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(Alliance News) - Credit Suisse Group on Monday warned of a sizeable hit to its first-quarter results after a US-based hedge fund defaulted on a margin call.
Credit Suisse and "a number of other banks" are exiting this position, the company said.
"While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first quarter results," Credit Suisse added.
The Zurich-based firm said it will provide another update "in due course".
Meanwhile, Japan's Nomura Holdings on Monday cautioned on a "a significant loss arising from transactions with a US client". The financial services firm estimated a USD2 billion hit based on market prices as of Friday, though it said the estimate was subject to change.
Nomura shares closed down 16% to JPY603.00 on Monday in Tokyo.
The Financial Times on Sunday reported that private investment Archegos Capital was behind a sale which sent media stocks in the US tumbling on Friday.
ViacomCBS Inc and Discovery Channel owner Discovery Inc both fell 27% in New York on Friday.
The FT noted that Archegos was forced into margin calls by its brokers.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 6,746.42
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Hang Seng: down 0.1% at 28,306.17
Nikkei 225: closed up 0.7% at 29,384.52
DJIA: closed up 453.40 points, or 1.4%, at 33,072.88
S&P 500: closed up 1.7% at 3,974.54
Nasdaq Composite: closed up 1.2% at 13,138.72
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EUR: down at USD1.1780 (USD1.1796)
GBP: down at USD1.3762 (USD1.3795)
USD: down at JPY109.54 (JPY109.60)
GOLD: down at USD1,726.93 per ounce (USD1,733.46)
OIL (Brent): down at USD63.62 a barrel (USD64.35)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
0930 BST UK money and credit
1100 BST Ireland retail sales index
1000 CEST EU eurozone economic outlook
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Friends and families will be reunited and team sports will resume in a major easing of England's coronavirus lockdown to allow far greater freedom outdoors. Groups of up to six, or two households, can socialise in parks and gardens once more, while outdoor sports facilities can reopen after the stay-at-home order ended on Monday. Among the first to re-open its doors was the Morley Hayes Golf Club, near Derby, with players teeing off at 12.01am on Monday for a seven-hole floodlit charity tournament. UK Prime Minister Boris Johnson stressed that "we must remain cautious, with cases rising across Europe and new variants threatening our vaccine rollout", while warm weather was excepted to accompany the relaxation. "Despite today's easements, everyone must continue to stick to the rules, remember hands, face, space, and come forward for a vaccine when called," Johnson added. He is expected to urge the public to take personal responsibility by sticking to the restrictions as he holds a Downing Street press conference.
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Egypt's Suez Canal Authority said the Ever Given container ship, which has been blocking the crucial waterway for nearly a week, has been turned in the "right direction". "The position of the ship has been reorientated 80% in the right direction," SCA chief Osama Rabie said in a statement. "The stern...moved to 102 metres from the shore," compared to its position four metres from the shore previously, he added. Rabie noted that the process of refloating the ship had begun, "with success". The process "will resume when water flow increases again from 11:30 am [0930 GMT]...in order to completely refloat the vessel, so as to reposition it in the middle of the waterway," the statement added. The Egyptian official said that navigation would resume "after the completion of refloating operations of the ship, which will then be directed to the waiting area," to allow the canal to be cleared. Over 300 ships are currently waiting to travel through the canal.
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BROKER RATING CHANGES
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JPMORGAN RAISES TAYLOR WIMPEY TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 220 (190) PENCE
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HSBC CUTS BERKELEY GROUP TO 'REDUCE' ('BUY') - TARGET 3,940 (5,920) PENCE
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MORGAN STANLEY RAISES BT GROUP TO 'OVERWEIGHT' ('EQUAL-WEIGHT') - TARGET 200 (125) PENCE
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COMPANIES - FTSE 100
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Chevron is leading the race to acquire a Royal Dutch Shell oil refinery in the Pacific Northwest region of the US, Reuters reported late Friday. The refinery, located in Anacortes, Washington, has been up for sale for at least a year, Reuters noted. The unit produces 145,000 barrels of crude per day. Reuters added a deal is not guaranteed. The plant was initially owned by Texaco, which itself was acquired by Chevron in 2000. After Texaco was bought by Chevron, it sold its stake in the refinery to Shell.
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COMPANIES - FTSE 250
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AJ Bell said it expects revenue for its current financial year to top market consensus. The retail investment platform said it has continued to see strong customer acquisition in the first half of the financial year ending September 30 and dealing activity by D2C customers has remained at "elevated levels". While dealing activity is expected to ease from current levels in the second half, AJ Bell currently expects revenue for the financial year to be at least GBP6.0 million above current market consensus. It said that consensus lies at GBP136.0 million.
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Domino's Pizza Group said it has agreed to sell its operations in Iceland for GBP13.7 million. Domino's Iceland is the master franchisee of Domino's Pizza in Iceland, operating 23 stores. The purchaser, PPH, is an investment vehicle owned by a consortium comprising Eyja fjarfestingafelag III - a wholly-owned subsidiary of Eyja fjarfestingafelag, a vehicle controlled by Birgir Bieltvedt - Kristinn, Sjavarsyn and Lysi. Bieltvedt is an indirect owner of DP Norway and, as previously announced, Domino's has separately agreed the sale of its Swedish business to Bieltvedt's vehicle Eyja fjarfestingafelag III. Proceeds from the sale will be used to reduce Domino's debt. The sale is part of Domino's planned exit from all directly operated international markets to allow the FTSE 250 company to focus on its core UK and Ireland markets. Talks remain ongoing over a disposal of its Swiss operations.
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COMPANIES - MAIN MARKET AND AIM
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Deliveroo will price its initial public offering in London at the bottom of the expected range, the Times reported Monday. The takeaway food delivery company will price its shares at between 390p and 410p a share when it lists on Wednesday, valuing it at between GBP7.6 billion and GBP7.85 billion, according to the newspaper. Deliveroo had said it was seeking a valuation of between GBP7.6 billion and GBP8.8 billion when it announced plans earlier this month for the float, the biggest of 2021 in London.
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Newspaper publisher and business information provider Daily Mail & General Trust noted that investee Cazoo intends to become listed in New York. DMGT currently holds around a 20% stake in Cazoo, a UK online car retailer with a growing presence in Europe, through its venture capital arm, dmg ventures. It noted that Cazoo has agreed a combination with Ajax I, a publicly-traded special purpose acquisition company listed in New York. The transaction values the combined company at a pro forma enterprise value of around USD7.0 billion and a pro forma equity value of approximately USD8.1 billion. "If the proposed transaction closes, and assuming no redemptions by Ajax shareholders, the combined value in cash proceeds and shares in the listed Cazoo, valued at the USD10.00 per share issue price, that DMGT will receive on closing is expected to be approximately USD1.35 billion," the company said.
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South32 said it now expects the transfer of its shareholding in South32 SA Coal Holdings to Seriti Resources Holdings Pty Ltd to complete following the end of the March quarter. Previously, South32 said it was on track to close the transaction during the March quarter. The deal was agreed back in November 2020, when miner South32 said it would sell its 92% holding in the coal subsidiary for an upfront payment of ZAR100 million. The consideration also includes a deferred payment which will see South32 receive a portion of the cash flow generated by the unit, capped at ZAR1.5 billion. The London, Sydney and Johannesburg listed company will earn 49% of cash generated between the completion of the transaction and March 2024.
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Cerillion said it has secured its largest ever contract win to date, with a ten-year agreement worth a total of USD18.4 million signed with a full-service network operator in Latin America. Cerillion is a billing and customer relations management software firm based in London. The contract in Latin America is for the supply and implementation of Cerillion's Enterprise Business Support System/Operations Support System suite, and includes full support services over the 10-year term. The tender process was "rigorous and extensive", the billing and customer relations management software firm said. This contract, together with a smaller GBP2.7 million extension recently secured with an existing customer in Europe, is anticipated to result in Cerillion exceeding current management expectations for pretax profit in the current financial year ending September 30.
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Ten pin bowling operator Ten Entertainment reported a swing to annual loss as trading was disrupted by the coronavirus pandemic. Revenue for the 52 weeks to December 27 slumped to GBP36.3 million from GBP84.1 million, while the company turned to a pretax loss on an IFRS 16 basis of GBP21.7 million from a GBP11.8 million profit on an IAS 17 basis. Its loss in financial 2020 on an IAS 17 basis was GBP12.2 million. IFRS 16 is an accounting rule related to the financial treatment of leases. Of the period, Ten Entertainment said 16 weeks saw disrupted trading due to Covid-19 and there were 25 weeks of closure, with just 11 weeks in the year of normal trading conditions. The company said it is "primed and ready to reopen", expecting pent-up demand when it can reopen all centres on May 17. The firm added that Chair Nick Basing has decided to step down in September. He will remain in place to oversee the appointment and handover to the new chair and "the relaunch of our business to continue to journey to future growth".
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Monday's Shareholder Meetings
Aukett Swanke Group PLC - AGM
Nuformix PLC - AGM
Pathfinder Minerals PLC - GM re fundraising
Sabien Technology Group PLC - AGM
TOC Property Backed Lending Trust PLC - GM re dividend policy
WANdisco PLC - GM re proposed fundraising by way of subscription
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By Tom Waite; thomaslwaite@alliancenews.com
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