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LONDON BRIEFING: Bridgepoint buys ECP; Barratt cuts dividend

6th Sep 2023 07:46

(Alliance News) - Stocks in London are called lower on Wednesday, as the recent uptick in oil prices sours the mood.

On Tuesday, the Saudi Arabian energy ministry said the kingdom's production cut of one million barrels per day which first took effect in July will continue "for another three months until the end of December 2023". Russia's export cut of 300,000 barrels per day will continue for the same period, Deputy Prime Minister Alexander Novak said in a separate statement.

Oil rose above USD90 for a barrel of Brent, helping to fuel fears of renewed inflationary pressures across the global economy.

"The central banks, including the [Federal Reserve], will have little choice but to keep their monetary policies sufficiently tight to prevent an uptick in inflation. That could mean further rate hikes, or keeping the rates at restrictive levels for longer, in which case, oil prices make a U-turn and cheapen due to recession and global demand concerns," said Ipek Ozkardeskaya, Swissquote Bank senior analyst.

In early UK company news, Barratt Developments reported lower annual completions, scaling back dividend payments and ruling out share buybacks for the time being. Bridgepoint, meanwhile, launched a GBP50 million buyback, and announced plans to acquire ECP GBP835 million, after which point it will split its chair and CEO roles.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called down 40.9 points, 0.6%, at 7,397.03

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Hang Seng: up 0.1% at 18,459.35

Nikkei 225: closed up 0.6% at 33,241.02

S&P/ASX 200: closed down 0.8% at 7,257.10

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DJIA: closed down 195.74 points, or 0.6%, at 34,641.97

S&P 500: closed down 0.4% at 4,496.83

Nasdaq Composite: closed down 0.1% at 14,020.95

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EUR: up at USD1.0736 (USD1.0713)

GBP: up at USD1.2580 (USD1.2564)

USD: down at JPY147.17 (JPY147.66)

GOLD: up at USD1,927.99 per ounce (USD1,926.63)

OIL (Brent): down at USD90.14 a barrel (USD90.31)

(changes since previous London equities close)

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ECONOMICS

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Tuesday's key economic events still to come:

11:00 CEST EU retail trade

11:00 IST Ireland unemployment

09:30 BST UK construction PMI

09:30 BST UK narrow money and reserve balances

07:00 EDT US MBA weekly mortgage applications survey

08:00 EDT US Fed Boston President Susan Collins speaks at New England Council breakfast event

08:30 EDT US international trade in goods and services

08:55 EDT US Johnson Redbook retail sales index

09:45 EDT US services PMI

10:00 EDT US ISM services PMI

10:00 EDT US retail trade

14:00 EDT US Federal Reserve Beige Book

16:30 EDT US API weekly statistical bulletin

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German factory orders saw a sharp fall in July, according to Destatis figures. On a monthly basis, they fell 11.7% in July, more than the 4.0% market consensus cited by FXStreet. June's figure was upwardly revised as a 7.6% rise from 7.0%. On an annual basis, orders were 10.5% behind July 2022, compared to a upwardly revised reading of 3.3% growth in June. "Much of the sharp decline in new orders in July 2023 is due to a very large order reported in the manufacture of air and spacecraft in June 2023," the statistics office explained.

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BROKER RATING CHANGES

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RBC cuts Hikma Pharmaceutical to 'sector perform' - price target 2,150 pence

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RBC cuts Hargreaves Lansdown price target to 875 (925) pence - 'sector perform'

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Goldman Sachs cuts boohoo price target to 43 (50) pence - 'neutral'

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COMPANIES - FTSE 100

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Homebuilder Barratt Developments reported bottom-line progress in its recently concluded financial year, despite lower completions. In the year to June 30, pretax profit rose 9.8% to GBP705.1 million from GBP642.3 million a year before, as revenue edged up just 1.0% to GBP5.32 billion from GBP5.27 billion. Completions fell 3.9% to 17,206 from 17,908, which the firm said reflected the market slowdown experienced from September 2022. On an adjusted basis, pretax profit fell 16% to GBP88.43 million as adjusted operating margin fell to 16.2% from 20.0%. It proposed a final dividend of 23.5 pence per share, bringing the annual total to 33.7p, behind the previous year's payout of 36.9p. It said there would be "no further share buybacks at this stage". "Whilst there remains a clear need for increased housebuilding in the UK, short-term demand has been impacted by mortgage affordability challenges," it noted. Barratt reiterated guidance for total home completions between 13,250 and 14,250 in financial 2024.

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COMPANIES - FTSE 250

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Bridgepoint said it has added Energy Capital Partners to its platform, in a cash and shares acquisition worth GBP835 million. "ECP is a market leader in value-add infrastructure specialising in energy transition and sustainability-focused investing," the private equity investor said. The acquisition will be subject to shareholder approval. Following the acquisition, it plans to split the roles of CEO and chair. William Jackson will be chair and continue to focus on the core private equity business. Meanwhile, managing partner Raoul Hughe, an "architect of both ECP and Bridgepoint Credit transactions", will become CEO from October 1. Hughes will lead the business on a day-to-day basis, and join the ECP board. Further, Bridgepoint announced plans for a new GBP50 million share buyback. It has current repurchased GBP43 million of its existing GBP50 million programme.

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GCP Infrastructure Investments said it has been unable to agree on structure and terms with RM Infrastructure Income of a possible combination, and has therefore terminated discussions. GCP Infra is a Jersey-based investment fund, which specialises in UK infrastructure. RMII is an investor in loans to infrastructure assets. Last month GCP Infra and GCP Asset Backed Income announced a proposed merger with RMII. GCP Asset Backed Income, also known as GABI, is a London-based UK asset backed loan investor. GCP Infra said it remains in discussions with GABI over a proposed combination of the two companies. "Heads of Terms have been agreed and a shareholder feedback exercise is being conducted," GCP Infra said. Meanwhile, RMII said it has decided to put forward proposals for a "managed wind-down" of the company

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OTHER COMPANIES

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UK-bound flights from a Greek Island have been cancelled as the region continues to be battered by severe rainstorms and widespread flooding. Storm Daniel is causing severe flooding across the region, with streams overflowing their banks and water sweeping cars into the sea. Jet2 said all its flights due to depart the island on Tuesday and Wednesday – five in total – have been cancelled. The airline said it was monitoring the forecast and will confirm new departure times as soon as possible. Four flights scheduled from the UK to the Island on Wednesday have also been cancelled.

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By Elizabeth Winter, Alliance News senior markets reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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