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LONDON BRIEFING: Barclays buys Tesco's retail banking business

Fri, 09th Feb 2024 07:51

(Alliance News) - Stocks in London are called to open higher on Friday, closing off a busy corporate week.

In early economic news, numbers from Destatis confirmed that consumer price inflation in Germany cooled to 2.9% in January.

On the corporate front, Barclays has agreed to buy Tesco's retail banking business. The two FTSE 100 companies have also agreed a long-term strategic partnership.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called up slightly at 7,597.80

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Hang Seng: closed up 0.8% at 15,746.58

Nikkei 225: closed up 0.1% at 36,897.42

S&P/ASX 200: closed up 0.1% at 7,644.80

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DJIA: closed up 48.97 points, 0.1%, at 38,726.33

S&P 500: closed up 2.85 points, 0.1%, at 4,997.91

Nasdaq Composite: closed up 37.07 points, 0.2%, to 15,793.72

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EUR: up at USD1.0780 (USD1.0763)

GBP: up at USD1.2626 (USD1.2609)

USD: down at JPY149.27 (JPY149.39)

Gold: up at USD2,033.41 per ounce (USD2,029.31)

(Brent): up at USD81.45 a barrel (USD81.02)

(changes since previous London equities close)

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ECONOMICS

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Friday's key economic events still to come:

08:30 EST Canada unemployment

11:00 GMT Ireland industrial production

13:00 EST US Baker Hughes oil rig count

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Consumer price inflation in Germany cooled to 2.9% in January, numbers from Destatis confirmed on Friday. According to a Destatis, the consumer price index rose by 2.9% in January from a year before, slowing from a 3.7% annual rise in December. This came in line with a previous estimate. On a harmonised basis, allowing for EU-wide comparison, the rate of inflation cooled to 3.1% in January from 3.8% in December. On a monthly basis, consumer prices rose 0.2% in January from December, picking up speed from a 0.1% rise in December from November. On a harmonised basis, consumer prices fell 0.2% in January from December. They had risen 0.2% in December from November.

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BROKER RATING CHANGES

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Deutsche Bank cuts AstraZeneca to 'sell' (hold) - price target 9,500 (11,000) pence

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Berenberg starts Keller Group with 'buy' - price target 1,250 pence

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Berenberg starts Kier Group with 'buy' - price target 210 pence

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COMPANIES - FTSE 100

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Barclays said it has bought Tesco's retail banking business, which includes credit cards, unsecured personal loans, deposits and the operating infrastructure. Additionally, Barclays UK will enter into a long-term, exclusive strategic partnership with Tesco Stores for an initial period of 10 years to market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand, as well as explore other opportunities to offer financial services to Tesco customers. "Barclays is a leading consumer bank in the UK. This strategic relationship with the UK's largest retailer will help create new distribution channels for our unsecured lending and deposit businesses. We are able to bring our expertise in partnership cards developed over decades in the US to enhance further the highly successful Tesco Clubcard loyalty scheme," said Barclays Chief Executive Venkatakrishnan. Rival UK supermarket chain J Sainsbury last month announced a phased withdrawal from its core banking business. This followed a review of its Financial Services division as part of its 'Food First' strategy.

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COMPANIES - FTSE 250

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Bellway said that in the six months ended January 31, housing revenue amounted over GBP1.25 billion, down from GBP1.80 billion a year earlier but in line with the board's expectations. Total housing completions came in at 4,092 homes, down from 5,695 homes. "Bellway has delivered another resilient performance in a period of challenging trading conditions. While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints and we are encouraged by the seasonal pick-up in customer leads and an improvement in reservations since the start of the new calendar year," said CEO Jason Honeyman.

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Victrex noted a "soft start" to its financial year, as it updated markets on its first quarter, ended December 31. Quarterly revenue fell 22% to GBP61.2 million from GBP78.8 million a year earlier. Volumes fell 21% to 751 tonnes from 948 tonnes. Looking ahead, Vistry noted an improvement seen in January, the start of its second quarter, but warned that "visibility remains limited." CEO Jakob Sigurdsson added: "January trading was solid and ended slightly ahead of the prior year comparative. However, we are mindful of the soft start and limited visibility of an uptick in several end-markets."

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OTHER COMPANIES

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Air Astana, an airline group in Central Asia and the Caucasus region, announced the price for its initial public offering in London and on two local exchanges in Kazakhstan. The IPO will include the sale of existing shares held by aerospace firm BAE Systems. Air Astana said the IPO was oversubscribed "multiple times". It set the price for its global depositary receipts - each representing four shares - at USD9.50, within its previously announced range of USD8.50 to USD11.00. This will give Air Astana a market capitalisation at the IPO price of USD847 million. BAE will sell 7.5 million GDRs in the domestic offering and 14.2 million in the global offering. The IPO will raise USD370 million, including an over-allotment option offered by BAE. Of this, USD120 million will go to Air Astana for growth initiatives.

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OpenAI chief Sam Altman is seeking to raise trillions of dollars to reshape the global semiconductor industry, and has held talks with potential investors including the UAE government, the Wall Street Journal reported Thursday. Altman is reportedly looking to resolve some of the biggest challenges faced by the rapidly-expanding artificial intelligence sector – including a shortage of the expensive computer chips needed to power large-language models like OpenAI's ChatGPT. The global chip industry is currently dominated by just a few firms, including Taiwan Semiconductor Manufacturing Co and California-based Nvidia. While many countries have unveiled plans to support domestic chip production, the financial support they have offered pales in comparison with the vast sums of money Altman has reportedly been discussing with investors. The Journal estimated that the total cost of realising Altman's project could be as much as USD7 trillion. This is roughly a trillion dollars more than the market value of the world's two largest public companies – Apple and Microsoft , the latter which backs OpenAI – combined.

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By Sophie Rose, Alliance News senior reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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