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FTSE 100 Rallies on Easing Stagflation Fears, Bargain Hunters

09/29/2021 | 10:20am EST

The FTSE 100 closed up 1.1% on Wednesday as stocks rebounded after a jump in U.S. bond yields triggered a selloff in the previous session. Some of the concerns around stagflation eased, which together with bargain hunters piling in, lifted equities, IG Group chief market analyst Chris Beauchamp said. "A small drop in Treasury yields has eased some of the pressure on equities, and with market internals approaching 'washout' levels again the urge to buy the dip has come storming back," Mr. Beauchamp said. Just one more day of the third quarter remains and volatility still remains high compared with summer levels, but current market action still has a "clearing the decks" feel about it as investors prepare for the fourth quarter, he said.

 
Companies News: 

Stranger Holdings Agrees to Reverse Takeover

Stranger Holdings PLC said Wednesday that it has entered into a deal to acquire certain Africa-based resource assets, which will constitute a reverse takeover of the company given the scale of acquisition.

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Arbuthnot Banking Sells Further Stake in Secure Trust

Arbuthnot Banking Group PLC said Wednesday that it has raised gross proceeds of around 2.5 million pounds ($3.4 million) via the sale of a further 220,000 ordinary shares of Secure Trust Bank PLC.

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CMO Group Swung to 1H Pretax Profit

CMO Group PLC reported Wednesday a swing to a pretax profit for the first half of 2021 and said that its forecast on delivering double-digit sales growth in the second half is in line with full-year expectations.

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Avingtrans Swung to FY 2021 Pretax Profit

Avingtrans PLC said on Wednesday that it swung to a pretax profit for fiscal 2021 as revenue increased, and that despite, the effects of the pandemic, its markets continue to develop and M&A opportunities remain a priority.

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Fintel PLC Chairman Gary Hughes Steps Down, Ken Davy Named Interim Chairman

Fintel PLC said Wednesday that Nonexecutive Chairman Gary Hughes is stepping down with immediate effect for personal reasons, and that Deputy Chairman Ken Davy will replace him on an interim basis.

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Sanderson Design Names Mike Woodcock as New CFO

Sanderson Design Group PLC said Wednesday that Mike Woodcock will become the company's chief financial officer and a board director of the group on Nov. 1.

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Roquefort Preliminarily Agrees to Buy Lyramid for GBP1 Mln

Roquefort Investments PLC said Wednesday that it has entered a preliminary agreement with Provelmare Holding SA to purchase Lyramid Ltd. for 1 million pounds ($1.4 million) in a reverse takeover.

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Harvest Minerals 1H Pretax Loss Narrowed, 2H Performance Seen as Robust

Harvest Minerals Ltd. said Wednesday that its first-half pretax loss narrowed as revenue increased, and that the board expects a robust performance in the second half.

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Lukoil Acquires 25% Interest in Offshore Project in Caspian Sea from BP

Lukoil PJSC said Wednesday that it has agreed to acquire a 25% interest in the Shallow Water Absheron Peninsula exploration project in the Azerbaijan sector of the Caspian Sea from BP PLC for an undisclosed sum.

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MyCelx Technologies Swung to 1H Profit on Higher Revenue

MyCelx Technologies Corporation on Wednesday reported a swing to pretax profit for the first half of 2021 as revenue increased amid a resurgence in bidding activity across the industries where the company operates.

 
Market Talk: 

Derwent London's Margins to Be Challenged by Flat Office Markets

1308 GMT - Derwent London's targeted development profit margins appear likely to remain lower than historical levels in what seems to be an increasingly complex market, RBC Capital Markets says. The property-investment-and-development company is likely to face challenges despite its relatively well-placed portfolio and strategy, with a relatively flat rental market forecast for London offices and as tenants become increasingly demanding and costs rise, the Canadian bank says. "At the same time, we expect a drag from older buildings pre-redevelopment to be more noticeable in a flattish market," RBC says. The bank retains its underperform rating and price target of 2,850 pence on Derwent, saying its discount to historical multiples is justified by the company's lower returns and growth.

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Sterling Moves in Opposite Direction to UK Yields

1305 GMT - Sterling has moved in the opposite direction of U.K. yields since early September with the currency failing to benefit from a widening in short-term swap rate spreads in favor of the U.K., RBC Capital Markets says. One explanation for this is that sterling is perhaps starting to behave more like an emerging markets currency where widening rates spreads reflect rising credit risk, which drives wider risk premium in the currency, RBC currency strategist Adam Cole says. "It could also reflect markets worrying about over-tightening by the Bank of England as rate expectations rise, while household real incomes are squeezed by higher energy and other prices, along with lower benefit payments."

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BHP's London Shares Could Take Cash, Listing Hit

1221 GMT - BHP Group's London-listed shares could lose ground in the face of lower cash and uncertainty surrounding the miner's plans to scrap its FTSE 100 listing, RBC Capital Markets says. With the property cycle in China turning, BHP's excess cash flows have dissipated, while lower iron-ore prices have led to BHP's profitability metrics normalizing, RBC says. "The complications and uncertain dynamics of the dual-listed company unification could see the recently accrued premium to the London line at risk," RBC analyst Tyler Broda says. "For global investors, we see better options elsewhere and downgrade to sector-perform. In Australia, BHP still stacks up and the recommendation remains unchanged [at outperform]."

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SSP's Medium-Term Prospects Seen as Positive

1141 GMT - SSP's update implying 2021 revenue of around GBP820 million was encouraging from a balance-sheet perspective, Goodbody says. The food-and-beverage outlet operator's 2H was better than Goodbody's expectations, especially from a cashflow perspective, and this helps to derisk the company in the recovery phase, with healthy liquidity of GBP900 million. The fact that it reiterated its 2024 expectations is a positive, particularly from a margin perspective, the Irish brokerage says. "We remain positive on the medium-term prospects for SSP and believe there is a considerable market share opportunity for the group to pursue, alongside the recovery in underlying passengers," the broker says. Goodbody rates the stock buy. Shares are down 4.5% at 276.70 pence.

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IAG Stock Has Potential to Fly Higher

1135 GMT - International Consolidated Airlines Group shares have potential tailwinds, says Deutsche Bank, increasing its recommendation on the owner of British Airways and Iberia to buy from hold and its target price to 260 pence from 225 pence. With the U.S. set to ease entry requirements in early November and the shares having fallen from about 217 pence in March--their highest this year--Deutsche says there is a better backdrop for IAG's shares to progress. "We're therefore raising IAG to buy from hold, with an increased [target price] of 260 pence...implying over 40% potential upside to the shares," says analyst Jaime Rowbotham. Shares rise 1.5% to 185 pence.

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Higher UK Mortgage, Consumer Borrowing Poses Risk to Recovery

1118 GMT - An increase in mortgage and consumer borrowing in the U.K. in August highlights some risks that the economy may take a small step back, says Capital Economics. Bank of England Money and Credit data published Wednesday showed households took on GBP400 million of consumer credit in August, while mortgage lending rose GBP5.3 billion in the month, reversing a GBP1.8bn decline in July ahead of the end of the stamp duty holiday. "The tepid increase in consumer credit in August provides more evidence that the economy didn't regain much momentum after stagnating in July," says chief U.K. economist Paul Dales, adding that there's a risk that at some point the economy will take a step backwards.

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SSP Still in the Middle of Its Recovery Phase

1107 GMT - SSP is still in the middle of its recovery and although progress is being made it might be a while before profits return to pre-pandemic levels, Russ Mould at AJ Bell says. Continuing restrictions on travel, and businesses questioning the need to spend as much on travel as they did pre-Covid-19, means demand from domestic travelers is stronger than from international and business, Mould says. For the food-and-beverage outlets operator this means increased pressure to keep costs down and manage cashflow carefully as countries with slower vaccine rollouts are seeing slow travel activity, creating an uneven backdrop, Mould says. "SSP must also contend with higher input cost inflation and struggles of finding enough workers among other factors," he says.

Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka Halas at sarka.halas@wsj.com

(END) Dow Jones Newswires

09-29-21 1220ET

Stocks mentioned in the article
ChangeLast1st jan.
AJ BELL PLC -8.37% 361.4 Delayed Quote.-16.68%
AJ NETWORKS CO., LTD. -1.67% 5290 End-of-day quote.14.63%
ARBUTHNOT BANKING GROUP PLC 0.30% 832.5 Delayed Quote.7.07%
AVINGTRANS PLC 0.62% 407.5 Delayed Quote.43.99%
BELIEVE -0.90% 17.64 Real-time Quote.0.00%
BHP GROUP -0.48% 39.71 End-of-day quote.-6.41%
BP PLC 1.24% 337.5 Delayed Quote.32.10%
DEUTSCHE BANK AG 0.33% 10.922 Delayed Quote.22.05%
DOW JONES AFRICA TITANS 50 INDEX -0.34% 517.02 Delayed Quote.-2.10%
FINTEL PLC 3.69% 225 Delayed Quote.24.83%
FTSE 100 -0.55% 7129.21 Delayed Quote.10.96%
IG GROUP HOLDINGS PLC -1.28% 772.5 Delayed Quote.-10.38%
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, S.A. 0.74% 132.74 Delayed Quote.-17.20%
PJSC LUKOIL 1.15% 6721.5 End-of-day quote.30.06%
S&P AFRICA 40 INDEX -0.01% 167.86 Delayed Quote.-1.38%
SANDERSON DESIGN GROUP PLC 0.00% 172 Delayed Quote.93.26%
SECURE TRUST BANK PLC -2.63% 1295 Delayed Quote.48.00%
SSP GROUP PLC 0.22% 225.5 Delayed Quote.-17.90%
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