Proactive Investors -
- Blue chips 39 points higher at 7,860
- Inflation slightly lower
- ASOS (LON:ASOS) revenues plummet
Gatwick owner agrees to buy Edinburgh Airport
French firm Vinci (LON:0NQM) has agreed to buy a majority 50.01% stake in Edinburgh Airport for £1.27 billion from Global Infrastructure Partners (GIP).
GIP will retain a 49.99% stake, having owned the UK’s sixth-busiest airport since 2012, to form a strategic partnership with Vinci.
Vinci took over Gatwick through a similar deal in 2019, with GIP among investors retaining the remaining stake in the airport.
Chairman John Elvidge and chief executive Gordon Dewar will remain in their roles at Edinburgh, which expects to see almost 15 million passengers pass through this year.
“The leadership team [...] is wholly committed to working with our investors to improve customer service, accelerate our decarbonisation plans and strengthen Scotland’s connectivity with the world,” Dewar said.
“This acquisition of a third freehold airport in the UK, in addition to London Gatwick and Belfast International, demonstrates Vinci Airports’ long-term strategic ambition and continued commitment to the country,” Vinci Airports boss Nicolas Notebaert said.
Eurozone set for June rate cut as inflation slows
Eurozone inflation slowed to 2.4% in March, compared to 2.6% a month earlier, fuelling optimism that the European Central Bank could cut interest rates in June.
Excluding food and energy, prices rose by 2.9% over the month, against 3.1% in February.
Service inflation remained higher at 4% however, with Pantheon Macroeconomics forecasting a dip in April, making June cut more likely.
“We still see the central bank cutting its policy rates four times this year, in June, July, September and October, with no cuts next year as inflation stays above 2%,” Pantheon said.
“Risks are now balanced around this baseline. If oil prices roar higher through May and June, the ECB won’t be able to cut as much as we currently think.”
Markets now pricing in one interest rate cut
Markets are now fully pricing in one interest rate cut by the Bank of England this year, after inflation data showed prices rose quicker than expected last month.
According to XTB analyst Kathleen Brooks, chances for a second rate cut this year are still high, though this is now far from being set in stone.
“The interest rate futures market has pushed out its expected timing of Bank of England rate cuts,” she commented, with reductions in August or September now uncertain.
“Currently the market is pricing in one full rate cut, and a high chance of a second, although a second-rate cut is not guaranteed,” she added.
ONS data on Wednesday showed the consumer price index rose by 3.2% in March, the slowest annual pace in over two years, but slightly ahead of market expectations for 3.1%.
Slowing food price rises offered the largest downward contribution, as motor fuels dealt the most upward pressure.
EY ITEM Club reassured that a June rate could still be on the cards though, arguing price rises were set to slow drastically this month.
“The 12% cut to Ofgem’s price cap will mean the downside effect from energy prices will grow,” analysts said.
“Services inflation is also likely to fall back as lower headline inflation should mean April’s annual indexation of inflation-linked contracts and regulated prices results in much smaller price rises than last year.”