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- FTSE 100 makes strong progress, up 51 points
- Oil prices soar after Opec+ agrees production cut
- BP (LON:BP), Sheel benefit from oil price rise, banks also advance
Burford soars as court win boosts credibility
Shares in Burford Capital soared 27% after a US District Court for the Southern District of New York found Argentina liable for failing to make a tender offer for their shares in majority state-owned Argentinian energy company YPF (NYSE:YPF) SA.
The London-based litigation finance, risk management and asset recovery company, said that the court decided that Argentina is liable to Petersen Energia Inversora SA and Eton Park Capital Management LP for not making a tender offer for their shares in YPF in 2012, and that YPF was not liable for not enforcing bylaws against Argentina.
The claims related to Argentine government-controlled energy company YPF, of which a majority of 51% was renationalised in 2012 after having conducted an initial public offering.
Burford explained: "In other words, the ruling was a complete win against Argentina with respect to liability, with the quantum of what we expect to be substantial damages yet to be determined, and a loss against YPF. However, no additional damages would have been payable had YPF also been found liable."
Peel Hunt said while damages have yet to be decided they realistically look to be US$2.0-3.2bn (Burford’s share), with interest potentially adding up to a further US$2.6bn.
The broker said “this win is a big support for Burford’s investment case, helping to prove out its IRRs and its credibility.”
“Whilst we think investors should ascribe more than just book value to the shares, this will do as a first step, and still provides attractive upside for this non-correlated business,” it added.
The broker has upped its price target to 1,270p from 1,000p and reiterated a buy rating.
Consumers cut discretionary spending as bills mount
More than half of UK consumers have cut back on discretional spending since the start of the year, with nearly two-thirds choosing to reduce the amount they spend on eating out, according to research from KPMG.
The survey of 3,000 consumers also found that 49% plan to spend less on non-essentials now that energy bill support payments have come to an end, while 30% will use their savings to cope.
Telecoms providers have imposed above-inflation bill rises of up to 17% on many account holders from April. Of the people surveyed by KPMG, 51% said they would be paying more for their broadband from this month, while 49% said the same for their mobile plan.
So far this year, 55% of consumers have reduced their non-essential spending, the research showed, in particular on dining out (63%). The cost of utilities bills was cited as the main reason.
Of those surveyed, 36% had switched to cheaper retailers to save money, 37% had been buying more own-brand and value products in supermarkets, 33% were buying fewer items, and 11% said they were using credit more.
Back in the markets and the FTSE 100 is holding close to session highs, up 56 points, at 7,688.
Oil majors BP and Shell (LON:RDSa) continue to lead the way while financials are performing strongly. Prudential (LON:PRU) is 2.3% higher while the banks are also enjoying a good day, with Barclays (LON:BARC), Lloyds (LON:LLOY), HSBC (LON:HSBA) and NatWest (LON:NWG) up 2.1%, 2.1%, 2% and 1.4% respectively.
UK manufacturing continues to contract - S&P PMI
The UK manufacturing sector fell back into contraction territory in March, as output declined following a slight increase in February according to the S&P Global/CIPS manufacturing PMI.
The PMI fell to 47.9 in March, down from February's seven-month high of 49.3 and the earlier flash estimate of 48.0. The PMI has stayed below the neutral 50.0 mark for eight successive months.
Market conditions remained subdued overall, as new export business decreased and overall new order books posted only fractional growth.
????????#UK’s manufacturing registered a sustained and stronger contraction in March (#PMI at 47.9; Feb: 49.3) as output was scaled back in response to subdued market demand. Read more: https://t.co/M2fL67nl2S pic.twitter.com/lDBdzNpGfp— S&P Global PMI™ (@SPGlobalPMI) April 3, 2023
However, there was positive news on the price and supply fronts as cost inflation eased and average supplier lead times improved to the greatest extent in survey history.
Rob Dobson, Director at S&P said: “UK manufacturing production fell back into contraction at the end of the opening quarter, as companies scaled back production in response to subdued market conditions.”
“Although total new orders saw a fractional increase, this followed on from a nine-month sequence of contraction and suggests that order book levels remain low overall.”
Capita confirms cyber attack
Capita PLC (LON:CPI) has confirmed it was hit by a cyber attack on Friday which plunged its IT infrastructure into meltdown.
The outsourcing company said the incident primarily impacted access to internal Microsoft (NASDAQ:MSFT) Office 365 applications causing some disruption to services.
“The issue was limited to parts of the Capita network and there is no evidence of customer, supplier or colleague data having been compromised,” the firm said.
The company added it has restored Microsoft Office 365 access to employees and is making good progress restoring remaining client services.
Capita employs 52,000 people in Britain, Europe, India and South Africa. In the UK, its government contracts include delivering “digital, logistical and support services for all of England's primary care practitioners working in the NHS; GPs, dentists, opticians and pharmacists”
It also handles recruitment for the British army, maintenance at the UK’s Submarine Training Centre, fire and rescue operations for the Ministry of Defence and Transport for London’s road-charging system.