Proactive Investors -
- FTSE 100 up 24 points to 8,228
- Carlsberg (CSE:CARLa) to buy Britvic (LON:BVIC)
- Chancellor Reeves lays out housebuilding plans
Metro Bank offloading £3bln mortgage book - Sky
High-street challenger Metro Bank has revived plans to offload its multibillion-dollar mortgage book after a deal with Barclays PLC (LON:BARC) fell apart last December.
According to a Sky News report, which did not mention who the potential buyers are, Metro’s mortgage book is worth at least £3 billion, but could be worth up to £4 billion.
Metro’s star has fallen since becoming the first British high-street lender to open its door in over 100 years in 2010.
The bank was given a £925 million funding lifeline in October 2023 amid a sharp decline in its share price and heavy post-pandemic losses.
Since then, Metro has managed to turn its first pre-tax profit in five years, though it came at a price of a large-scale cost-cutting programme and headcount reductions.
Metro Bank shares added 2.2% following the Sky News report, but the stock is still down 70% year on year.
US markets to open flattish
The US stock market is expected to open flattish this Monday.
Futures contracts for the Dow Jones Industrial Average predict a 0.1% gain, while the Nasdaq 100 (which smashed a new all-time high last week) and the broader S&P 500 index are not tipped to move from Friday’s closing prices.
There will be little on the macroeconomic calendar to push the needle barring the latest consumer inflation expectations print for June.
The big story on the company news front is Paramount Global’s agreed-upon merger with Skydance to make a $28 billion mega media conglomerate.
Shari Redstone will sell her family's controlling stake in Paramount as part of the deal.
Meanwhile, crisis-struck aircraft manufacturer Boeing Co (NYSE:BA) has agreed to pay a $243.6 million fine and plead guilty to fraud in a deal with US federal prosecutors in order to avoid a criminal trial.
The guilty plea relates to a criminal fraud conspiracy charge after the US Department of Justice (DoJ) found the company violated a deal that had protected it from prosecution after two fatal crashes of its 737 Max jets in 2018 and 2019 that killed all 346 people aboard.
Back in London, the FTSE 100 is currently up 16 points to 8,220
Scrapping onshore wind ban presents ‘unique opportunity’ for retail investors
Newly appointed Labour chancellor Rachel Reeves’ scrapping of the “absurd” ban on onshore wind farms should be welcomed by Britain’s retail investors, according to Tara Irwin, ESG analyst at Hargreaves Lansdown (LON:HRGV).
The Chancellor’s announcement included a proposal to incorporate onshore wind projects into the nationally significant infrastructure projects regime.
“This change will streamline decision-making processes, enhance project approval efficiency, and attract substantial private sector investment,” stated Irwin.
She added: “For retail investors, this presents a unique opportunity to participate in the burgeoning green energy market, with the potential for robust financial returns and portfolio diversification.
“Labour has provided the market indicators for the industry to expand and establish. Retail investors have a unique opportunity to support the UK's journey towards a zero-carbon electricity system while enjoying the financial benefits of an industry set for growth.
“The end of the onshore wind ban marks a significant milestone in this journey, promising lower energy bills, enhanced energy security, and a greener future for all.”
BoE’s Haskel fires hawkish rates warning
Monetary Policy Committee member Jonathan Haskel delivered some hawkish comments on inflation and interest rates during a Monday speech at King’s College London.
"The labour market continues to be tight, and I worry it is still impaired," Haskel warned.
He added: "I would rather hold rates until there is more certainty that underlying inflationary pressures have subsided sustainably”.
His comments come on the same day that a new survey conducted by the Recruitment and Employment Confederation suggested that starting salaries for new permanent roles are increasing at the fastest rate since last October.
Haskel joined six other MPC members in voting to maintain the bank rate at 5.25% in June, while two other members voted to reduce the rate to a flat 5%.
The net vote is scheduled for 21 August.
Haskel also denied that the BoE was behind the curve in tempering the post-pandemic inflation surge.
“The initial burst of inflation was due to the economy being hit by a succession of external shocks, unforeseen by even the most informed market participants,” he stated.
Labour to restore mandatory housebuilding targets
Keir Starmer’s Labour party will restore mandatory housing targets, newly instated chancellor Rachel Reeves has stated in her debut speech.
Reeves, who became the UK’s first female chancellor following Labour’s sweeping victory over the Conservatives, said Labour will launch a task force "to accelerate stalled housing sites in our country".
She reiterated Labour’s manifesto pledge of building 1.5 million new homes over the next five years.
Former prime minister Rishi Sunak scrapped plans for compulsory housebuilding targets in 2022 following a Tory backbench rebellion.
The move was labelled as “extremely damaging” by the Home Builders Federation.
"It'll be up to local communities to decide where the housing is built, but it has to be built,” Reeves today stated.
Brownfield and ‘grey belt’ land will be flagged for development. Labour classifies grey belt land as “poor-quality scrubland, mothballed on the outskirts of town”.
Reeves also said Labour will scrap the “absurd” ban on new onshore wind farms in England.
French election signals end to pro-growth reforms
Analysts at Berenberg have warned of a growth fallout from the shock outcome of this weekend’s French elections.
The left and centrist factions of France’s political class combined to deliver a major blow to Marine Le Pen’s populist National Rally party, with the prospect of a hung parliament now emerging.
To the surprise of nearly everyone, a loose alliance of leftist parties under the New Popular Front won the most seats in the election, but with no single party gaining an absolute majority, political deadlock seems inevitable.
This is not the absolute worst outcome, reckon Berenberg analysts- that would have been an absolute majority for the hard-right National Rally. But the outcome nonetheless raises fiscal problems and a likely reversal of Macron’s pro-growth reforms.
“Although French voters did not grant a majority to either the (National Rally) or the spendthrift left, the election result is still negative for France in two important respects,” wrote Berenberg.
“First, it spells the end of Macron’s pro-growth reforms. Instead, the centrists will almost certainly have to accept some reform reversals (eg a potential softening of Macron’s crucial pension reform) and possibly progressive tax hikes demanded by the left in order to pass a budget.
“Second, it threatens to exacerbate France’s fiscal problems. After a deficit of 5.5% of GDP last year and a similar shortfall this year in the absence of any corrective action, France will struggle to pass a 2025 budget that complies with EU fiscal rules.”
France is also at risk of credit deratings, inflation and a “less favourable reputation among global investors”, warned Berenberg.