FTSE 100 Closed Higher as New UK Prime Minister Touts Energy Bill Support

The FTSE 100 on Tuesday closed up 0.2%, led by consumer cyclicals and financials, AJ Bell's Russ Mould says. "Investors appear to be betting that the potential relief on energy bills might help avoid the disastrous scenario previously feared whereby consumers would drastically cut back on spending," Mr. Mould adds. Meanwhile, the pound outperformed many of its peers by the end of the trading session with Liz Truss delivering a much-anticipated shock and awe announcement aimed at bringing energy prices under control, says Joshua Mahony, senior market analyst at online trading platform IG.

 
Companies News: 

Ashtead's FY 2022 Directors Pay Report Passed With Low Votes at AGM

Ashtead Group PLC said Tuesday that the resolution to approve the directors' remuneration report for fiscal 2022 passed with low votes in favor at its annual general meeting.

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Helical to Sell Farringdon East for GBP158.5 Mln

Helical PLC said Tuesday that it is selling its single asset company, Farringdon East (Jersey) Ltd., to Chinachem Group for 158.5 million pounds ($182.6" million).

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LSF XI Investments Mulls Revised Offer to Acquire Bank of Cyprus

LSF XI Investments LLC, or Lone Star, said Tuesday that it is considering a revised offer for Bank of Cyprus Holdings PLC after the lender rejected its latest cash proposal in August.

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Lamprell Remuneration Report Resolution Fails to Pass at AGM

Lamprell PLC said Tuesday that the resolution to approve its 2021 annual report on remuneration got 87.9% of votes against at its annual general meeting and failed to pass.

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XPS Pensions Appoints New Interim Chairman

XPS Pensions Group PLC said Tuesday that Senior Independent Director Alan Bannatyne will be appointed as interim chairman following the company's annual general meeting on Sept 8.

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Berkeley Group Remuneration Policy and Two Other Resolutions Passed With Low Level of Support

Berkeley Group Holdings PLC said Tuesday that resolutions proposed at the annual general meeting on the remuneration policy, the restricted share plan and the long-term option plan were approved with a low number of votes.

 
Market Talk: 

Finance Chiefs Use Zero-Based Budgeting As Potential Downturn Looms

1216 ET - Many finance chiefs scouting for efficiencies are relying on zero-based budgeting, a tool that gained attention during the pandemic, to identify potential savings as they prepare for a possible economic downturn. Zero-based budgeting requires finance executives to question and justify each line item in every new budget period. Among the businesses using zero-based budgeting to some extent are General Motors, Honeywell International, Coty, Hershey, Diageo PLC and Hewlett Packard Enterprise. "There is increased pressure on the chief financial officer to review the cost structure and to potentially outsource tasks," says Robert Willems, a senior managing director at consulting firm Accenture PLC. Total operating expenses at companies in the S&P 500 rose to a combined $3.34T in 2Q, according to S&P Global Market Intelligence. That's up from $2.86T in the prior-year period. ([e-mail]; @Nina_Trentmann)

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UK Inflation Expected to Fall Markedly if Energy-Price Freeze Is Implemented

1457 GMT - U.K. inflation is likely to have already peaked should the government freeze household energy prices at April levels, economists at Barclays say. The measure is likely to drag inflation lower starting in October, and by April price growth would be at 5%, 6.25 percentage points less than the current forecast, they say. "Inflation may also be even lower... once taking into account a price freeze for businesses, which would contribute to limit the spillover effects to consumer prices," Barclays says. By capping energy prices, the government would also help the Bank of England, the U.K. bank says. "Peaking and rapidly falling inflation, in a context of a slowing economy, would challenge calls for a faster pace of [policy] tightening," it says. ([e-mail])

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UK Utility Bill Freeze Would Be Expensive But Effective

1434 GMT - If incoming U.K. Prime Minister Liz Truss implements a price freeze on utilities, it would prove an effective--but expensive--sticking plaster, Capital Economics says. If domestic gas and electricity prices are frozen, then inflation may peak at around 11% in October this year, rather than 14.5% in January next year as currently forecast by Capital Economics, group chief economist Neil Shearing says in a research note. "The economy is still likely to enter recession, but the peak-to-trough fall in real GDP may be more like 0.5% than our current forecast of 1.0%," the U.K. economic-research firm says. ([e-mail])

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UK Fiscal Support Amid Energy Crisis Could Boost Inflation

1429 GMT - Incoming British Prime Minister Liz Truss has indicated that she will set out fiscal support for the unfolding energy crisis as early as Thursday, but paying for it will likely boost inflation, Deutsche Bank says. Spending pledges by Ms. Truss could total nearly GBP100 billion, with 20%-25% of spending paid for by cuts in departmental or capital spending over coming years, and the vast remainder adding to borrowing between now and 2024, Deutsche Bank senior economist Sanjay Raja says in a research note. Increased fiscal support should add to medium-term aggregate demand, raising inflation and an increase in the amount of central bank policy tightening needed to get inflation back to target, the German bank says. ([e-mail])

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BOE Might Slow Pace of Rate Rises if Truss Freezes Energy Bills

1429 GMT - The Bank of England could raise interest rates by a more gradual 25 basis points at its September 15 meeting if new U.K. Prime Minister Liz Truss freezes energy bills, HSBC Global Research says. If Truss freezes the energy price cap at current levels, it could mean inflation has already peaked, HSBC economists say in a note. "That would potentially reduce inflation expectations and the likelihood of a wage-price spiral--the two key reasons why the BOE chose to get 'forceful' in August." The BOE lifted rates 50bp in August. Another reason the BOE might favor a 25bp rate rise is that it is set to launch active quantitative tightening later this month, which will tighten monetary conditions further, the economists say. ([e-mail])

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Pebble Beach Keeps Capitalizing on Market's IP-Based Technology Transition

1424 GMT - Broadcasting-software company Pebble Beach Systems Group's 1H results were in line with the August trading update, finnCap analyst Andrew Darley says in a note. Despite increased working capital expenditure required from the inventory build to mitigate the effect of supply-chain challenges, net debt was reduced to GBP6.3 million from GBP6.6 million in 1H 2021, Darley says. The board is confident in its expectations, confident in its debt management and investment in product development, with 1H capitalized R&D investment rising 29% year-on-year to GBP900,000 as investment in product development to meet IP-based technology's market demands is key to the company's growth, Darley says. "Pebble continues to capitalize on the broadcast market transition to IP-based playout technology," he says. ([e-mail])

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Capricorn Energy Faces Takeover Doubts

1331 GMT - Capricorn Energy falls 2% after the oil-and-gas company formerly known as Cairn Energy said it is exploring a number of alternative deals in case its merger with Tullow Oil fails. The company said it was "mindful of the impact of external factors and market conditions" and was continuing to assess all options. Meanwhile, investors had suggested that the deal may be rejected due to the low premium of less than 5%, Panmure Gordon says. "The elephant in the room remains the terms of the takeover by Tullow," Panmure analyst Ashley Kelty says in a note. "This will be at the forefront of investors' minds for the time being." ([e-mail])

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Sterling Seem Hit by Loss of UK Monetary Policy Credibility

1316 GMT - A loss of monetary policy credibility in the U.K. might have contributed to sterling's recent underperformance despite higher interest rate rise expectations, RBC Capital Markets says. Long-term breakeven inflation rates--a measure of inflation expectations--have accelerated to levels well above the Bank of England's inflation target unlike most other markets where 10-year breakevens are mostly close to central bank inflation targets, RBC currency strategist Adam Cole says in a note. "While higher inflation expectations are positive for most G10 currencies, the relationship has always been more ambiguous for GBP and it is plausible that the decoupling of GBP from nominal rate spreads is related to this rise in inflation expectations." ([e-mail])

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DS Smith Maintains Momentum Despite Cost Pressure

1301 GMT - Shares in DS Smith rise 3% after the packaging group reported higher profits since May 1 and said it continues to back its expectations for fiscal 2023 despite higher costs. Smith has had to navigate a storm of rising input costs, but efficiency drives and a long-term energy hedging program have kept it nimble, Hargreaves Lansdown says. "The company's resilience shines through in this update, given that it is still expecting a significant improvement in performance, despite the easing off of e-commerce sales and a darkening economic outlook," HL analyst Susannah Streeter says in a note. ([e-mail])

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BT Group May Have to Make Up Ground in 2H

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09-06-22 1312ET