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Large UK Fiscal Tightening Could Reduce Need for Rate Rises in 2023

11/17/2022 | 06:45am EST

Large UK Fiscal Tightening Could Reduce Need for Rate Increases in 2023

1012 GMT - Significant cuts to government spending and tax increases in the autumn statement on Thursday are likely to impact the Bank of England's economic projections and reduce the need for further rate increases in 2023, say Barclays analysts in a note. However, the analysts say much of the fiscal tightening is already priced in by the market and the announcement is unlikely to materially impact the course of inflation for now. "With much of the fiscal tightening likely to be pencilled in for the medium term, it is unclear whether the Autumn Budget will materially impact the course of inflation over the next three years," the analysts say. (miriam.mukuru@wsj.com)

 
Companies News: 

Halma 1H Pretax Profit Fell After Disposal Gain in Prior Year

Halma PLC said Thursday that pretax profit for the first half of fiscal 2023 fell after the comparable period a year earlier was boosted by a gain on a disposal.

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International Distribution Services Swung to 1H Pretax Loss on Royal Mail Losses

International Distribution Services PLC said Thursday that it swung to a first-half pretax loss and revenue fell as a good performance from its GLS division was offset by Royal Mail losses.

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Burberry Group 1H Pretax Profit Rose on Lower Costs; Backs FY 2024 Views

Burberry Group PLC said Thursday that it expects to achieve near-term guidance despite the challenging environment and that pretax profit for the first half of fiscal 2023 rose amid lower costs.

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Spirax-Sarco Engineering Backs 2022 Guidance After Underlying Demand Growth

Spirax-Sarco Engineering PLC on Thursday backed its full-year guidance for adjusted operating profit as underlying demand growth remained strong in the four months to the end of October despite a weakening global industrial production growth forecast.

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Investec 1H Pretax Profit Rose on Higher Interest Rates, Starts GBP350M Buyback

Investec PLC on Thursday reported an increased pretax profit for the first half of fiscal 2023, supported partly by rising global interest rates, and declared a 350 million-pound ($417 million) share buyback program.

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Intermediate Capital Appoints William Rucker Chair; 1H Pretax Profit Fell

Intermediate Capital Group PLC said Thursday William Rucker has been appointed nonexecutive director and chair, and it reported a fall in pretax profit for the first half of fiscal 2023 as revenue decreased.

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Finsbury Food Four-Month Sales Up 16%, Boosted by Higher Volumes, Prices

Finsbury Food Group PLC said Thursday that sales for the first four months of the new fiscal year have risen 16%, boosted by higher volumes and prices, but it expects macro-economic and cost inflation headwinds to continue throughout the year.

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International Distribution Services Swung to 1H Pretax Loss on Royal Mail Losses -- Update

International Distribution Services PLC said Thursday that it swung to a first-half pretax loss and revenue fell as a good performance from its GLS division was offset by Royal Mail losses.

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Close Brothers Says 1Q Performance Was Robust Despite Market Uncertainties

Close Brothers Group PLC said Thursday that its first-quarter performance has been solid, with a robust margin in the banking division and increased net inflows in asset management despite market uncertainty.

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Mitie Group 1H Pretax Profit Fell; Raises Interim Dividend

Mitie Group PLC said Thursday that pretax profit for the first half of fiscal 2023 fell after it booked fewer coronavirus-related contracts, and declared an increased interim dividend.

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Crest Nicholson Sees FY 2022 Profit Meeting Guidance; Recent Sales Slowing

Crest Nicholson Holdings PLC said Thursday that it expects adjusted pretax profit for fiscal year 2022 to meet previous guidance of 135 million to 140 million pounds ($160.9 million-$166.8 million), though recent weeks have seen sales slow.

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Begbies Traynor Group Sees 1H Revenue, Profit Increase

Begbies Traynor Group PLC said Thursday that it expects to report a rise in revenue and adjusted pretax profit for the first half of fiscal 2023 and that it backed its full-year expectations.

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Kier Group Says New Fiscal Year Started Well, In Line With Expectations

Kier Group PLC said Thursday that the new financial year has started well, and that it is performing in line with the board's expectations.

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Fuller Smith & Turner 1H Pretax Profit Rose Amid Recovery From Pandemic Restrictions

Fuller Smith & Turner PLC said Thursday that pretax profit and revenue for the first half of fiscal 2023 rose on a recovery from the effect of coronavirus-related restrictions.

 
Market Talk: 

Sterling May be Little Moved by UK Fiscal Statement

1110 GMT - The U.K. government's autumn statement Thursday should deliver further clarity on closing the fiscal gap but a muted reaction in sterling is likely, Danske Bank says. "While domestic political themes have been a key driver for GBP the past months, we increasingly expect domestic politics to take a back seat going forward," Danske Bank analyst Jesper Fjarstedt says in a note. This is the result of new Prime Minister Rishi Sunak being focused on fiscal prudence after September's tax-cutting mini budget under Sunak's predecessor Liz Truss sparked market turmoil, he says. GBP/USD falls 0.5% to 1.1860 but EUR/GBP trades flat at 0.8727. The budget is expected at 1130 GMT. (renae.dyer@wsj.com)

Total Gilt Issuance in FY 2023/24 to Rise to GBP200 Bln, ING Forecasts

1116 GMT - The gilt market is expected to absorb a record amount of gilts, roughly GBP200 billion, in the fiscal year 2023/24 as the Bank of England's gilt-sale program will add GBP80 billion of gilts annually into the market, say ING analysts in a note. "Private investors will be required to increase their gilt holdings by a record amount in FY2023/24," the analysts say. The total gilt issuance in the fiscal year 2022/23 is estimated at 120 billion pounds according to ING. (miriam.mukuru@wsj.com)

International Distribution Services' First-Half Delivers Only Disappointment

1104 GMT - International Distribution Services has swung to a first-half loss due to weakness in its U.K. operations, as post-pandemic market normalization in parcel volumes derails the group, AJ Bell says. The postal service and courier is still failing to deliver on its promise of becoming more efficient and is talking about splitting in two if Royal Mail isn't fixed quickly, AJ Bell investment director Russ Mould says in a market comment. "That's looking more likely as time goes on, yet one must question which investors would be happy to just hold shares in the U.K. business," Mould says. "It's broken, battered and bruised with an uncooperative workforce and a large part of its business in steady decline." Shares are down 0.8% at 237.8 pence. (joseph.hoppe@wsj.com)

Great Portland Estates' New Focus Is Welcome but Faces Challenges

1035 GMT - Great Portland Estates' management appears as confident as ever in its new focus at its first-half results, with the development pipeline progressing and supply shortages of grade-A office space intensifying, RBC Capital Markets says in a note. The real-estate investment trust's significant shift in focus toward offering flexible office space points to an attractive supply demand dynamic in this part of the London office market and as such has a strong logic, RBC analysts say. "However, it also highlights the challenges in more traditional London office markets, still the majority of GPE's business, even before any recession in our view," the Canadian bank says. RBC retains its underperform rating on the stock and 470-pence price target. Shares are down 3.3% at 525.0 pence. (joseph.hoppe@wsj.com)

Pound Could Recover as Fiscal Policy Tightens, Risk Appetite Improves

1027 GMT - The tide may be turning for sterling after a volatile few months and a year of underperformance, HSBC says. "The government's significant reversal on fiscal spending will limit concerns about fiscal vulnerability, while there are early signs that the external accounts are starting to rebalance, albeit slowly," HSBC analysts say in a note. A rebound in global sentiment should also support sterling given its strong tie to risk appetite in recent years, they say. The U.K.'s economic challenges are well priced into sterling and the Bank of England's relative caution in raising interest rates may even support the currency, they say. HSBC expects GBP/USD to rise to 1.25 by the fourth quarter of 2023, versus 1.1880 currently. (renae.dyer@wsj.com)

Grainger Shows Resilience From Wider Economic Downturn

1020 GMT - Grainger has delivered a strong set of fiscal 2022 results, delivering on its private rented pipeline and benefiting from strong rent growth, correlated to wage inflation, Citi says in a note. The property-investment company has noted strong demand, constrained supply as smaller landlords get squeezed out and a resilient customer base, and it expects rising mortgage costs to drive rental demand, say Citi analysts Aakanksha Anand and Aaron Guy. "Although, an aggressive rise in rates has, in our view, transitioned real estate broadly into a downward trajectory, we expect [the private rented sector] to be relatively resilient to our broader commercial coverage," the U.S. bank says. Citi retains its buy rating and 369 pence price target on Grainger's stock. Shares are up 1.1% at 239.4 pence. (joseph.hoppe@wsj.com)

Ergomed's New Appointees Will Support Future Growth

(MORE TO FOLLOW) Dow Jones Newswires

11-17-22 0644ET

Stocks mentioned in the article
ChangeLast1st jan.
BARCLAYS PLC 0.40% 185.78 Delayed Quote.17.20%
BEGBIES TRAYNOR GROUP PLC -1.38% 143 Delayed Quote.-1.52%
BURBERRY GROUP PLC 1.63% 2433 Delayed Quote.19.85%
CLOSE BROTHERS GROUP PLC -0.57% 959.5 Delayed Quote.-8.36%
CREST NICHOLSON HOLDINGS PLC -0.08% 244.8 Delayed Quote.3.47%
DANSKE BANK A/S 1.35% 142.25 Delayed Quote.3.61%
FINSBURY FOOD GROUP PLC 0.00% 94.5 Delayed Quote.2.72%
GLOBAL INDUSTRIAL COMPANY -0.24% 25.27 Delayed Quote.7.65%
HALMA PLC -1.08% 2115 Delayed Quote.7.14%
INTERMEDIATE CAPITAL GROUP PLC 3.00% 1426.5 Delayed Quote.24.26%
KIER GROUP PLC -1.40% 70.4 Delayed Quote.18.72%
MITIE GROUP PLC -4.45% 79.5 Delayed Quote.6.57%
UK 10Y CASH 0.16% 3.3255 Delayed Quote.-9.57%
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