FTSE Down, Pound's Recent Struggles Look Likely to End

09/09/2021 | 09:31am

Pound's Recent Struggles Look Likely to End

The pound has struggled so far in the second half of 2021, but it should strengthen towards year-end, Bank of America says. The failure of real U.K. economic activity data to match elevated expectations has been a key reason the pound has failed to continue its strong first-half performance as many investors had anticipated, BofA analysts say. "We continue to believe that the next trend remains higher headed into year-end," they say. If the pound continues to receive support from investment flows into the U.K. and the gap between sterling positioning and expectations for economic growth converge, the currency's recent consolidation is likely coming to an end, the analysts say. GBP/USD rises 0.3% to 1.3812 and EUR/GBP falls 0.2% to 0.8568.

 
Companies News: 

EMIS Group 1H Pretax Profit Fell; Sees Meeting 2H Expectations

EMIS Group PLC said Thursday that first-half pretax profit fell after booking higher costs and that it expects to meet the board's expectations for the second half.

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Cenkos Securities 1H Pretax Profit, Revenue Rose

Cenkos Securities PLC said Thursday that first-half pretax profit and revenue rose, and that it is optimistic about the remainder of 2021.

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Capital & Regional 1H Loss Narrowed; Partners With Far East Consortium International

Capital & Regional PLC said Thursday that its first-half loss narrowed on lower revaluation costs and that it has signed a strategic partnership with Far East Consortium International Ltd.

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Sportech Swung to Pretax Profit in 1H

Sportech PLC on Thursday reported a swing to pretax profit for the first half of 2021, and said it has no debt, with significant cash to deliver to shareholders and invest.

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Jadestone Energy Says 1H Performance Was Solid

Jadestone Energy Inc. reported Thursday a decline in pretax profit despite a rise in revenue for the first half of 2021, and said that its financial position at the end of the period was very strong.

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Curtis Banks 1H Profit, Revenue Rose

Curtis Banks Group PLC said Thursday that first-half profit rose on higher revenue as it continued its plan to diversify the business.

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Rurelec Sells Gas Turbine for $1 Mln

Rurelec PLC said Thursday that it has agreed to sell a gas turbine generating set for $1 million to The Independent Power Corporation PLC.

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EasyJet to Raise $1.65 Bln in Rights Issue, Shares Fall

Shares in easyJet PLC fell Thursday after the company said it would launch a fully underwritten rights issue to raise 1.2 billion pounds ($1.65 billion), and has secured a new $400 million credit line to repair its balance sheet.

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Mothercare Says Retail Performance Improved Significantly in Year to Date

Mothercare PLC said Thursday that it achieved retail sales of 136 million pounds ($187.3 million) and adjusted Ebitda of GBP4.0 million in the first 21 weeks of the financial year.

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EasyJet Founder Set to Shun Rights Issue, Diluting Stake Amid Takeover Interest

EasyJet PLC founder Stelios Haji-Ioannou isn't expected to participate in the airline's planned 1.2 billion-pound ($1.65 billion) rights issue, potentially heavily diluting his stake just as the company becomes the focus of takeover attention after disclosing a rejected approach.

 
Market Talk: 

EasyJet Bid Shows Some Think Its Shares Are Good Value

1155 GMT - EasyJet trades more than 10% lower after the European budget airline announced a GBP1.2 billion fund-raising and said it had rejected a takeover approach from an unidentified suitor. "Early losses for easyJet following news of a rejected takeover and a rights issue have pushed the shares into negative territory for the year, which rather underlines how expectations of a sudden return to flying and holidays at the beginning of the year were misplaced," IG analyst Chris Beauchamp says. "The optimism of early April has been replaced by increased pessimism, which for some dip-buyers will doubtless be irresistible. Today's bid news shows some people at least clearly think easyJet is good value."

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Wickes Trading Buoyancy Could Boost 2021 Prospects

1132 GMT - Wickes is likely to report resilient demand in first-half results due Sept. 16, even as the home-improvement market returns to normal after the coronavirus pandemic, Citigroup says. Overall 1H performance is set to be strong and in line with management's underlying pretax profit guidance, while trading in July and August is also likely to have held up relatively well, the U.S. bank says. "We believe the resilience of home-improvement demand at elevated levels--versus 2019--is likely to drive further upside risks to 2021 estimates," Citi analysts say.

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Pernod Ricard's Momentum Should Continue to Fizz

1117 GMT - Pernod Ricard's solid fiscal 2022 outlook, bolstered by strong 2021 results, mean it should close the valuation gap to rivals, J.P. Morgan Cazenove says. The French drinks company trades at a more than 15% discount to its spirits peers, despite broadly similar midterm earnings growth outlooks, JPM Cazenove says. Pernod's top-line momentum looks set to continue, supported by a buoyant recovery in whisky exports and good market-share dynamics in Europe, China and India, it says. The brokerage upgrades its 2022 EPS estimates by 5% and raises the stock to overweight from neutral. Shares are up 1.4% at EUR188.65.

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Hays Investors Are Underestimating Growth Prospects, Barclays Says

1111 GMT - Hays gains 1.6% to 168 pence after Barclays upgrades the recruitment-agency firm to overweight from equal-weight and its price target to 195p from 120p. A strong market rebound is underway, the market is underestimating Hays's growth potential and the shares look better than those of rival PageGroup, Barclays says. Industry data shows high demand for new digital/information technology roles across multiple sectors, cost savings imply higher longer-term conversion margins and Hays could return cash worth more than 25% of its current market capitalization in the next five years, the bank says. "We currently have a preference for Hays' shares...due to their higher exposure to job categories likely to benefit the most post-Covid," Barclays analysts say.

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Wm. Morrison Shares Shrug Off 1H Profit Decline

1033 GMT - Wm. Morrison Supermarkets' share price didn't suffer the effects of the company posting a sharp fall in profits for the first half. The British grocer is a decent business and all eyes are set on the various bids that have driven its share price to its current record-high levels, CMC Markets analyst Michael Hewson says. "The bigger question is whether the business in question is worth what the two bidders are looking to pay, or whether today's numbers prompt a reassessment on the part of one or other of the interested parties," Hewson adds. Shares are up 0.2% at 293.00 pence, having risen 65% since the start of the year.

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Energy Rally to Benefit Exposed Utilities, Attract Political Attention

1027 GMT - European power prices and future curves continued to rally on Wednesday, setting new records in Germany and the U.K. If these higher prices are to be applied to financial forecasts, meaningful earnings upgrades would be expected for commodity-sensitive companies such as Centrica, SSE, Drax, Uniper and RWE, even after taking into account input costs and hedged positions, RBC Capital Markets says. However, these higher prices are likely to come into the political spotlight as consumer bills start to rise and costs increase for the heavy industry, RBC says.

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EasyJet's Fundraise Plan Signals Expectations of a Difficult Winter

1025 GMT - EasyJet's decision to raise GBP1.2 billion sent shares on a nosedive as its forecast of a roughly 60% capacity over the next six months suggests the low-cost carrier has a hard winter ahead, Laura Hoy at Hargreaves Lansdown says. The airline could benefit from legacy carriers paring down some routes indefinitely and leaving space for it to increase its presence at major airports which it couldn't do without an injection of cash, she says. "It's a risky move, particularly if the pandemic continues to drag on beyond the winter. However it's sink or swim time in the aviation industry and the move could pay off if easyJet is able to expand its presence into more profitable routes," Hoy says. Shares are down 8.6% at 720.80 pence.

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Capital & Regional Mid-Term Outlook Stays Bright

1018 GMT - Capital & Regional is maintaining operational momentum despite declining asset valuations, Panmure Gordon says following the property firm's first-half results. C&R said its 1H loss narrowed on lower re-valuation costs and it signed a partnership with Hong Kong-listed real-estate developer Far East Consortium International. While net tangible assets have fallen, operational activity has picked up and C&R is targeting new areas such as start-up independent retailers, Panmure says. "Therefore, whilst the balance sheet remains stretched (72% loan-to-value) and management continues to liaise and negotiate with its lenders, we remain optimistic about the medium-term outlook," Panmure analyst Miranda Cockburn says. "Given continued uncertainties, we retain our hold rating." Shares rise 4.5%.

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

(END) Dow Jones Newswires

09-09-21 0930ET

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