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(Alliance News) - US financial market regulators will study the trading frenzy last week that saw shares like GameStop Corp soar, and ensure investors are protected, the Treasury Department said Thursday.
Treasury Secretary Janet Yellen called the meeting with top market watchdogs to discuss the recent trading volatility created by a social media-fuelled buying craze for stocks that were shorted by hedge funds, including of video game store GameStop, which surged over 400% in a week before falling sharply.
While it did not mention GameStop or retail trading platform Robinhood, Treasury said the Securities & Exchange Commission will be "releasing a timely study of the events".
In addition, the SEC and the Commodities Futures Trading Commission "are reviewing whether trading practices are consistent with investor protection and fair and efficient markets," Treasury said in a statement late Thursday.
Prior to the meeting, Yellen stressed the need to "make sure that our financial markets are functioning properly, efficiently and that investors are protected," in her first television interview on ABC's Good Morning America.
However, she made no commitment to taking action to curb any of the behaviours involved.
Game Stop shares, which started 2020 at USD5.88, spiked to nearly USD483 on January 28. The stock ended Thursday in New York at USD53.50, down 42% on the day, and lost another 8.1% in after-hours activity to USD49.17.
Here is what you need to know at the London market open on Friday:
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MARKETS
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FTSE 100: down 0.1% at 6,497.37
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Hang Seng: up 0.6% at 29,280.90
Nikkei 225: closed up 1.5% at 28,779.19
DJIA: closed up 332.26 points, 1.1%, at 31,055.86
S&P 500: closed up 1.1% at 3,871.74
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GBP: up at USD1.3680 (USD1.3659)
EUR: down at USD1.1965 (USD1.1976)
Gold: up at USD1,798.50 per ounce (USD1,788.70)
Oil (Brent): up at USD59.15 a barrel (USD58.55)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
0830 GMT UK Halifax house price index
0830 EST US jobs report for January
0830 EST US international trade in goods & services
1500 EST US consumer credit
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UK retail destinations booked their largest footfall plunge in over six months in January, data on Friday showed, after England third national lockdown emptied high streets and shopping centres once again. According to the British Retail Consortium-ShopperTrak monitor, UK retail footfall tumbled 77% annually in January, a steeper fall than the 46% contraction in December, a month when various regions, including London, were slapped with tier 4 restrictions. The January fall was the largest decline since May's 82% plunge. England's third national lockdown came into force on January 6 and since then footfall is 78% lower annually. This is a steeper drop than the 76% decline in the second lockdown in November, which was a month long, and the 82% plunge during the initial three-month lockdown last spring.
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Property portal Rightmove said it had its busiest ever January, with site visits surging as new buyers were undeterred by Covid-19 health crisis or the looming end to the UK stamp duty holiday at the end of March. Rightmove said visits to its website jumped by 39% annually to a new record in January, with time spent on rising 44%. "Prospective buyers contacting estate agents was up by 7% on January last year, and those enquiring about a property to rent was up by 14%," Rightmove said. The number of sales agreed was 5% higher, "despite the fact the majority will not complete in time to beat the stamp duty holiday deadline".
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BROKER RATING CHANGES
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GOLDMAN SACHS RAISES BURBERRY TO 'NEUTRAL' ('SELL') - TARGET 1,690 (1,595) PENCE
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BARCLAYS CUTS JOHNSON MATTHEY TO 'UNDERWEIGHT' ('EQUAL WEIGHT') TARGET 2,570 (2,640) PENCE
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BERENBERG INITIATES ANGLO AMERICAN WITH 'BUY' - TARGET 2,800 PENCE
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COMPANIES - FTSE 100
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The UK's energy regulator Ofgem said an energy price cap will be raised, pushing up bills to "pre-pandemic levels". The decision means UK customers who get their energy from the likes of SSE, Centrica's British Gas and E.ON will have bills raised by nearly GBP100. "Ofgem has announced today that from 1 April 2021 the price cap will return to pre-pandemic levels, principally as a result of changes in wholesale energy prices," the regulator said. A "big increase" in wholesale prices has meant the cap for 11 million default tariff customers has risen to GBP1,138 from April 1, up by GBP96. The measure will last for six months. For four million pre-payment default customers in the UK, bills will go up by GBP87 to GBP1,156.
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The UK's financial services industry should focus on taking on New York and Singapore rather than the EU post-Brexit, the chief executive of Barclays has said. Jes Staley, who has led the bank since December 2015, told the BBC that UK fostering co-operation and trust with the EU was important in the wake of the divorce, but not at the cost of being uncompetitive. He told the broadcaster: "What the UK needs and London needs, is to make sure that the city is one of the best places, whether it was regulation or law or language, or talent that manages these flows of capital well. "I think what London needs to be focused on is not Frankfurt or not Paris, [it] needs to be focused on New York and Singapore. Brexit gives the UK the opportunity to define its own agenda, and in defining that agenda around financial services, staying competitive with other markets outside of Europe is really what the government here should be focused on, and I think that's what they're focusing on."
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COMPANIES - FTSE 250
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Global Infrastructure Partners said Brown Bidco and Signature Aviation have reached agreement on a takeover proposal for the aviation services provider. Blackstone Infrastructure and Blackstone Core Equity, GIP and Cascade make up the consortium in relation to the acquisition. Under the terms of the acquisition, each shareholder will be entitled to USD5.62 in cash, or 411 pence, valuing Signature at USD4.72 billion. Signature directors intend to recommend unanimously that shareholders vote in favour of the resolutions relating to the acquisition. "Bidco's investors believe that the development of the Signature Group will be best served as a private business, with access to capital and the benefit of a long-term investment approach. This will allow it to continue to deliver on its strategic objectives whilst enabling it to respond to structural changes in its industry in the medium and long term," GIP said.
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Beazley swung to an annual loss and skipped paying any dividend for 2020, as the insurer felt the effects of the coronavirus pandemic. Beazley posted a pretax loss of USD50.4 million for the year ended December 31, swinging from a USD267.7 million profit in 2019 on revenue of USD2.91 billion, up 10% from USD2.34 billion. Beazley said 2020 gross premiums written were USD3.56 billion, up 19% from USD3.00 billion. But it reported a combined ratio of 109%, up from 100% in 2019. A combined ratio above 100% indicates an underwriting loss. Bealey highlighted that after a series of years with material natural catastrophes, the Covid-19 pandemic brought a wave of event cancellation and business interruption claims that hit its contingency and property books. "At Beazley we felt the impact of pandemic-related losses, reporting an estimated USD340 million in first-party claims net of reinsurance in 2020, largely driven by our exposure to cancelled events, and to have ultimately yielded a financial loss has been disappointing," said Chief Executive Officer Andrew Horton. The insurer declared no dividend for 2020 having paid out 12.3p per share in 2019. However, Horton said he was confident Beazley could return to paying dividends in 2021. Looking ahead Horton said: "We anticipate the favourable rating environment will continue throughout 2021 and we will continue to pursue growth in areas where we can deliver consistent value for brokers and clients while managing our claims and expenses."
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COMPANIES - MAIN MARKET AND AIM
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French Connection Group said it received two separate takeover approaches for the struggling clothing retailer from Spotlight Brands and Go Global Retail. French Connection said discussions are at an early stage and there can be no certainty that an offer will be made.
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COMPANIES - GLOBAL
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Johnson & Johnson asked US regulators on Thursday for emergency authorization of its single-shot Covid vaccine. If approved, the vaccine would be the third in the hard-hit US and offers logistical advantages because it doesn't require two doses and the deep-freeze storage needed for already approved shots. However trials showed the Johnson & Johnson vaccine does not protect as well against a highly transmissible virus variant first identified in South Africa, which is spreading rapidly around the world. An advisory committee of the US Food and Drug Administration will meet to consider the application on February 26. J&J says if its vaccine is authorized it is on track to deliver 100 million doses to the US by the end of June, a major supply of vaccine in a nation of some 320 million people.
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BNP Paribas predicted "a gradual rebound in economic activity" in the second half of 2021, after the Paris-based lender ended a Covid-battered 2020 with another quarterly earnings fall. In the three months ended December 31, revenue fell 4.5% annually to EUR10.83 billion from EUR11.33 billion. Fourth quarter pretax profit slumped 12% to EUR2.23 billion from EUR2.53 billion. Quarterly operating expenses were lower however, coming in at EUR7.56 billion, down 5.9%. For the year, revenue inched down 0.7% to EUR44.28 billion from EUR44.60 billion. Pretax profit was 14% lower at EUR9.82 billion from EUR11.39 billion. For 2020, revenue in its Domestic Markets segment was 2.2% lower, at International Financial Services it fell 7.2% but in the CIB investment banking arm, annual revenue jumped 14%.
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Nippon Telegraph & Telephone said its profit grew in the first nine months of its current financial year despite revenue slip. The Tokyo-based telecommunications company reported a 1.4% decline in revenue in the nine months to the end of 2020 to JPY8.738 trillion, about USD82.82 billion, when compared to the prior year. Pretax profit, meanwhile, increased by 1.9% year-on-year to JPY1.495 trillion. During the period, Nippon Telegraph & Telephone said it has expanded work-from-home environments for contact centre operators by strengthening security counter-measures.
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Friday's Shareholder Meetings
AIB Group PLC - EGM re replacing Crest with Euroclear Bank
Bank of Cyprus Holdings PLC - EGM re replacing Crest with Euroclear Bank
Brewin Dolphin Holdings PLC - AGM
Countryside Properties PLC - AGM
DWF Group PLC - AGM
Hipgnosis Songs Fund Ltd - EGM
On the Beach Group PLC - AGM
Smurfit Kappa Group PLC - EGM re settlement of shares replacing CREST
Total Produce PLC - EGM re replacement of CREST
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By Tom Waite; thomaslwaite@alliancenews.com
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