Proactive Investors -
- FTSE 100 sets new intra-day high of 7,943.68
- Standard Chartered (LON:STAN) rises on reports of renewed bid
- Entain (LON:ENT) tumbles after MGM rules out bid
9.28am: Entain tumbles as MGM boss rules out bid
Shares in Entain PLC, fell 10%, after the boss of MGM ruled out a bid for the FTSE 100-listed gambling firm.
On a call following the release of fourth quarter earnings MGM Resorts CEO and President, Bill Hornbuckle ruled out a move for the owner of Ladbrokes (LON:LCL) and Coral.
“I think it’s time to be definitive and give a little direction. The simple answer on Entain is no, we’ve moved on.”
“I said before that we liked their technology platform and their leadership team. We’re also interested in the content studio business. We think there’s a real play there.”
But he added: “So for now, the answer is no, not with Entain.”
Victoria Scholar, head of investment, interactive investor noted in January 2021 Entain refused an £8.1bn takeover approach arguing the price was too low, adding “today’s share price drop wiping out most of its year-to-date gains.”
But the falls in Entian failed to stop the FTSE 100 which has powered ahead, now at 7,940.86, up 55.69 points, or 0.71%, just below new record highs.
9.18am: House prices continue to fall - RICS
The FTSE 100 has powered to a new all-time high, now at 7,942.89, up 57.72 points, or 0.73%. This is slightly below the intra-day high of 7,943.68 seen today.
Back in the property and sales and house prices continued to decline across the UK in January, surveyors have reported.
The Royal Institution of Chartered Surveyors (RICS) house price balance, which measures the gap between the percentage of surveyors seeing rises and falls in house prices, fell to -47, the lowest since April 2009, from -42 in December.
This is the ninth monthly fall in new buyer inquiries in a row, while price falls were the most widespread since 2009.
RICS said all the indicators point to a further slowdown in the housing market in the coming months, as borrowing costs have risen sharply.
Simon Rubinsohn, chief economist at RICS, said the overall mood of the market as measured by surveyors remained subdued.
"However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year," Rubinsohn said.
9.14am: First Abu Dhabi Bank to press ahead with bid for Standard Chartered - Bloomberg
Shares in Asian-focused bank Standard Chartered PLC top the FTSE 100 risers after a report on Bloomberg that First Abu Dhabi Bank (FAB) is pressing ahead with a potential offer for the lender.
According to Bloomberg, FAB, which is worth about twice as much as Standard Chartered, is exploring an all-cash bid of in the range of $30bn to $35bn, citing sources.
Bloomberg reported: “Under the code name Silver-Foxtrot, officials at the Abu Dhabi bank are working under the radar on a possible bid once a cooling off period required by UK takeover rules elapses, according to people familiar with the matter.”
EXCLUSIVE: First Abu Dhabi Bank is exploring a $35 billion offer for Standard Chartered after putting earlier takeover considerations on hold https://t.co/mKH28GvWWR— Bloomberg Middle East (@middleeast) February 9, 2023
“FAB, as the bank is known, recently completed due diligence on the London-based lender, the people said, asking not to be identified because the matter is private.”
“Any deal would be dependent on market conditions and the performance of Standard Chartered’s share price, they said.”
In January, shares in the FTSE 100-listed bank soared , and then fell as FAB said it had been considering a move for the bank but had decided not to proceed.
Shares in Standard Chartered rose 8.3% in London on Thursday to 746.50p.
9.00am: FTSE higher, bid chat resurfaces at Standard Chartered
London’s blue chips are close to establishing a new record intra-day high with the FTSE 100 at 7,931, up 46 points, or 0.6%, just shy of the fresh peak of 7,934.79 set yesterday.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown (LON:HRGV) commented: “’The FTSE 100 powered up in early trade, gaining more ground back towards the record high, as winds of worry over how far interest rates will go are blown away again.”
“The defensive, international nature of the index has provided the seeds of growth, but an improved forecast for the UK economy this week is also adding fresh nutrients.”
Top of the FTSE 100 risers was Standard Chartered as traders reported speculation of a takeover from First Abu Dhabi Bank. “No news as yet but await a statement,” was Neil Wilson’s verdict at markets.com.
But Entain PLC failed to join the winners enclosure falling 11.5% after a Jefferies report pointed to MGM's chief executive officer saying the company had "moved on" from the gambling firm amid recent speculation of a takeover.
“Speculation that MGM might be ready to make a move were shut down by the company during an analyst call,” Streeter noted.
Elsewhere, there was a raft of trading statements for investors to wade through. AstraZeneca PLC (NASDAQ:AZN) was an early riser, up 2.5%, as core earnings per share of $1.38 beat City forecasts of $1.34.
But British American Tobacco PLC (LON:BATS) tumbled 4.2% after the cigarette maker forecast a fall of around 2% in global tobacco industry volumes in 2023 and predicted mid-single figure constant currency adjusted EPS growth.
8.18am: Footsie resumes upward path
The FTSE 100 on Thursday made strong early progress shrugging aside losses in the US as investors in London digested a raft of trading updates and results.
At 8.15am London’s lead index was up 40 points, or 0.5%, at 7,925.
Hawkish comments from a number of Federal Reserve officials dented sentiment as sent US markets lower.
"So, the message is clear. The Fed is not done yet. This means that the rate hikes will continue, and that will continue pressuring the US yields higher as well," said Swissquote Bank's Ipek Ozkardeskaya.
Back in London and there was plenty for investors to digest as a number of FTSE 100 heavyweights released results.
AstraZeneca PLC rose 1.4% after posting double-digit annual sales growth in 2022, despite a weaker fourth quarter, and a pre-tax profit of US$2.50bn compared to a loss of US$265mln a year ago.
Sales growth came from all therapy areas, as well as the addition of Alexion (NASDAQ:ALXN), the pharma giant said.
Consumer goods firm, Unilever PLC (LON:ULVR), also pleased the market with shares up 1%. It reported underlying sales growth of 9% although a decline in operating margins meant underlying profits grew only slightly, up higher to €9.7bn.
The owner of Marmite and Persil also forecast further price rises in the first half of 2023 and expects net material inflation of 2023 of around €1.5bn in the period.
But British American Tobacco PLC fell 4%, despite saying it was on track to hit its £5bn revenue target by 2025.
The cigarette maker forecast a fall of around 2% in global tobacco industry volumes in 2023 and predicted mid-single figure constant currency adjusted EPS growth.
Housebuilder, Redrow PLC (LON:RDW), was another company under pressure in early exchanges, down 1.7%, as it withdrew financial guidance for 2024, warning that this year will be ‘challenging’.
Redrow told the City that “economic and political uncertainty” led to a fall in sales in the second half of 2022.
But as with Barratt Developments PLC (LON:BDEV) earlier in the week Redrow Redrow said demand has picked up so far this year, to 0.51 private reservations per outlet per week, which it calls an “encouraging start” to the second half of its financial year.
8.00am: BAT confident of hitting £5bn revenue target by 2025
British American Tobacco PLC remained confident of hitting its £5bn revenue target by 2025 with profitability in the New Category division now expected one year ahead of target.
The FTSE 100-listed tobacco group made the predictions together with full-year results which showed a 7.7% rise in revenue to £27.6bn, a 2.8% increase in operating profit to £10.5bn and a 1.3% fall in diluted EPS to 291.9p.
Shareholders received a 6% hike to the dividend to 230.9p.
Chief executive Jack Bowles, said “"Our New Category business delivered strong volume, revenue and market share growth and has become a significant contributor to the group's financial delivery. In 2022, we invested more than £2bn in New Categories to drive long-term sustainable growth, while making excellent progress in reducing operating losses by 62%.”
The division is now expected to be profitable in 2024, one year ahead of plan.
BAT said non-combustible product consumers rose 4.2mln to 22.5mln and New Categories revenue jumped 37.0% to £2.8bn with growth in: Vapour (+43.8%), THP (+26.7%) and Modern Oral (+45.6%).
On the traditional cigarette side of the business revenues were underpinned by price/mix improvements of 4.6% although global cigarette value share was flat despite a 10bps rise in US value share.
Cost savings continue apace with £1.9bn delivered so far, well ahead of original £1bn target, with £629mln in 2022.
Looking ahead, BAT forecast a fall of around 2% in global tobacco industry volumes and predicted mid-single figure constant currency adjusted EPS growth, including a c.2% transactional FX headwind, with growth weighted to the second half.
Organic revenue growth between 3% to 5% is expected, on a constant currency basis, with reported growth impacted by timing of the transfer of the Russian and Belarusian businesses which are expected to close in 2023.
Bowles said: “Looking forward, while we expect the macro-economic environment to remain challenging, we will continue to deliver and further accelerate our transformation.”
7.34am: Saes growth remains strong at Unilever
A busy day of results and Unilever PLC reported strong growth in full-year sales but a margin decline meant operating profits only improved slightly.
Underlying sales growth accelerated to 9.0% driven by all business groups, with price growth of 11.3% and volumes declining 2.1%, the owner of Marmite and Persil said.
Turnover increased 14.5% to €60.1bn and underlying operating profit edged 0.5% higher to €9.7bn despite a margin decline of 230bps driven by input cost inflation.
Its billion+ Euro brands, accounted for 53% of turnover, delivered underlying sales growth of 10.9%, led by strong performances from OMO, Hellmann's, Rexona, Sunsilk and Magnum.
Underlying EPS fell 2.1% to €2.57 while diluted EPS rose 28.8% to €2.99 helped by profit on disposals.
Unilever said cost inflation is set to continue in 2023 and expects net material inflation (NMI) in the first half of 2023 of around €1.5bn billion.
“We anticipate significantly lower NMI in the second half, with a wide range of possible outcomes, though we do not expect cost deflation” it added.
Looking ahead, the company forecast in the first half, underlying price growth will remain high, and volume growth will be negative.
“We expect 2023 underlying sales growth to be at least in the upper half of our multi-year range of 3% to 5%,” Unilever said.
It forecast a modest improvement in underlying operating margin in the full year, reflecting another year of increased investment, and estimated underlying operating margin will be around 16% in the first half.
The FTSE 100 listed firm paid a dividend of €0.4268.
“We are increasingly realising the benefits from the reshaped portfolio, accelerated savings delivery and improved execution,” outgoing chief executive Alan Jope said.
7.00: FTSE 100 set to resume upward path
FTSE 100 is expected to open higher ahead of a busy day of company news.
Spread betting companies are calling the lead index up by around 18 points.
The Dow closed Wednesday down 208 points, 0.6%, at 33,949, the Nasdaq Composite slid 203 points, 1.7%, to 11,911 and the S&P 500 lost 46 points, 1.1%, to 4,118. The small-cap focused Russell 2000 dropped 28 points, 1.4%, to 1,995.
“It’s the continued kind of yin-and-yang, if you will, with, ‘Which way are we going with the Fed?,’” said Sal Bruno, CIO of IndexIQ, as reported by CNBC. “We should expect a lot of choppiness.”
In Asia on Thursday, the Nikkei 225 index closed down 0.1%. In China, the Shanghai Composite was up 1.1%, while the Hang Seng index in Hong Kong was 1.2%. The S&P/ASX 200 in Sydney closed down 0.5%.
Back in London and a busy day of company news sees results from AstraZeneca PLC, Unilever PLC, British American Tobacco PLC and Redrow PLC while trading updates are due from Compass Group PLC (LON:CPG) and Bellway PLC (LON:BWY)
Michael Hewson, chief market analyst at CMC Markets noted: “The pound will also be in focus as Bank of England governor Andrew Bailey testifies to the Treasury Select Committee, along with chief economist Huw Pill, as well as Jonathan Haskel and Silvana Tenreyro discussing the latest interest rate decision, with Tenreyro’s testimony likely to be the most instructive given she voted to keep rates unchanged.”