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UK gas prices drop back after sabotage fears played down
Wholesale gas prices have fallen back today after rising sharply on Tuesday after the damage caused to the Baltic Sea pipeline and a telecommunications cable connecting Finland and Estonia on Sunday.
Damage to the Balticconnector gas pipeline was caused by “quite heavy force”, Estonia’s defence minister said today, a day after Finland said it could have been the result of deliberate action.
But defence minister Hanno Pevkur told Reuters “at the moment it rather seems that it had been mechanical impact or mechanical destruction.”
There had been concerns the leak may have been the result of a third party attack.
UK gas prices have fallen back 6.5% to 116.64p per therm, while Europe’s benchmark contract is little changed €49.45 per megawatt hour.
Both had soared to their highest levels since June in the wake of the closure of Israel’s Tamar gas field and fears about energy security following the claims that the Baltic undersea pipeline could have been sabotaged.
Berenberg sees 50% upside in Barclays
Banks are attracting the attention of City analysts ahead of third quarter updates and Berenberg (LON:BARC) is today singing the praises of Barclays.
The broker reiterated a buy rating with a 240p price target, around 50% upside from today’s 157p share price.
Berenberg said Barclays has shown that it can generate acceptable returns, including in its investment bank (IB).
But “in order to re-rate, the bank must prove that the recent level of its returns is sustainable.“
Barclays’ valuation is subdued, even relative to global IB peers it said, which it feels is hard to justify given its presence in the US market (where returns are higher than in Europe) and market share gains (including versus US peers).
“While the precise trajectory of global banks’ IB revenues is uncertain, our analysis indicates that consensus IB revenues for Barclays in FY 2025 are consistent with a “normal” year,” it said.
The broker also expects Barclays’ consumer goods to provide support, its share of UK mortgage lending is also rising and a cyclical recovery in credit card usage can also support volumes.
“As a result, we expect Barclays’ consumer revenues to grow c3% pa beyond FY 2023,” it added.
Berenberg said Barclays’ current strategy review is unlikely to lead to material strategic changes beyond modest simplification and efficiency improvements.
But it does believe that management can strengthen its resolve to demonstrate that a 10% RoTE is a floor by committing to a nominal level of capital returns - of at least £6.0 billion during the 2024-25 financial year.
This, and clearer targets for consumer and payments growth, may help to sharpen investors’ focus on Barclays’ strategic strengths.
Rising costs and tough macro hurting hiring
More evidence on how tough the recruitment is, after the warning from PageGroup. comes from a study out today which shows uncertainty over the economic outlook as well as rising costs are hitting hiring.
The Recruitment & Employment Confederation and KPMG found the number of permanent placements by recruiters fell in recent weeks as companies were reluctant to commit to hiring new workers.
#ReportonJobs signalled that temp billings have returned to growth after a slight decline in the previous month. Also, the data highlights that pay pressure is easing as staff supply for permanent and temporary staff increases. Read the latest data here: https://t.co/oDWpQJPIPa pic.twitter.com/jImMMAJisu— Recruitment & Employment Confederation (@RECmembers) October 11, 2023
The study among 400 recruitment firms also showed improved demand for short-term staff and increased availability of workers to fill vacancies.
Neil Carberry, REC chief executive, said: "Employers tell us they are feeling better about themselves as the year moves on, and today's data does suggest the possibility of a turnaround in hiring over the next few months.
"Permanent placements have been falling for a year now from abnormal post-pandemic highs. While permanent hiring activity continues to slow, fewer firms reported a slowdown last month, leading to a much shallower rate of decline than most months recently.
"Likewise, temporary hiring remains robust with billings growing marginally in September – as they have most months this year."
PageGroup sees greater deal of uncertainty
Heading the other way is PageGroup PLC (LON:PAGE), down 3.8% at 408p.
The international recruiter said group gross profit of £242.2 million was down 7.9% year-on-year and said it expects 2023 operating profit, excluding the previously announced one off cost of £5 million, to be between £125- £130 million.
Liberum noted this was below its £137 million forecast with management referring to a heightened degree of uncertainty in the short term due to a slower end to the quarter.
Nicholas Kirk, chief executive efficer, said: “The group delivered a resilient result in challenging markets. EMEA was our best performing region, however, tough market conditions affected our performances in Asia, the UK and the US.”
Kirk said the firm was seeing a higher proportion of offers being turned down as firms try to play hard ball in salary offers.
“The increased time to hire that we saw in Q2 continued,” he added.
“"Looking ahead, due to a slower end to the quarter, there is a heightened degree of uncertainty in the short term,” he added.