FTSE 100 Ends Muted in Absence of U.S. Inflation Data Impetus

The FTSE 100 edged lower on Tuesday, by 0.03% at 7,542.77 points, with today's U.S. inflation data unable to provide any further impetus ahead of tomorrow's Federal Reserve meeting. Leading the fallers was Hargreaves Lansdown, down 6.7% after the U.K. Financial Conduct Authority penned a letter to investment platforms and money managers raising concerns over earned interest on client accounts. Shares in Abrdn and AJ Bell also took a tumble as a result. "Today's move appears to be kneejerk in nature as none of the companies indulge in the behavior that the FCA is most concerned about," CMC Markets UK analyst Michael Hewson says in a market comment.

COMPANIES NEWS:

AstraZeneca to Buy Icosavax for Up to $1.1 Bln

AstraZeneca said it would buy U.S.-based clinical-stage biopharmaceutical company Icosavax for up to $1.1 billion in a deal that expands its vaccines and immune therapies late-stage pipeline.

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S&U Reports Net Receivables Growth Despite Challenging Environment

S&U said it has made steady but more cautious progress despite challenging tax and regulatory burdens for the half year reflecting a lack of consumer confidence amid an inflationary environment.

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Chemring Pretax Profit Fell on Higher Costs; Performance in New Year in Line With Views

Chemring Group said that fiscal 2023 pretax profit fell after booking higher costs, and that its performance in the current year has been in line with the board's expectations.

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Shaftesbury Capital COO Chris Ward Steps Down

Shaftesbury Capital said Tuesday that Chief Operating Officer Chris Ward will step down from the board on December and will not be replaced.

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Morgan Sindall Finance Director to Retire

Morgan Sindall said that its finance director Steve Crummett will retire from the company with effect from the end of next year.

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Sosandar Backs Views After Robust Autumn Performance

Sosandar said that autumn sales have been robust and that it continues to perform in line with expectations for fiscal 2024.

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Smartspace Software's Shares Soar on Skedda Holdings Bid Valuing it at GBP25 Mln

Shares in Smartspace Software jumped after Skedda Holdings said it has made a cash offer for the company valuing it at 25.0 million pounds ($31.4 million), a significant premium to the prevailing share price.

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Smartspace Software Doesn't Support Skedda's GBP25 Mln Takeover Proposal

Smartspace Software said it doesn't currently support Skedda Holdings' latest 25 million pound ($31.4 million) takeover proposal.

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Icosavax Shares Take Flight on Takeover by AstraZeneca

Shares of Icosavax jumped nearly 50% in premarket trading Tuesday after the vaccine developer agreed to be acquired by pharmaceutical giant AstraZeneca in a deal worth up to $1.1 billion.

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FCC to Acquire Urbaser's U.K. Subsidiary in $500 Mln Deal

Fomento de Construcciones y Contratas said that its environmental-services unit has agreed to buy Urbaser's U.K. subsidiary in a deal valued at an estimated 398 million pounds ($499.8 million), including debt.

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NVent Electric Raises Quarterly Dividend by 8.6%

NVent Electric's board has raised the electrical connection and protection solutions provider's quarterly dividend by 8.6%, to 19 cents from 17.5 cents.

MARKET TALK:

Above-Average Gain Expected from Bonds in 2024, Pictet AM Says

1426 GMT - Bonds should deliver above-average gains in 2024, due to higher coupon income, weaker nominal GDP growth and a gradual shift in central bank monetary policies toward modest easing, Arun Sai, senior multi asset strategist at Pictet Asset Management, says in a note. According to Pictet's forecasts, U.K. and U.S. benchmark government bonds are likely to outperform other developed market peers, while emerging local currency bonds are likely to be the overall winner with an expected return of more than 12% in U.S. dollar terms, the strategist says. Emerging market dollar denominated debt should also outperform given that its current yield stands at 9%, the highest in the sovereign bond market and some 200 basis points above its 10-year average, he says. ([e-mail])

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Chemring's Growth Story Underpinned by Strong Results, Outlook

1326 GMT - Chemring's strong fiscal 2023 results, positive outlook, record order intake and ambitious capital investment program underpin analysts' expectations for future growth, Shore Capital analyst Jamie Murray says in a note. Demand for the defense company's products remains high, with record order intake of GBP756 million and a decade-high backlog of GBP922 million, while multi-year visibility for its countermeasures and energetics segment is at unprecedented levels, Murray says. Furthermore, its GBP120 million investment program at the energetics division, combined with the fast-growing Roke division, points to its compelling growth story, Murray says. "We encourage investors to buy the shares to gain exposure to a well-run business, with structural tailwinds and excellent products," he says. Shares are up 0.8% at 330 pence. ([e-mail])

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On the Beach's Positive Outlook Prompts Upgrades

1308 GMT - On the Beach sees positive momentum across its core and premium segments after a period of investments, Liberum analysts Anna Barnfather and Nishant Dahad say in a note. The online holiday retailer's marketing costs have reduced to 38% from 45% of core U.K. segment revenue, which means it could now deliver faster profit growth against the backdrop of strong consumer demand for holidays, the analysts say. "After two solid updates we are feeling more confident in the positive outlook with... costs stabilized to drive more operating leverage," the analysts say. Liberum upgrades its rating on the stock to buy from hold, and raises its target price to 200 pence from 125 pence. Shares are up 3% at 162.80 pence. ([e-mail])

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Hargreaves Lansdown, AJ Bell Benefited Most from Interest on Client Money, RBC Says

1244 GMT - Hargreaves Lansdown and AJ Bell have earned the most from interest made on clients money, RBC analyst Ben Bathurst estimates. The U.K.'s Financial Conduct Authority calculates that GBP74.3 million of revenue was earned collectively by investment and self-invested personal pension platforms in June. Of that amount, Bathurst estimates 23% was generated by Hargreaves and 7% by AJ Bell. The FCA flagged renewed concerns about interest earned on customer cash balances and criticized the high percentage of interest retained by some firms without justification, RBC says. "Whilst the letter falls short of banning the practice of retaining client interest, we can envisage extra pressure on revenues from this source as a result," Bathurst says. AJ Bell and Hargreaves shares are down 7.77% at 287.40 pence and 7.16% at 710.40 pence, respectively. ([e-mail])

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Jet2 Seen Well Sheltered From Headwinds

1228 GMT - For Jet2, headwinds from geopolitical conflicts and higher wage costs are overplayed, HSBC analysts say in a note. The leisure-travel group isn't directly exposed to the Middle East, and should be able to pass on higher costs through pricing, they say. Winter capacity is up 21% with pricing-to-date robust and in line with 1H trends, while summer 2024 bookings and pricing look encouraging on the back of a 12% rise in capacity, the analysts say. "The key risk we see are a sharp fall in bookings, most likely driven by weakening consumer confidence, which we don't expect in the current market environment," the analysts say. Shares are down 1.05% at 1,227 pence. ([e-mail])

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U.K. Domino's Pizza's 2024 Could Be Transformational

1228 GMT - Domino's Pizza Group is hinting that 2024 could be a transformative year, Liberum analysts Wayne Brown and Anubhav Malhotra say in a note. The pizza chain--the holder of the master franchise agreement to own, operate and franchise Domino's stores in the U.K. and Ireland--is focused on core growth and is balancing well both earnings delivery and returns for stakeholders, they say. However, the most exciting is the potential to improve standards and capital reallocation in order to drive franchisee profitability, they add. "We need to wait for March 2024 to get more details, but Domino's could be returning to its former glory," the analysts add. Shares are down 0.5% at 392.0 pence. ([e-mail])

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Pennon Faces Increasing Risks From Water Regulator's Probing of Subsidiary

1205 GMT - Pennon could see a negative impact from one of its subsidiaries being probed by the U.K. water-services regulator, Citi analysts Jenny Ping and Rory Graham-Watson write in a research note. Additionally to the investigation, the government has sent letters of warning to CEOs and asked the Environment Agency to set out plans to reduce sewage spills. These action underline the pressure on both the government and the regulator--Ofwat--to show a tough approach towards a highly-politicized sector, the analysts say. "A dynamic which we think raises the risk going into next year's key regulatory milestones." Ofwat's probing will likely find wrongdoings, given a resolution would already have been reached had there been none, they say, adding that an enforcement action can reach 10% of relevant turnover. Pennon shares are down 2.7% at 730.50 pence. ([e-mail])

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European Stocks Trade Mixed; US Eyes Modest Gains

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12-12-23 1256ET