FTSE 100 Slumps on UK Rate-Hike Fears -2-

1130 GMT - Currys shares fall 12% after the consumer-electronics retailer reported a full-year profit hit by tough trading in its Nordic business and flagged an uncertain economic outlook. While group adjusted pretax profit in the year to April 29 fell 38% to GBP119 million, the results were at the high end of guidance, Barclays says. "But the group remains cautious for this year and didn't provide any pretax profit guidance," Barclays analysts say in a note. "It has also taken actions to protect its cash flow and decided not to pay a dividend." ([e-mail])

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European Stocks Fall After Asia Losses; US Set to Drop

1107 GMT - European stocks retreat after mostly downbeat Asia trading and ahead of a likely lower U.S. open. The Stoxx Europe 600, FTSE 100, DAX and CAC 40 all fall more than 1%, with tech and property stocks among the biggest losers. Brent crude rises 0.1% to $76.73 a barrel. Australian and Japanese markets fell more than 1% and Hong Kong stocks backtracked more than 3%. IG futures data show the Dow opening at 34151, versus Wednesday's close of 34288. "The Federal Reserve has affirmed its hawkish stance, indicating interest-rate hikes are likely in the near future," IG analysts write. "This has caused stocks to decline and bond yields to rise in the Asia-Pacific region." ([e-mail])

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Endeavour Mining's Mines Sale Improves Risk, Margin Profile

1058 GMT - Endeavour Mining's disposal of two Burkina Faso mines improves its risk and margin profile, but investors are still advised to sell, Liberum analysts write in a research note. "The shares should respond positively in the short term to this latest bout of active portfolio management, as it improves country risk, operating expenses and margin," the analysts say. However, Liberum continue to expect shares to underperform against bullion over the rest of the year, and therefore keeps a sell rating on the stock. Liberum lowers its price target on the stock to 1,133.00 pence from 1,247.00 pence. Shares are down 1.5% at 1,847.00 pence. ([e-mail])

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Currys's UK Margin Improvement Shows Robustness

1034 GMT - Currys's FY 2023 report showed that its U.K. margin performance was robust, but was offset by problems in the Nordics market, Citi analysts say in a note. The technology retailer's U.K. arm reported an EBIT rise of 45% on year to GBP170 million, ahead of Citi's views of GBP165 million, with a robust margin increase to 3.4% supported by cost-saving measures, they note. Performance in Nordics market was weak but in line with expectations, on the back of a margins squeeze amid aggressive price competition in a market with excess inventory, they add. "Mindful of an uncertain consumer environment in both the U.K. and the Nordics, the group has set itself up prudently for FY 2023 taking a number of steps to conserve cash," the analysts add. ([e-mail])

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Man Group's Varagon Acquisition Valuation Looks Attractive

1019 GMT - The implied valuation from Man Group's deal for a controlling interest in U.S.-based Varagon Capital Partners is attractive, Citi says in a note. Analysts estimate an around 10% accretion to 2024 management-fee pretax profit without accounting for synergies for the U.K. active investment manager. "In addition to expanding and diversifying mix, a complimentary asset and client mix would enable further cross-sell and distribution opportunities over the medium run, in our view," they write. Despite the acquisition being funded from internal resources, surplus capital is expected to remain comfortable, they say. Citi rates the stock buy. Shares rise 1.9% to 222.1 pence. ([e-mail])

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Value From Man Group's Varagon Acquisition Is Unclear

1003 GMT - Man Group's Varagon Capital Partners acquisition seems relatively modest but its value impact isn't clear, Numis says in a note after the active investment manager said it is buying into the U.S. private credit manager for $183 million. "Either Man has bought this business at an attractive valuation relative to the sector, or perhaps the disclosed backward-looking revenues and profits are not reflective of the current run-rates... and/or perhaps there are risks relating to the significant vendor assets under management... and/or profit drag from the new management-remuneration arrangements," analyst David McCann writes. The transaction isn't expected to meaningfully affect the group's buyback activity but it provides Man with an entry into private equity, a strategically important growth market, McCann adds. ([e-mail])

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Outlook for UK Packaging Companies Seen as Improving

0954 GMT - Mondi, Smurfit Kappa and DS Smith shares have all underperformed, but the plateauing of testliner paper prices and an expectedly improved destocking environment makes for a more positive outlook, JPMorgan analyst Detlef Winckelmann writes in a research note. Shares in the packaging companies have dropped 15% in the year to date on market worries over lower prices, destocking and general macro woes, Winckelmann says. However, testliner prices should be close to bottoming, as costs are starting to support them, while the current destocking should improve in 2H, he says. "We prefer Smurfit Kappa over DS Smith on its lower gearing and better free cash flow to the firm profile, while Mondi represents longer-term value." The asset manager upgrades its rating on Smurfit Kappa and Mondi stock to overweight from neutral, while its rating on DS Smith is kept at overweight. ([e-mail])

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UK Banks' Returns Look Sustainable But Are Undervalued

0951 GMT - U.K. banks' near-term revenue outlook is muted given the actions taken to shield borrowers from higher mortgage costs and provide opportunities for consumers to save at favorable costs, Berenberg says in a note. Politicians and regulators have accused lenders of hiking mortgage rates without sharing the benefits of higher rates with savers, and while the criticism is superficially true, broader analysis shows a more equitable outcome, particularly as mortgage affordability normalizes, analyst Peter Richardson writes. "This waning momentum, alongside concerns related to political intervention, has increasingly led investors to ignore U.K. banks' attractive (but not excessive) returns," Richardson says. NatWest and OSB Group seem particularly undervalued while HSBC and Standard Chartered may be more sheltered from U.K. regulatory risks, he adds. ([e-mail])

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Currys Delivers Bad News Throughout its Numbers

0947 GMT - Currys's FY 2023 numbers are bad throughout, offering even less reason to hold the shares than before, IG Group chief market analyst Chris Beauchamp says in a note. The technology retailer's profits and revenue are down, while the dividend has been ditched, he notes. "The group's outlook is even tougher now that the previously strong Nordic division is feeling the pinch too," Beauchamp says. ([e-mail])

Contact: London NewsPlus, Dow Jones Newswires

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07-06-23 1226ET