FTSE 100 Flat, BOE Expected to Keep Raising Interest Rates

BOE Expected to Keep Raising Interest Rates

Despite expected weaker economic growth, the Bank of England is likely to keep raising interest rates throughout this year to tame inflation, says Bank of America. "We assume higher near-term inflation leads the BOE to hike more than we previously expected," economists at the bank say. They now expect 25 basis-point interest-rate rises in March, May, June, August and November, compared with previous expectations for increases in March and May. They note inflation expectations are already running uncomfortably high and recent communication missteps have undermined the central bank's ability to use words to control expectations.

 
Companies News: 

Direct Line Pretax Pft Fell in 2021 on One-Off Costs; Declares Buyback

Direct Line Insurance Group PLC said Tuesday that pretax profit fell in 2021 because of restructuring and one-off costs, and it raised its final dividend and declared a share buyback.

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Ashtead Group 3Q Pretax Profit Rose on Higher Revenue

Ashtead Group PLC said Tuesday that pretax profit rose for the third quarter of fiscal 2022 as revenue increased, and that it expected results for the full year to be ahead of the board's previous expectations.

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British Land Enters Into JV With AustralianSuper After Selling London Project Stake

British Land Co. said Tuesday that it has sold 50% of its share in the Canada Water Masterplan for 290 million pounds ($380 million) to AustralianSuper, and entered into a joint venture with the pension fund.

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M&G 2021 Pretax Profit Fell, Announces GBP500 Mln Share Buyback

M&G PLC reported Tuesday a fall in 2021 pretax profit, but also an increase in its assets under management, and declared a return to shareholders via a share buyback.

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Fresnillo 2021 Results Boosted by Higher Precious-Metals Prices

Fresnillo PLC on Tuesday reported an 11% rise in 2021 pretax profit on revenue that was boosted by higher precious-metals prices.

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Made.com 2021 Pretax Loss Widened on Higher Costs; Outlook Seen Stronger

Made.com Group PLC reported on Tuesday a significantly widened pretax loss for 2021, noting that its performance was hit by industry wide global freight inflation and supply-chain disruptions.

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Johnson Service Swung to 2021 Pretax Profit; Outlook Positive on Strong Sales Pipeline

Johnson Service Group PLC reported Tuesday a swing to a pretax profit for 2021 and said the business is well-positioned for medium- to long-term growth given its strong sales pipeline.

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Foxtons to Start a GBP3 Mln Share Buyback Program

Foxtons Group PLC said Tuesday that it will begin a share buyback of up to 3 million pounds ($3.9 million), funded from accumulated cash resources.

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Predator Shares Rise After Update on Morocco Gas Exploration

Predator Oil & Gas Holdings PLC shares were up on Tuesday after the company said that development of the MOU-1 well in Morocco remains on track, and that it seeks to accelerate monetization as gas prices surge due to geopolitical tensions.

 
Market Talk: 

Energy Crisis Likely to Weigh on UK Government Spending

1230 GMT - Bank of America estimates U.K. public sector borrowing at GBP100 billion in the 2022/23 fiscal year as the energy crisis bites. The government has announced a package of support to help households with rising energy bills. "We assume the government more than doubles the utility bill rebate planned for October from GBP200 to GBP500 and cancels the previously planned GBP40 a year surcharge starting in April 2023," BofA economists say.This has prompted the U.S. bank to raise its forecast for public sector borrowing in 2022/23 by GBP300bn to GBP100bn.

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Greggs Longer-Term Outlook is Bright Despite Cost Rises

1230 GMT - Greggs's longer-term prospects are intact despite cost pressures, Panmure Gordon says. The U.K. bakery chain's full-year results were in line with a trading statement in January, Panmure says. Despite positive trading this year, with like-for-like sales in company-managed sites up 3.7% in the first nine weeks of 2022, Greggs has highlighted higher-than-expected raw material, energy and wage costs. Still, Panmure says the long-term investment case for the shares, including opening more shops and increasing the number of those offering home delivery, remains unchanged. "We therefore maintain our buy recommendation, reducing our target price slightly to 3,690p (from 3,795p), reflecting the modest change to our forecasts," Panmure says. Shares fall 6% to 2,143 pence.

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Synectics Seen With Potential for Significant Profit Uplift as Normal Business Resumes

1148 GMT - Synectics is set to become a beneficiary of a vaccine-led recovery at some stage, Shore Capital analysts say. The U.K. provider of security and surveillance systems announced a five-year contract award with National Grid and, given its strategic focus on multiyear revenue contracts, the quality of these profits should also improve, the analysts say. Furthermore, although Asia's gaming sector remains subdued, North America's signs of increased customer activity are encouraging, Shore says. "Notwithstanding the current events in Ukraine, we continue to believe that, when more normal trading conditions return, there remains the potential for a significant uplift in profits as sales growth resume." Shore has Synectics as a house stock. Shares are up 2.3% at 112.50 pence.

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Fresnillo Shares Sparkle After FY Results

1105 GMT - Shares in Fresnillo are among the FTSE 100 Index's biggest risers, up 4% after the Mexican silver miner reported an 11% rise in 2021 pretax profit on revenue boosted by higher precious-metal prices. RBC Capital Markets says the results were better than it had expected, but a miss versus consensus forecasts, with full-year EBITDA of $1.21 billion 5% above RBC's prediction of $1.15bn, but 5% below market expectations of $1.27bn. "We rate Fresnillo outperform," RBC says. "Albeit higher capex guidance together with cost inflation could drive consensus downgrades, we see macro drivers outweighing operational performance in a year that was anticipated to be challenging."

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M&G Dividend Yield Should Please Income-Seeking Investors S

1048 GMT - M&G's 2021 performance showed the strength of its capital position and an increase of assets under management that could offset the lower pretax profit disappointment, Interactive Investor says. Moreover, a coverage ratio of 218%, dividend payout and share buyback program of GBP500 million should be welcomed by the market, the investment platform says. "The [dividend] yield of 10.3% is not only the highest in the FTSE 100, but is also a clear invitation to income-seeking investors, as opposed to growth investors who have not been rewarded in recent times," Interactive Investor says. Shares are up 11% at 198.3 pence.

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Greggs' 2021 Was Good But Cost Pressures Are Biting

1033 GMT - Greggs has gone through a turbulent time with the coronavirus pandemic before dusting itself down well to record results 2021 results, but it is now feeling cost pressures going into the new year, Shore Capital says. The on-the-go retailer has a robust balance sheet, but it has high continuing capital expenditure plans and considerable operating lease liabilities, Shore says. Given Greggs management's cautious comments on the cost environment--cautioning it won't make profit progress in 2022 as a result--along with general worries on the U.K.'s consumer outlook and the possibility Greggs has set unachievable medium- to long-term targets, Shore retains its sell stance on the company's stock. Shares are down 7.4% at 2,114 pence.

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Greggs Still Has Growth Potential Despite Cost Pressure

1020 GMT - Shares in Greggs drop 6.2% after the U.K. bakery-shop chain said it doesn't expect material profit progress in 2022 due to cost pressures. Greggs has recovered well from coronavirus-related disruption, with sales and profit now well ahead of 2019 levels, trading firm eToro says, though the bakery chain is facing raw-material price inflation, supply shortage and rising staff costs. "As a result, it isn't expecting to increase its profits over the coming year," eToro analyst Adam Vettese says. "While the fundamentals of the business look strong, this is why Greggs's share price is coming under intense pressure this morning. However, these are short-to-medium term issues and we still believe the firm has plenty of growth potential."

Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka Halas at [e-mail]

(END) Dow Jones Newswires

03-08-22 0842ET