Weak UK Retail Sales Could Hamper Sterling's Rise
Data showing an unexpected 0.9% fall in U.K. retail sales in
August, against the consensus forecast in a WSJ poll for a rise of
0.8%, "may take some of the momentum out of the rise in U.K. money
market rates and also GBP," ING says. The impact may be limited,
however, as the weak figures are unlikely to prompt the Bank of
England to "deliver a 'rate protest'" against market pricing of
future interest-rate rises at next week's meeting, ING says. This
is likely to leave GBP/USD gravitating around 1.3800 and EUR/GBP
near 0.8500, it says. GBP/USD is last up 0.1% at 1.3801, having
traded at around 1.3806 before the data. EUR/GBP rises 0.1% to
0.8535, versus around 0.8525 beforehand.
Safestay Says Board Was Approached About Possible Offer
Safestay PLC said on Friday that the board has received a "very
early stage and highly conditional approach" from a third party in
relation to a possible offer for the company.
Volvere 1H Pretax Loss Narrowed
Volvere PLC on Friday reported a significantly narrowed pretax
loss for the first half of 2021, noting that its financial position
continues to be strong, with high liquidity.
Accsys Technologies Five-Month Performance Marked by Sales,
Accsys Technologies PLC said Friday that its performance in the
first five months of fiscal 2022 was strong, marked by growth in
sales and revenue.
Proton Motor Power Systems 1H Pretax Loss Narrowed
Proton Motor Power Systems PLC reported on Thursday a
significantly narrowed pretax loss for the first half, noting that
it is generating a positive gross margin.
Steppe Cement 1H Pretax Profit, Revenue Rose
Steppe Cement Ltd. said Friday that pretax profit rose in the
first half of the year as revenue increased.
GoldStone Resources Shares Drop on Continued Halt to Gold
Production at Ghanian Mine
Shares in GoldStone Resources Ltd. fell on Friday after the
company said that it hasn't been able to start gold production at
the Homase Mine in Ghana.
NextEnergy Solar Fund Enters Into GBP100 Mln Joint Venture with
NextEnergy Solar Fund Ltd. said Friday that it has entered into
a 100 million-pound ($137.9 million) joint-venture partnership with
Eelpower Ltd., a battery storage specialist in the U.K.
Midatech Pharma 1H Loss Narrowed Sharply
Midatech Pharma PLC said Friday that its first-half loss
narrowed significantly from the prior year.
Live Company Posts Narrowed 1H Pretax Loss on Lower Exceptional
Live Company Group PLC on Friday reported a narrowed pretax loss
for the first half of 2021 but said revenue fell due to Covid-19
Ashtead Group Notes Some Shareholder Opposition to Remuneration
Ashtead Group PLC said Friday that resolutions relating to
director remuneration got relatively low votes in support at its
annual general meeting.
HSBC, StanChart Set to Benefit From Better Asia Outlook
0936 GMT - Asia-focused banks look set for a boost from better
prospects in the region, Barclays says, raising its recommendations
on HSBC to over-weight from under-weight and Standard Chartered to
equal-weight from under-weight. Barclays says that while it prefers
HSBC, both banks should benefit from an improving outlook, with
revenue momentum set to accelerate. "We argue near-term growth
concerns and China policy developments are driving weak valuations,
limiting downside risk and under-appreciating sizeable upside
potential. With both stocks trading at rare discounts, we see
attractive entry points," Barclays analysts say, raising their
price target on HSBC to 530 pence and on StanChart to 550p. Shares
gain 1.6% to 375p and 0.2% to 442p respectively.
BOE Communication Seen as Key as Two New Policymakers Join
0933 GMT - Bank of England officials face an "awkward moment for
the U.K. economy" and communication will key to see which factors
they prioritize in their policy decisions, says Luke Bartholomew,
senior economist at Aberdeen Standard Investments. With
inflationary pressures mounting at the same time that growth is
slowing, the Bank may be facing a trade-off over which factors it
prioritises, he says. While the new members of the Bank's
decision-making body, Catherine Mann and Huw Pill, are unlikely to
vote against the committee's majority in their first meeting,
"investors will need to follow Bank communication carefully over
the next few months, and brace for some volatility if we are indeed
starting the rate hiking cycle next year," he says.
BOE May Need to Signal if Market Rate Speculation Has Gone Too
0931 GMT - Money markets and U.K. sovereign debt are all pricing
a higher chance of interest-rate rises next year, and the Bank of
England may need to signal markets next week whether current
speculation has gone too far, says Luke Bartholomew, senior
economist, Aberdeen Standard Investments. "Speculation is mounting
that the Bank will start to increase interest rates next year," he
says. However, he thinks the current bout of higher inflation will
prove to be transitory and that unemployment may increase around
the end of the furlough scheme. "The Bank will need to signal to
markets quickly if it thinks current hiking speculation has gone
too far, otherwise it risks these predictions having a certain
self-fulfilling logic," he says.
Decline in UK Retail Sales Signals Shift to Services
0903 GMT - The fall in U.K. retail sales in August reflects
households spending more on non-retail categories as life returns
closer to normal, after the Covid-19 lockdowns triggered a plunge
in spending on services, Capital Economics' chief U.K. economist
Paul Dales says. However, the decline in retail sales is still a
source for concern as high-frequency data don't point to a surge in
non-retail spending either, suggesting that some of the weakness
may be due to consumers becoming more cautious as Covid-19 cases
rise, he says. "The data suggest that the economy didn't regain
much momentum in August after growing by just 0.1% on month in
July, but a rise in non-retail spending will probably prevent GDP
from declining," Dales says.
Markets Overprice Prospect of BOE Rate Rises, Says Deutsche
0818 GMT - Interest-rate markets are overpricing prospects of
the Bank of England raising interest rates next year, says Deutsche
Bank. "Rates pricing is consistent with 50 basis-point base rate by
end of 2022 and a very flat curve hereafter implying 75 basis
points as the long run terminal rate," DB's Sanjay Raja and Panos
Giannopoulos say. The February 2022 overnight index swap, currently
at 15.9 bps, is implying around a 70% chance of a 15 basis-point
increase, they note. "Whilst of course a February [rate] hike could
materialize, it is far from a foregone conclusion." The analysts
estimate a rate increase in February should be less than 50% priced
at this stage given the net balance of risks.
UK Retail Sales Decline Reflects Supply Constraints, Demand
Rotating Into Services
0801 GMT - August's fall in U.K. retail sales reflects demand
rotating into services, HSBC's senior economist Elizabeth Martins
says. U.K. retail sales fell 0.9% on month in August, the third
decline in four months. "U.K. retail sales volumes are still higher
than pre-pandemic, but having had a roaring start to the reopening
period, they have lost some momentum," Martins says. The rotation
into services is evident on the food sales side, she says. Sales in
food stores fell 1.2% on the month in August, while Open Table data
showed restaurant bookings increased and, according to the Office
of National Statistics, social spending did too. The drop in retail
sales also reflects supply constraints, as consumers can't buy what
isn't on the shelves, Martin says.
BOE Expected to Keep Policy On Hold
0756 GMT - The Bank of England is expected to keep monetary
policy on hold at next week's meeting. "It remains too early to
expect a further hawkish pivot from the Monetary Policy Committee
at this stage," says Deutsche Bank. Growth has slowed materially
and while hiring, unemployment and job vacancies have been
positive, "the scale of furloughed staff remains worryingly high
with only weeks to go on the furlough scheme," DB's Sanjay Raja and
Panos Giannopoulos say. The likely uncertainty around labour market
slack combined with the slowdown in demand and uncertain health
outlook could weigh on the final Monetary Policy Report later this
year, they say.
Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka
Halas at firstname.lastname@example.org
(END) Dow Jones Newswires
September 17, 2021 05:59 ET (09:59 GMT)
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