UK on 2023 Recession Course, But 2024 GDP Seen -2-

1223 GMT - BP and rivals are unlikely to be able to avoid public criticism of rising profits while energy bills are soaring, despite benefits for investors, AJ Bell says. BP's record annual profit and higher dividends helped to drive up the FTSE 100 Tuesday, benefiting pension savers with exposure to U.K. stocks, AJ Bell says. Still, the more money companies like BP make, the stronger the calls for windfall taxes will be, Bell says. "BP's success makes it a target because other people have suffered at the same time it has enjoyed bolstered earnings--namely the public and businesses who have had to stomach higher energy bills," Bell's investment director Russ Mould writes. "Therefore, BP can't sit back and expect praise for its operational and financial performance." ([e-mail])

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BOE Could Cut Bank Rate in 4Q

1243 GMT - The Bank of England could cut the bank rate as soon as in the last quarter of 2023 as the U.K.'s economic activity slows, rate of unemployment rises, and inflation falls, UBS Research economist Dean Turner says in a note. "With the economy slowing, inflation falling, and unemployment rising, we expect the BOE to unwind some of the policy tightening from the past 10 meetings," he says. Turner expects the BOE base rate to peak at 4.25% in March. "With labour market data still signalling tightness, the BOE will likely deliver another small--25 basis points--hike in March, lifting base rates to 4.25%," he says. ([e-mail])

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Big Oil's Profits Are Putting Smaller Companies at Risk

1243 GMT - Oil giants such as BP are profiting while some smaller businesses are struggling to survive amid higher energy costs, insolvency group Begbies Traynor says. While BP reported record annual profit and higher dividends Tuesday, it said it was continuing to make progress in efforts to increase its focus on renewable energy. Still, crippling energy bills are among the reasons for a recent surge in the number of U.K. companies rated as being in critical distress and close to collapse, Begbies says. "While BP's talk about investing for the future to create cleaner, greener energy is laudable, doing so while posting massive profits like this will only increase the calls for a heavier windfall tax," Begbies Traynor partner Julie Palmer writes. ([e-mail])

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Investors Cheer BP's Renewed Focus on Crude Oil

0847 ET - BP's 4Q earnings release is receiving high marks from investors, and not so much for the results themselves which are in-line to slightly positive, but rather for its plan to pivot back to oil and natural gas as profit engines, while also investing in green energy. "An updated medium-to-long-term outlook for investment in the traditional energy space ... represents a positive strategic shift, in our view," says Tudor Pickering in a research note, adding that BP is still also making "incremental capital allocated for the higher return opportunity set in focus energy transition themes (biofuels and convenience/EV charging), resulting in an upsized capex outlook for 2023, and an upsized 2024-2030 capital outlook." Shares rise 4.2% premarket. ([e-mail])

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Ashmore's Short-Term Recovery Is Unrealistic, Says Numis

1354 GMT - Ashmore Group's shares aren't cheap and it is still too early to call a recovery, says Numis in a note ahead of the fund manager's interim results on Wednesday. "Our view is that even if shorter term sentiment/flows improve for [emerging markets] generally, Ashmore may not pick up its 'fair share' of these flows, given this performance headwind, although it will likely track asset class beta to some extent," says analyst David McCann. Numis sees poor investment performance continuing to cause problems for client retention and sales. It sees Ashmore's 1H pretax profit at GBP67.2 million and net management fees of GBP98.5 million with a stable interim dividend at 4.8 pence per share. The brokerage rates the stock sell. ([e-mail])

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Fixed Income Assets Seen Attractive Again

1358 GMT - Fixed income valuation has improved considerably over the past few quarters, making the asset class attractive again, MFS IM says in a note. "We are now observing levels of yield not seen in a decade," it says. This is also true for credit spreads, which have widened, but even more so for total yields which have benefited from the combined effects of the rate and spread widening, the asset manager says. From a strategic standpoint, the higher yields offer attractive opportunities as entry points in fixed income considering the historically high correlation of starting yields to subsequent returns, it says. ([e-mail])

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(END) Dow Jones Newswires

02-07-23 0917ET