(Alliance News) - The UK government will continue to sell down its stake in lender NatWest, extending the trading plan unveiled last July for another year, the Treasury said on Wednesday.
The trading plan now will terminate no later than August 11, 2023. It will continue to be managed by Morgan Stanley.
Since the plan was established, the UK Treasury has sold 703.5 million shares for GBP1.6 billion, it said. This implies an average sale price per share of around 227p, well below the 502p paid to bail out NatWest, then Royal Bank of Scotland, in 2008.
The stock closed on Tuesday at 222.04p. It was up 2.0% to 225.80p early Wednesday, outperforming the wider FTSE 100. The NatWest share price is up 11% over the past 12 months.
NatWest shares also benefited from an upgrade to a 'buy' rating by Jefferies early Wednesday.
The Treasury currently owns 5.09 billion NatWest shares, representing a 48.5% stake. When it set out the trading plan last July, the UK state had a 54.7% stake.
"UKGI and HM Treasury will keep other disposal options open, including by way of directed buybacks and/or accelerated bookbuilds. The decision to extend the trading plan does not preclude HM Treasury from executing such other disposals that achieve value for money for taxpayers, including during the term of the trading plan," the UK government added.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.5% at 7,047.44
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Hang Seng: down 2.3% at 21,061.19
Nikkei 225: closed down 0.4% at 26,149.55
S&P/ASX 200: closed down 0.2% at 6,508.50
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DJIA: closed up 641.47 points, 2.2%, at 30,530.25
S&P 500: closed up 2.5% at 3,764.79
Nasdaq Composite: closed up 2.5% at 11,069.30
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EUR: down at USD1.0490 (USD1.0568)
GBP: down at USD1.2220 (USD1.2276)
USD: up at JPY136.48 (JPY136.18)
Gold: down at USD1,826.87 per ounce (USD1,839.99)
Oil (Brent): down at USD110.27 a barrel (USD114.71)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's key economic events still to come
1100 BST Ireland wholesale price index
0930 BST UK ONS house price index
0700 EDT US MBA weekly mortgage applications survey
1000 EDT US Fed Chair Powell testifies before Senate Banking Committee
1630 EDT US API weekly statistical bulletin
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The UK inflation rate edged up in May to a fresh 40-year high. Annual consumer price inflation hit 9.1%, ticking up from 9.0% in April. This was in line with market consensus, according to FXStreet. It was the highest 12-month inflation rate in the National Statistic series, which began in January 1997, the Office for National Statistics said. Indicative modelled consumer price index inflation estimates suggest that it would last have been higher around 1982, ONS said. Month-on-month, prices rose 0.7%, far slower than the 2.5% notched for April. Turning to factory prices, producer input prices rose by 22% in the year to May, accelerating from 21% in April to hit the highest rate since records began in 1985. Output prices rose 16%, again accelerating from April's rise of 15%.
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Talks on a trade deal between the UK and six Gulf nations that could boost the UK economy by up to GBP1.6 billion a year will kick off on Wednesday with a meeting in Saudi Arabia. UK Trade Secretary Anne-Marie Trevelyan will meet representatives of the Gulf Co-operation Council in Riyadh to begin negotiations on a deal with the bloc. Trade between the UK and the GCC – which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – is already worth GBP33 billion, making it the UK's seventh largest trading partner, and the bloc's demand for international goods and services is expected to increase 35% in the next 13 years. The UK is expected to pursue cuts to tariffs on British exports to the Gulf, particularly in the food and drink sector. UK food and drink exports to GCC countries were worth GBP625 million in 2021. The government will also seek to improve access for hi-tech industries including green technology to help the GCC transition away from reliance on fossil fuels.
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BROKER RATING CHANGES
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Jefferies raises NatWest to 'buy' (hold) - price target 359 (246) pence
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Goldman Sachs reinitiates Melrose Industries with 'neutral' - price target 160 pence
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Jefferies raises Smurfit Kappa to 'buy' (hold) - price target 3,700 (3,900) pence
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COMPANIES - FTSE 100
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Housebuilder Berkeley said pretax profit for the financial year ended April 30 rose 6.4% to GBP551.5 million from GBP518.1 million, with revenue rising 6.6% to GBP2.35 billion from GBP2.20 billion. "These strong results reflect the stability of our uniquely long-term operating model throughout an exceptionally volatile period," said Chief Executive Rob Perrins. Berkeley added it has seen a "stable" start to the new financial year, with enquiries, visitor numbers and reservations in line with the end of the 2022 financial year.
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JD Sports Fashion reported a jump in annual revenue and profit, though performance is set to stagnate in the year ahead due to a number of headwinds facing consumers, it said. Revenue for the 52 weeks to January 29 rose 39% to GBP8.56 billion from GBP6.17 billion the year before, with pretax profit doubling to GBP654.7 million from GBP324.0 million. The athleisurewear retailer will pay a dividend of 0.35p for the year, up from 0.29p the year prior. "This result demonstrates our capacity for growth in both existing and new markets, and the strength of our global proposition and consumer engagement in store and online," said JD Sports. Trading in the new financial year has been reassuring so far, it said, with like-for-like sales after four months 5% above a year ago. JD Sports said headline profit before tax and exceptional items for the 2023 financial year is expected to be in line with the record GBP947.2 million just achieved. On its hunt for a chief executive, JD Sports said a number of "high calibre candidates" are at different stages of consideration. The search for a new non-executive chair is also progressing "at pace".
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Merck & Co said its Lynparza drug, developed alongside AstraZeneca, improved survival rates for some sufferers of prostate cancer. Results from a phase three probe showed Lynparza, in tandem with abiraterone plus prednisone "significantly" improved progression-free survival, compared to users of just abiraterone plus prednisone. The latter treatment is the standard of care for sufferers of metastatic castration-resistant prostate cancer. Metastatic cancer is a form of the disease which spreads to distant parts of the body. Castration-resistant prostate cancer is a form of the disease which continues to spread even when the level of testosterone in the body is reduced.
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COMPANIES - FTSE 250
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Frasers Group has increased its stake in German fashion house Hugo Boss. The Sports Direct-owner now holds 3.4 million shares of common stock, it said, representing 4.9% of Hugo Boss's share capital, and 18.3 million shares of common stock via the sale of put options, representing a further 26% stake. "This investment reflects Frasers Group's belief in the Hugo Boss brand, strategy and management team. Frasers Group continues to intend to be a supportive stakeholder and create value in the interests of both Frasers Group's and Hugo Boss' shareholders," said Frasers.
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Software firm Micro Focus International reported a narrowed pretax loss in the half year that ended April 30 of USD42.9 million from USD280.0 million a year before, amid lower costs, as revenue declined to USD1.27 billion from USD1.43 billion. Adjusted earnings before interest, tax, depreciation and amortisation fell to USD449 million from a constant-currency year-earlier figure of USD511 million. As a results, Micro Focus cut its interim dividend to 8 cents per share from 8.8 cents. The company said there is no change to its expectations on revenue, costs or cash for the full year.
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Wednesday's shareholder meetings
ASA International Group PLC - AGM
Atalaya Mining PLC - AGM
Bonhill Group PLC - AGM
Chapel Down Group PLC - AGM
Churchill China PLC - AGM
Downing Renewables & Infrastructure Trust PLC - GM re share issue
Ecofin US Renewables Infrastructure Trust PLC - AGM
EJF Investments Ltd - AGM
Frenkel Topping Group PLC - AGM
Good Energy Group PLC - AGM
Honeycomb Investment Trust PLC - AGM
ICG-Longbow Senior Secured UK Property Debt Investments Ltd - AGM
Intelligent Ultrasound Group PLC - AGM
Iofina PLC - AGM
John Wood Group PLC - AGM
Kingfisher PLC - AGM
LXi REIT PLC - GM
Menhaden PLC - AGM
North Atlantic Smaller Cos Investment Trust PLC - AGM
Pennant International Group PLC - AGM
Plant Health Care PLC - AGM
Skillcast Group PLC - AGM
Team PLC - AGM
Tribal Group PLC - GM re final dividend
Trident Royalties PLC - AGM
Vertu Motors PLC - AGM
Wentworth Resources PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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