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LONDON BRIEFING: Hipgnosis Songs Fund backs new Blackstone bid

29th Apr 2024 07:50

(Alliance News) - London's FTSE 100 is called to open higher on Monday, with heady gains for US tech stocks on Friday brightening the mood in Europe and Asia at the start of the new week.

Focus this week will be on what Federal Reserve Chair Jerome Powell has in store at the US central bank's post-decision press conference. The Fed is expected to keep rates unchanged.

"A hawkish hold is expected, where the central bank stand pat, and Fed Chair Powell confirms that there has been a setback in officials' confidence that inflation is on a sustainable path toward its target," Bannockburn Global Forex analyst Marc Chandler commented.

In addition to the Fed decision, there is a stacked diary of corporate events to come this week, including updates from lender HSBC on Tuesday, pharmaceutical firm GSK on Wednesday, oil major Shell on Thursday and hotel company IHG on Friday.

In early UK corporate news, the Hipgnosis Songs Fund takeover saga may have hit a crescendo, with Blackstone now in pole position to acquire the company. AstraZeneca reported a favourable assessment of a cancer drug by EU health experts. Beazley reported a decent start to the year and Frasers announced a new share buyback.

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

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MARKETS

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FTSE 100: called up 0.5% at 8,181.23

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Hang Seng: up 1.0% at 17,830.43

Nikkei 225: financial markets in Tokyo closed for holiday

S&P/ASX 200: up 0.8% at 7,637.40

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DJIA: closed up 153.86 points, 0.4%, to 38,239.66

S&P 500: closed up 1.0% at 5,099.96

Nasdaq Composite: closed up 2.0% to 15,927.90

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EUR: up at USD1.0719 (USD1.0676)

GBP: up at USD1.2528 (USD1.2453)

USD: down at JPY156.88 (JPY157.41)

GOLD: down at USD2,331.21 per ounce (USD2,333.37)

OIL (Brent): down at USD87.36 a barrel (USD88.26)

(changes since previous London equities close)

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ECONOMICS

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Monday's key economic events still to come:

13:00 BST Germany CPI

11:00 BST Ireland CPI

11:00 BST Ireland GDP

11:00 BST Ireland retail sales

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UK Prime Minister Rishi Sunak has again refused to rule out a July general election, amid speculation that a disastrous set of local elections results for the Tories could force his hand. Sunak said he would not "say anything more than I've already said", which is that the national poll is likely to be in the second half of the year. Most Westminster analysts take this as meaning October or November, although it could technically also mean July. But a drubbing in mayoral and council elections on May 2 could either lead to a challenge to his leadership or persuade him that an earlier polling day could be a better solution than limping on with a divided party.

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UK Chancellor Jeremy Hunt is set to hold a summit to attract companies to London's stock market, it has been reported. Hunt has invited the bosses of some of Britain's most prominent private technology firms to meet on May 16 at Dorneywood, his private residence, according to Sky News. It comes amid a dearth in stock market listings and a slew of listed companies leaving the City. The day-long event would target fintech and biotech entrepreneurs who could turn their firms public, sources told Sky News. The invitation reportedly said that Hunt will "discuss the UK's capital markets and how they can support innovative, high-growth companies such as yours to achieve your growth ambitions". Digital banks Monzo and Starling Bank are understood to have been invited, Sky News said.

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Vacancies in the UK have fallen for the fifth month in a row, sparking a warning that jobseekers face a "turbulent" year looking for work. Jobs site Adzuna said vacancies fell by 0.5% to 862,294 in March – 17% lower than a year ago. The decline came as the number of people out of work recently rose to 4.2%, said Adzuna, adding there are now almost two jobseekers per vacancy, the highest figure since August 2021. Jobs across public relations, advertising and marketing were worst affected last month, dropping by more than 11% compared with February, as companies scale back their marketing spend, said the report. Trade and construction vacancies fell by 8.2%.

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BROKER RATING CHANGES

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Barclays cuts JD Sports to 'equal weight' - price target 140 pence

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HSBC reinitiates Serco with 'buy' - price target 210 pence

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COMPANIES - FTSE 100

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AstraZeneca said its Truqap drug, in combination with Faslodex, has been recommended for approval in the EU to treat a form of breast cancer. The recommendation comes from the Committee for Medicinal Products for Human Use, part of the European Medicines Agency. It follows trial results which showed the drug combination "reduced the risk of disease progression or death by 50% versus Faslodex alone". Separately, the drugmaker said trial results showed its Enhertu offering, which it develops jointly with partner Daiichi Sankyo, "demonstrated a statistically significant and clinically meaningful improvement in progression-free survival" compared to standard chemotherapy in some breast cancer sufferers. Progression-free survival is the length of time a sufferer of a disease lives without the disease worsening. "The safety profile of Enhertu was consistent with previous breast cancer clinical trials with no new safety signals identified. The data will be presented at a forthcoming medical meeting and shared with global regulatory authorities," it added.

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Insurer Beazley hailed a "solid start to the year" and maintained annual guidance. Beazley said insurance written premiums rose 7.2% to USD1.48 billion in the three months to March 31, from USD1.38 billion a year prior. Beazley added: "Overall, claims experience for the first quarter is as expected. Total natural catastrophe activity so far this year has been within the margins we hold in our reserves for such events." Combined ratio guidance for the year is unmoved "at low 80s on an undiscounted basis". A combined ratio below 100% means a profit on underwriting, so the lower the better.

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Sports Direct owner Frasers Group said it plans a new share buyback programme of up to GBP80.0 million which will run until it reports annual results for the financial year which concluded on Sunday. "The purpose of the programme is to reduce the share capital of the company. The shares repurchased by the company will be held in treasury pending cancellation or re-issue," it added. The firm will release annual results in July.

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COMPANIES - FTSE 250

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Hipgnosis Songs Fund backed a USD1.57 billion takeover offer from Blackstone, trumping a previous offer from Concord. Blackstone will pay USD1.30 in cash for each share in the music investment company, around 104 pence. It is a premium of 4.0% to Concord's USD1.51 billion offer. Concord had raised its bid from USD1.40 billion last week, in a bid to thwart Blackstone. HSF no longer recommends that new Concord offer. Concord sweetened its bid after HSF earlier in April noted Blackstone was mulling a USD1.50 billion offer. Hipgnosis Chair Robert Naylor said: "Since we started our strategic review, we have been clearly focused on looking at all the options to deliver shareholder value. We are delighted that, following competitive interests in acquiring Hipgnosis, our investors now have a chance to immediately realise their holding at an increased premium." Blackstone has around USD1 trillion in assets under management. It has assets in sectors including real estate, public debt and equity and life sciences. HSF added: "Among its investments within the media and entertainment sectors, through its portfolio company Hipgnosis Songs Assets, managed by Hipgnosis Song Management Ltd which is majority owned by Blackstone, Blackstone owns music rights catalogues from leading artists and songwriters. Blackstone's other investments in the space include SESAC, the US performance rights society and Candle Media." Hipgnosis Song Management is HSF's investment adviser.

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OTHER COMPANIES

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Petrofac delayed its annual results, warned it will book "an incremental loss" in its Engineering & Construction arm and reported an update in its financial restructuring. The oilfield services firm said an "ad-hoc group" of senior secured noteholders have proposed giving the company "further credit" of up to USD300 million. The financing would "require the conversion of a significant proportion of the group’s existing debt to equity", the company said. Petrofac added that it does not expect to make the payment of a bond coupon due on May 15, but noted the payment has a 30-day grace period. It said the ad-hoc group of noteholders represent around 41% of the outstanding notes. They have entered into a forbearance agreement with Petrofac pledging not to take any action on the outstanding notes until at least the end of June. Petrofac also added it expects to "recognise an incremental loss in its E&C division" of around USD130 million for 2023. Back in December, it had warned of a risk "in relation to the timing of the negotiations" at the Thai Oil Clean Fuels project. Petrofac and its partners have been in talks with a client on the reimbursement of additional project costs. "Management does not expect to have progressed discussions sufficiently to recognise the expected outcome of the negotiations in its accounts," it added. Petrofac's 2023 results, which had been due for release this month, will now be published by the end of May. Its shares will be suspended on Wednesday until the results are published.

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Banco Bilbao Vizcaya Argentaria reported profit growth and raised its profit outlook on the back of upgraded net interest income expectations in Spain. The Bilbao, Spain-based lender said net profit jumped 19% to EUR2.20 billion in the first quarter of 2024 from EUR1.85 billion a year prior. Gross profit climbed 18% to EUR8.22 billion from EUR6.96 billion. Net interest income rose 15% to EUR6.51 billion from EUR5.64 billion. Return on equity improved to 16.9% in the first quarter of 2024 from 15.5% in the first quarter of 2023. Noting sensitivity to market impacts however, BBVA's fully loaded common equity tier 1 ratio slipped to 12.8% from 13.1%, but remained above its target range of 11.5% to 12.0%. The CET1 ratio compares a bank's capital against its risk assets, with a higher ratio being more financially sound. Looking ahead, BBVA said its outlook for 2024 net profit improved to double-digit growth, citing upgraded net interest income in Spain and the general interest rate environment. Back in January, it only had said it expected continued growth in 2024.

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By Eric Cunha, Alliance News news editor

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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