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LONDON BRIEFING: Vodafone-Three deal faces deeper UK probe

4th Apr 2024 07:43

(Alliance News) - London's FTSE 100 is called to open higher on Thursday, despite remarks from Federal Reserve Chair Jerome Powell failing to soothe lingering interest rate worries.

While Powell said it will "appropriate" to cut rates this year, he also warned on the perils of moving too soon.

In recent days, investors have reconsidered whether three cuts, something the Fed's own projections suggested, is a realistic prospect this year. Nonetheless, US stocks came off session lows by the close overnight.

"Amidst a backdrop of global economic uncertainties and shifting monetary policies, Wednesday saw US stocks grappling with a challenging rebound effort, struggling to shake off the turbulent start to the second quarter. Heightened concerns surrounding the Federal Reserve's less dovish stance on potential interest rate cuts added to the market's prevailing unease," SPI Asset Management analyst Stephen Innes commented.

"Despite concerted attempts to regain ground, market performance remained largely flat at the close. This tepid response may be interpreted as a mixed outcome, suggesting both resilience in the face of adversity and lingering apprehension among investors."

In early UK corporate news, both Ocado and Entain announced chair succession plans, while Vodafone UK's tie-up with Three UK will face greater watchdog scrutiny.

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 0.1% at 7,944.44

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Hang Seng: financial markets in Hong Kong closed for holiday

Nikkei 225: up 0.8% at 39,773.14

S&P/ASX 200: up 0.5% at 7,817.30

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DJIA: closed down 43.10 points, 0.1% at 39,127.14.

S&P 500: closed up 0.1% at 5,211.49

Nasdaq Composite: closed up 0.2% at 16,277.46

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EUR: up at USD1.0842 (USD1.0827)

GBP: up at USD1.2654 (USD1.2630)

USD: down at JPY151.67 (JPY151.72)

GOLD: higher at USD2,296.31 per ounce (USD2,286.90)

OIL (Brent): lower at USD89.53 a barrel (USD89.69)

(changes since previous London equities close)

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ECONOMICS

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Thursday's key economic events still to come:

09:00 BST eurozone composite PMI

10:00 BST eurozone PPI

08:55 BST Germany composite PMI

11:00 BST Ireland unemployment

09:30 BST UK composite PMI

13:30 BST US trade balance

13:30 BST US initial jobless claims

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UK food suppliers have warned of higher prices and empty supermarket shelves thanks to a new post-Brexit border charge being introduced at the end of the month. Importers will have to pay up to GBP145 to bring small amounts of products such as cheese, salami and fish through the port of Dover or the Eurotunnel from April 30, according to guidance published on Wednesday. The fee is intended to cover the cost of operating the border control posts introduced after Brexit, and will not apply to goods brought into the UK for personal use. But importers warned the new charges could lead to higher prices for consumers.

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The UK government's plans to abolish the special non-dom tax status leave open a loophole worth more than GBP400 million, the opposition Labour party has claimed. At the spring budget, Chancellor Jeremy Hunt announced plans to abolish the current system for taxing non-domiciled wealthy foreigners living in the UK, which allows them to pay tax only on their UK earnings. Instead, he said this would be replaced with a "modern, simpler and fairer residency-based system", with the resulting GBP2.7 billion a year raised from scrapping the special status put towards tax cuts. Under the new system, anyone who has been a tax resident in the UK for more than four years would have to pay tax on their foreign income and other gains.

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Irish service sector growth continued to accelerate in March, according to numbers from a survey. The AIB services PMI rose to 56.6 in March from 54.4 in February, marking the fastest pace of expansion since last July. With the number coming in further above the 50.0 neutral mark, it suggests a further acceleration in Irish service sector growth, following February's rebound. The strongest growth was seen in financial services, though all other sectors saw robust rates of expansion. The manufacturing sector has not kept up pace, however, as reported earlier in the week. The manufacturing PMI fell to 49.6 in March from 52.2 in February, indicating a renewed, but marginal, downturn, as the figure fell back below the 50.0 no change mark. The composite PMI fell to 53.2 from 54.4, due to a drop in manufacturing. The composite PMI is a combination of the services and factory scores.

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BROKER RATING CHANGES

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Berenberg starts 4imprint with 'buy' - price target 7,365 pence

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Numis cuts CMC Markets to 'sell' (hold) - price target 182 (160) - pence

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COMPANIES - FTSE 100

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The merger of Vodafone's UK offering with CK Hutchison-owned Three UK will move to an in-depth probe, a UK watchdog said. The Competition & Markets Authority said any measures to soothe antitrust concerns were not offered to the regulator. "The CMA has therefore decided to refer this merger for a phase 2 investigation," it said. In March, it said the planned merger could raise consumer prices and harm investment into UK mobile networks. Both are major providers of mobile telecommunication services in the UK. Vodafone and CK Hutchison announced plans in June to combine the UK businesses into a joint venture, with Vodafone to own 51% and CK Hutchison 49% of the combined operation. This would bring their roughly 27 million customers under a new, single network provider.

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A deadline for Mondi to make a firm offer for packaging sector peer DS Smith has been extended. Mondi had until the close of pay on Thursday to table a bid, though the 'put up or shut up' deadline has been extended to April 23. "DS Smith is continuing discussions with Mondi regarding the combination. There can be no certainty that any firm offer will be made," DS Smith said. Last week Tuesday, DS Smith confirmed that it is in discussions with International Paper, which is also eyeing a bid. Its proposal values DS Smith at GBP5.72 billion, while Mondi's values it at GBP5.14 billion.

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Entain said it has named Stella David, currently the Ladbrokes owner's interim chief executive, as its next chair. Barry Gibson will step down as chair by the end of September, or sooner depending on when Entain appoints a permanent CEO. "The search for a permanent CEO is ongoing and is progressing well," it said. Jette Nygaard-Andersen stepped down as CEO in December. Gibson took over as chair in November 2019. He played an "integral role in the transformation from GVC to Entain", the firm said.

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Ocado Group Chair Rick Haythornthwaite will not seek re-election at the company annual general meeting in April of next year. The online grocer and warehouse technology firm put this down to Haythornthwaite's "increasing commitment" after he became chair of lender NatWest. " have given extensive thought to my workload, listened to all parties and reflected on how I ensure that I deliver effectively on all fronts. With the benefit of time and greater visibility of the expected growth in requirements of the publicly-listed portfolio, it has become evident that pressure on my time is likely to increase over the medium term. Given that Ocado has a strong and stable board, a high-quality management team as well as good momentum in business performance, I have made public my intention to step down a year from now to ensure that the company has sufficient time for a measured chair succession," Haythornthwaite said.

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COMPANIES - FTSE 250

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Business-to-business media and events company Ascential said it plans a GBP850 million return to shareholders, through a tender offer, special dividend and share buyback. It explained GBP300 million will be returned through the tender offer, GBP450 million through the special dividend and GBP100 million through the buyback. The special payout will be accompanied by a share consolidation, "to maintain the comparability of Ascential's share price and per-share metrics before and after special dividend", it added.

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Online magazine publisher and owner of the Go Compare price comparison website Future hailed a return to organic revenue growth in its second quarter ended March 31. "The return to growth has been driven by a strong performance in Go.Compare, alongside good growth in B2B, and a resilient performance in magazines," it said. It noted a continued "challenging performance" in digital advertising, however, "as macroeconomic pressures and low visibility continue to impact the wider sector". It said it is on track to meet its full-year expectations.

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OTHER COMPANIES

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Cross-border payments and foreign exchange firm CAB Payments celebrated being granted a European licence. Its Dutch unit will be "eligible to provide services across the European Economic Area under the passporting regime". It added: "This is one of the operational and strategic initiatives that underpin the group's growth aspirations for 2024 and beyond. CAB Payments is confident that being able to provide services across the EEA will bring significant opportunity for the business and for the clients and the markets it serves. The Dutch licensed firm will be based in The Netherlands and will operate under the name of CAB Payments Europe."

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Motorpoint Group hailed a "strong and profitable" fourth-quarter, and the motor retailer expects its full-year pretax loss to be at the "favourable end of management expectations" as a result. It noted "positive momentum" in the fourth-quarter ended March 31. "As a consequence, January, February and March were all profitable months. Consumer demand has picked up, and we have benefitted from the numerous enhancements made to our digital presence during the past year which, among other things, is generating strong website traffic," Motorpoint said. Retail volumes rose around 9% on-year in the fourth-quarter.

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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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