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Fall in UK Inflation Isn't Likely to Prevent a Rate Hike in the Short-Term

10/20/2021 | 03:53am EST

Fall in UK Inflation Isn't Likely to Prevent a Rate Hike in the Short-Term

0911 GMT - The dip in consumer-price inflation in September probably won't deter the Bank of England from raising interest rates from the current 0.1% in the coming months, Capital Economics' chief U.K. economist Paul Dales says. Inflation is set to accelerate in the short-term on the rise of utility prices, while the further rise of producer prices due to supply shortages signals a further boost to CPI goods inflation, he says. However, inflation will fall close to 2% by the end of next year as base effects drop out of the annual rate and supply shortages ease, Dales says. "That's why we doubt the Bank [of England] will raise interest rates very far," he says. (xavier.fontdegloria@wsj.com)

 
Companies News: 

Segro Third-Quarter Rental Income Rose

Segro PLC said Wednesday that the rental income it contracted during the third quarter of 2021 rose 63%, and its vacancy rate declined further on the back of strong demand for space.

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Antofagasta Expects Copper Production to Fall in 2022

Antofagasta PLC on Wednesday forecast lower copper production for 2022, reflecting a lack of rainfall and lower grades at its Centinela Concentrates operation.

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Avast 3Q Revenue, Adjusted Ebitda Rose; Reaffirms FY Outlook

Avast PLC said Wednesday that its adjusted Ebitda and revenue for the third quarter of 2021 increased when compared with the year-earlier period, and reiterated its full-year outlook.

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Deliveroo 3Q Orders, Gross Transaction Value Rose; Raises Full-Year Transaction Value Guidance

Deliveroo PLC said Wednesday that it saw a rise in orders and gross transaction value in the third quarter of 2021, and raised its guidance for gross transaction value for the year.

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Burberry Appoints Versace's Jonathan Akeroyd as New CEO

Burberry Group PLC said Wednesday that it has appointed Jonathan Akeroyd, currently Gianni Versace SpA's chief executive, as its new CEO.

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Real Good Food Sees Positive 1H Ebitda as Revenue Returns to Pre-Pandemic Levels

Real Good Food PLC said Wednesday that it achieved profitability at the Ebitda level in the first half of the fiscal year, as revenue returned to pre-pandemic levels.

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Anglo American Says De Beers' Rough-Diamond Sales Fell

Anglo American PLC said Wednesday that rough-diamond sales by its majority-owned De Beers Group fell 6.1% in the eight sales cycle of 2021 compared with the previous cycle, but said sales were higher compared with the same cycle last year.

 
Market Talk: 

Antofagasta Faces Unfavorable Weather Conditions, Political Risk

0925 GMT - Antofagasta has released an iffy production report which has put the miner on the back foot, AJ Bell analyst Danni Hewson says. The company's copper operations in Chile, which require plenty of water to function, are facing epic drought conditions, she says. Moreover, there are concerns about looming changes to Chilean mining royalties which could see Antofagasta get a smaller share of production revenues, Hewson says. "In the wake of Covid and amid elevated commodity prices, countries may well be tempted to increase their take as they look to rebuild broken public finances and the mining sector may have to prepare itself for a wave of resource nationalism," the analyst warns. (jaime.llinares@wsj.com)

Antofagasta 3Q Production Was in Line With Expectations

0917 GMT - Antofagasta reported third-quarter copper production of 181,100 metric tons, which was in line with expectations, Peel Hunt says. Gold output was slightly higher than forecast, which helped keep net cash costs low at $1.16 a pound, below Peel Hunt's projection of $1.22. In addition, the brokerage says forecasts of lower copper production for 2022 should have been expected: "Guidance of 660-690kt for 2022 comes as no surprise given the heavy warnings made earlier in the year about the drought situation at Los Pelambres--our estimates are already in line with the newly-issued guidance." Shares fall 4.1%. (jaime.llinares@wsj.com)

Antofagasta Expected to Increase Dividends as Expansion Projects Are Completed

0910 GMT - The end of the current capital expenditure cycle, combined with strong copper pricing, will allow Antofagasta to deliver strong dividend payments in 2022 and 2023, Peel Hunt says. The brokerage forecasts a dividend of 166 cents a share for next year and 132 cents in 2023, which would be up from the 2021 estimate of 89 cents. The mining company's expansion projects remain on schedule and budget for completion through 2022, Peel Hunt says. The desalination plant at Los Pelambres will remove water as a constraint for the copper mine, allowing Antofagasta to increase production to full capacity ahead of expansion completion, it says. (jaime.llinares@wsj.com)

UK Inflation Slips But Increase Is Expected

0848 GMT - U.K. inflation dropped in September as the positive 'Eat Out to Help Out' program base effect ended, but a sharp increase is expected for October, driven by utility price rises and a partial VAT increase, HSBC says. Utility prices are set for another jump in April, petrol prices are rising and supply shortages haven't gone away, HSBC's senior economist Chris Hare says. "So despite a calmer month in the inflation data, the worst of the inflation squeeze is yet to come," he says. The extent of U.K. rate increases priced in by markets isn't warranted by fundamentals, Hare says. While HSBC's expectation is for the first rate rise in February, continuing inflation fears mean risks are tilted toward an earlier increase. (maria.martinez@wsj.com)

No Rain in Chile Means No Gain for Antofagasta

0838 GMT - Antofagasta should be a huge beneficiary of the commodities boom, but its copper mines are being affected by a decade-long drought in Chile that has gone from bad to brutal, Freetrade analyst Gemma Boothroyd says. The company needs water to separate the mineral from the ore, so as water supplies run dry, the risk Antofagasta's profits start to shrivel does too, she says. The company expects production to fall next year, and in August pulled down guidance for 2021. "The question for copper-hungry investors now is whether they have a better choice. The metal continues to smash record prices, but is water-starved Antofagasta their best bet?," Boothroyd says. (jaime.llinares@wsj.com)

Crest Nicholson Shares Look Cheap, Says Peel Hunt

0835 GMT - Shares in Crest Nicholson Holdings rise 1.3% to 378 pence after the U.K. house-builder said financial and operational progress meant it plans to expand into new geographical areas, with new medium-term targets. The group is targeting more rapid volume increases in the longer term, supported by an extra three or more divisions, Peel Hunt says, adding that the the shares look cheap. "We reiterate our add recommendation and 460p target price," Peel analysts say. (philip.waller@wsj.com)

Contact: London NewsPlus, Dow Jones Newswires; Dow Jones Newswires; paul.larkins@wsj.com

(END) Dow Jones Newswires

10-20-21 0553ET

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