Proactive Investors -
- FTSE 100 up 9 points
- DFS swings to loss
- Rightmove rejects Murdoch's latest offer
Pound forecast to hit $1.38 in next year
UBS analysts expect the pound to continue its impressive run against the dollar over the coming year and reach US$1.38 by next September.
According to the bank, diverging interest rate policies from the Bank of England and Federal Reserve should buoy the pound as the latter cuts more aggressively.
“Stickier-than-expected UK inflation has cemented a more gradual Band of England easing cycle,” UBS said in a note
“The Federal Reserve’s 50 basis point rate cut shows that its focus has shifted to the labour market.”
Sterling hit a two-and-a-half-year high against the dollar earlier this week and was at US$1.3380 as of Wednesday morning.
Murdoch’s REA Group ‘frustrated’ after Rightmove rejects latest offer
Rupert Murdoch’s REA Group has expressed frustration after its latest bid for property portal Rightmove PLC (LON:RMV) was batted off on Wednesday.
In a statement, REA said it was “disappointed” and “frustrated that, save for the rejection of REA's three previously disclosed proposals,” there was still no substantive engagement.
Rightmove had argued the third bid, which valued it at £6.1 billion, remained “unattractive and materially undervalues the company and its future prospects”.
Panmure Liberum noted the latest offer was “complicated” and warned a successful deal was unlikely “in the absence of some creativity on REA’s part to increase its bid”.
????When we floated Rightmove back in 2006, it was £500m value company. Revenues were £18mFast forward 18 years. Now the company value is £5.4bn and the revenue is £364m #RMV pic.twitter.com/pDYemjia5x
— Alex (@DeGrooteMedia) September 25, 2024
Pound falls back against euro but traders ramp up bets
The sterling slipped back against the euro on Tuesday having climbed above the €1.20 mark for the first time in two years on Tuesday.
Come mid-morning, the pound had fallen 0.3% to €1.960, with the rise earlier in the week following growing concerns of recession in Germany and expectations for faster interest rate cuts on the continent.
Traders have appeared to ramp up bets on the pound gaining further against the dollar in recent days though.
According to Bloomberg, options trading volumes for the pound versus the euro jumped some 300% ahead of the five-day average last Monday.
Tuesday also saw averages on the Depository Trust and Clearing Corporation beaten.
Expectations have been growing that the UK economy will emerge better from the recent inflation crisis than European counterparts, with interest rate cuts set to come more gradually.
Visa accused of debit card monopoly as US files lawsuit
Visa Inc (NYSE:NYSE:V) has been accused of illegally hampering competition within the debit card market in a US antitrust lawsuit.
America’s justice department filed the case on Tuesday, claiming Visa had paid off potential competitors and punished those looking to use alternative payment methods.
This had led to higher fees for consumers and hit innovation, the department said, with the lawsuit following an investigation since 2021.
Attorney General Merrick Garland argued Visa’s dominance, which sees it account for over 60% of US debit transactions, meant fees were higher than in a “competitive market”.
“Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service," he noted.
“As a result, Visa’s unlawful conduct affects not just the price of one thing - but the price of nearly everything.”
Visa subsequently labelled the lawsuit, which had been reported earlier on Tuesday, as “meritless” and accused it of “ignoring the reality” in the debit market.
Miners extend gains after China economic package
Miners enjoyed further gains early on Wednesday after receiving a boost on plans by China to reinvigorate its struggling economy.
Rio Tinto (LON:RIO) climbed by 1.2% early on, followed by Anglo American PLC (LON:AAL) and Glencore PLC (LON:GLEN), after each gained on Tuesday.
This came after the People's Bank of China said short-term interest rates and cash reserve requirements would be cut earlier in the week, with the efforts to breathe life into its struggling economy boosting sentiment for commodities.
Fresnillo PLC (LON:FRES) and Endeavour Mining PLC (LON:EDV) also climbed on Wednesday morning.
Rentokil Initial PLC (LON:RTO) took the spot as the day’s biggest riser early on, up 3%, after announcing a representative of activist investor Nelson Peltz's Trian Fund Management would join its board.
Co-op swings to profit despite challenging conditions
The Co-operative has reported a swing to profit for the first half of the year as its food, business and life units all outperformed the wider market.
Pre-tax profit swung to £58 million over the first six months of the year, against a £33 million loss in 2023, Co-op said on Wednesday.
This came on the back of a 1.5% increase in revenue to £5.6 billion as food sales ticked up alongside life services turnover.
“Although the external environment remains challenging, it is testament to the underlying strength of our Co-op that we have outperformed in all our markets,” chief executive Shirine Khoury-Haq said.
Food revenue climbed by 3.2%, the Co-op added, while revenue from its funeral, legal and insurance wings increased by 1.4%, 35% and 7% respectively.
Wholesale turnover dipped by 2.9%, though an 11% increase in franchise revenue meant Co-op’s market share was either unchanged or grew across its food, business and life segments.
Nike , Sky ads banned in UK
Social media adverts from Nike Inc (NYSE:NKE) and Sky Plc (BE:BSBAy) have been banned in the UK over unclear claims which regulators said could mislead customers.
Nike’s, an X ad from last December, featured an image of its trainers alongside a caption saying they were “now just £26”.
Sky’s featured on its NOW TV streaming service and related to membership options, which were automatically added to customers’ baskets once on the site.
Britain’s Advertising Standards Agency (ASA) noted on Wednesday that the Nike promotion related only to children's sized shoes when consumers clicked through to the site, while text in the Sky campaign was said to be unclear.
The regulator said it was investigating such “online choice architecture,” which sees brands hide or delay key information on products in order to prompt people to click on ads.
Rightmove rejects latest bid from Murdoch's REA Group
Rightmove PLC has rejected a third offer from Rupert Murdoch's REA Group.
Noting it "continues to be unattractive and materially undervalues the company and its future prospects," Rightmove said Wednesday its board had unanimously rejected the offer.
Made up of 341p in cash and 0.0422 new REA shares per Rightmove share, the latest bid from the Australian property portal owner implied an offer value of 759p, Rightmove pointed out.
DFS reports loss, eyes consumer recovery this year
DFS Furniture PLC (LON:DFSD) has reported a loss for the year but noted improving house market conditions and growing incomes should aid a recovery ahead.
Reported pre-tax losses for the year sat at £1.7 million, against a £29.7 million profit in 2023, the furniture retailer said in an update on Wednesday.
This coincided with a 9.3% drop in revenue to £987.1 million, which DFS attributed to Red Sea shipping delays late in the year and lacklustre demand.
“Despite the challenges that the business has seen, we are optimistic for the future and see signs that market growth could soon return,” chief executive Tim Stacey commented.
“We expect recent improvements in housing transaction data and strengthening consumer balance sheets to lead to increased upholstery market demand across 2025.”
Underlying profit before tax from continuing operations sat 65.7% lower at £10.5 million, with DFS previously suggesting this would be closer to £20 million.
No dividend was declared as a result, as underlying cash outflows climbed by £3 million to £10 million and debt grew by 17.5% to £164.8 million.
DFS added orders had grown over the start of the new financial year and said it was on course to deliver medium-term targets of £1.4 billion in revenue and 8% pre-tax profit growth.