noted Monday that Hibiscus Petroleum Berhad is currently unwilling to commit to further investment in the P2366 license in the U.K. North Sea.

 
Market Talk: 

Furlough Scheme End Likely to Deter December Rate Rise

1300 GMT - The recent end of the furlough scheme could delay an interest rate rise in the U.K. to February next year, says Bank of America. While an earlier move is possible, the end of the furlough scheme in September is a factor that could stand in the way of a December rate rise, U.K. economist Robert Wood says, stressing that if unemployment rose materially the BOE may yet wait. He expects the BOE to start raising the bank rate in February 2022 by 15 basis points to 0.25%, but sees risk of earlier rise, which would not imply more rate rises, he says.

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Coronavirus Boosters, Drugs May Help Limit Europe Cases

1258 GMT - European coronavirus cases may still rise towards winter, but hospitalizations look set to stay low due to boosters and new oral drugs, J.P. Morgan Cazenove says. Between Sept. 27-Oct. 3, infection levels in Denmark rose by 25%, in Austria by 9% and in the U.K. by 1%. In the Netherlands, cases were flat and in all other countries monitored by JPM, cases fell: in Spain by 15%, France 16%, Italy 11%, Germany 1%, Sweden 17%, Belgium 14% and Switzerland 21%, JPM says, adding that booster jabs for older people and single doses in 12-17 year olds should help. "Further reductions in the hospitalization rate could come from using Merck & Co's molnupiravir, orally administered after a confirmed infection," JPM says.

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Vertical Nabs Joby's Chief Pilot

0857 ET - Fledgling air taxi operators are battling for talent, as well as investment and the blessing of regulators, with UK-based Vertical Aerospace luring Joby Aviation's chief test pilot. Justin Paines joins after three years at Joby, with the first flight of Vertical's eVTOL offering slated for next year. The firm's backers include American Airlines, Bristow and Avolon.

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GlaxoSmithKline Seen Confident About Meeting 2021 Guidance Despite Challenges

1246 GMT - GlaxoSmithKline Chief Executive Emma Walmsley is confident that the company could still achieve its 2021 guidance despite potential headwinds to its shingles vaccine Shingrix, JPMorgan Cazenove says as it relays remarks from a conference call with the executive. Sales of the shot might experience headwinds related to Covid-19 boosters displacing Shingrix vaccinations, as well as to the delta variant disrupting vaccination uptake. There is confidence in the drug's medium-term potential, however, JPMorgan says. Potential offsets to the Shingrix situation should come from the company's broader product portfolio and from tight cost control, JP Morgan Cazenove says, citing GlaxoSmithKline's chief executive.

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Airline Bookings Improve as US Eases Travel Restrictions

1245 GMT - European airline bookings continued to improve in the week ending Sept. 26, driven by a spike in international sales after the U.S. said it was easing of travel restrictions from Europe, Bank of America Global Research says. Daily website traffic in the period for British Airways was around 2% above 2019's level, and while Wizz Air's was up around 5%. Ryanair's website traffic was around 1% below 2019's levels, while easyJet's was around 14% down. Daily flights from all U.K. airports have gradually increased since mid-May, with Ryanair averaging 2,341 daily flights, followed by easyJet's 1,058, Wizz Air's 607, and British Airways' 459, BofA says. London-listed shares in British Airways owner IAG were up 1.1% at 190.14 pence, while shares in Ryanair were up 2.5% at EUR17.66.(

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Petrol Crisis Could Force BofA to Raise UK Inflation Forecasts

1236 GMT - Rising petrol prices after a shortage of drivers left fuel pumps dry across the U.K. could force Bank of America to revise its inflation forecasts higher, the U.S. bank says. Citing the U.K.'s motoring organisation RAC, U.K. economist Robert Wood says petrol prices could rise by 4%-5% in the coming weeks, which could add 15 basis points to the U.S. bank's October inflation forecast of 3.9%. "Depending how quickly that price surge unwinds we may need to raise our inflation forecasts beyond October," he says.

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Nuclear Seen as Most Likely Beneficiary of UK's Green Power Plans

1230 GMT - The most likely beneficiary from the U.K. government's plans to have a 100% green power generation mix in Britain will be nuclear, RBC says. The technology is now likely to get further support by 2030 as much of the incumbent nuclear fleet decommissions in the early 2020s, RBC says. And another positive may be for power company Drax Group, which aims to become carbon negative by 2030 through bioenergy with carbon capture and storage technology, and will play a further role in decarbonizing the U.K.'s power system, the bank says. The Times of London has reported that U.K. Prime Minister Boris Johnson will this week announce that all of Britain's electricity generation will be green by 2035.

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Imperial Brands Core-Market Focus Set to Face Spotlight

1225 GMT - Imperial Brands investors are likely to want to see that the tobacco company's renewed focus on its core markets is paying off in an end-of-year trading statement Wednesday Oct. 6, Hargreaves Lansdown says. "Having lagged badly in their Next Generation Products business, Imperial's challenge here now is to show that it can still fight its weight in this critical source of future growth," HL fund manager Steve Clayton says. "Progress on debt reduction could allow the group to talk more confidently on future capital allocation, although our view is that the group will want to make greater progress here before making changes."

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Greggs Investors Likely to Eye Costs, Supply Issues

1215 GMT - Greggs investors are likely to eye any impact on the U.K. bakery chain of cost and supply-chain pressures caused by the coronavirus pandemic and the U.K.'s exit from the EU in a third-quarter trading update Tuesday. The statement looks set to show sales within touching distance of 2019's pre-pandemic level, Hargreaves Lansdown says. "However, the big unknown at the third quarter is cost inflation," HL analyst Nicholas Hyett says. "Food-input inflation was already creeping up three months ago, but widely-reported labor shortages and supply-chain disruption across the economy are likely to have increased that."

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

(END) Dow Jones Newswires

10-04-21 0925ET

Stocks mentioned in the article
ChangeLast1st jan.
AMERICAN AIRLINES GROUP INC. -8.79% 17.75 Delayed Quote.12.56%
ASX LIMITED -1.78% 91.17 End-of-day quote.26.63%
AUSTRALIAN DOLLAR / BRITISH POUND (AUD/GBP) 0.01% 0.53551 Delayed Quote.-5.05%
BANK OF AMERICA CORPORATION -3.93% 45.76 Delayed Quote.50.97%
BRANDSHIELD SYSTEMS PLC -1.45% 17 Delayed Quote.-32.02%
BRISTOW GROUP INC. -6.47% 31.37 Delayed Quote.19.19%
CALEDONIA MINING CORPORATION PLC -1.16% 12.8 Delayed Quote.-19.40%
CANADIAN DOLLAR / BRITISH POUND (CAD/GBP) -0.15% 0.58808 Delayed Quote.1.83%
DJ INDUSTRIAL -2.53% 34899.34 Delayed Quote.14.03%
DRAX GROUP PLC 0.18% 566 Delayed Quote.50.67%
EURO / BRITISH POUND (EUR/GBP) -0.04% 0.8462 Delayed Quote.-5.01%
GLAXOSMITHKLINE PLC 0.56% 1518.4 Delayed Quote.12.58%
GREGGS PLC 1.41% 3028 Delayed Quote.66.76%
HARGREAVES LANSDOWN PLC -2.22% 1390 Delayed Quote.-6.79%
HIBISCUS PETROLEUM BERHAD -6.96% 0.735 End-of-day quote.26.72%
IMPERIAL BRANDS PLC 0.81% 1562.5 Delayed Quote.0.88%
INDIAN RUPEE / BRITISH POUND (INR/GBP) -0.28% 0.009995 Delayed Quote.0.03%
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, S.A. 3.96% 136.44 Delayed Quote.-17.77%
JPMORGAN CHASE & CO. -3.01% 161.93 Delayed Quote.27.43%
LONDON BRENT OIL 0.56% 76.08 Delayed Quote.59.07%
LONDON STOCK EXCHANGE PLC -1.26% 6760.96 Delayed Quote.-23.96%
PETROFAC LIMITED 3.16% 114.2465 Delayed Quote.-19.91%
PJSC SBERBANK -4.09% 304.28 End-of-day quote.12.24%
RIVERSTONE ENERGY LIMITED 0.84% 480 Delayed Quote.60.27%
RIVERSTONE HOLDINGS LIMITED 2.90% 0.71 End-of-day quote.-36.04%
RYANAIR HOLDINGS PLC 5.95% 14.87 Real-time Quote.-13.66%
SOUTHERN COPPER CORPORATION -2.68% 57.71 Delayed Quote.-11.38%
STEM, INC. -3.30% 21.09 Delayed Quote.3.08%
US DOLLAR / BRITISH POUND (USD/GBP) -0.03% 0.749384 Delayed Quote.2.52%
VP PLC 1.14% 974.95 Delayed Quote.22.03%
WTI 0.32% 71.572 Delayed Quote.60.61%
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