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LONDON BRIEFING: Shop price inflation eases; Revolution spurns offer

Tue, 28th May 2024 07:54

(Alliance News) - Stocks are called to open lower on Tuesday, as hopes of interest rate cuts dwindle, and as the general election campaign gets underway in the UK.

In early economic news, UK shop price inflation eased in May from April, as all categories showed weaker price pressure.

There was also good news for Intermediate Capital, which posted improved annual results on the back of "long-term financial growth", as the firm managed to withstand a tricky investing environment.

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

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MARKETS

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FTSE 100: called down 0.1% at 8,323.40

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Hang Seng: down 0.1% at 18,806.27

Nikkei 225: closed down 0.1% at 38,872.24

S&P/ASX 200: closed down 0.3% at 7,766.70

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New York closed for holiday on Monday.

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EUR: up at USD1.0877 (USD1.0849)

GBP: up at USD1.2779 (USD1.2748)

USD: down at JPY156.83 (JPY156.96)

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Gold: up at USD2,347.00 per ounce (USD2,336.80)

(Brent): up at USD82.93 a barrel (USD81.54)

(changes since previous London equities close)

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ECONOMICS

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Tuesday's key economic events still to come:

08:00 CEST Germany wholesale prices

09:00 EDT US S&P/Case-Shiller home price index

09:00 EDT US house price index

10:00 EDT US consumer confidence

10:30 EDT US Dallas Fed manufacturing index

12:55 EDT US Cleveland Fed President Loretta Mester speaks

13:05 EDT Federal Reserve Governor Lisa Cook speaks

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Shop price inflation in the UK eased to 0.6% annually in May from 0.8% in April, as all categories showed weaker price pressure. The BRC-NielsenIQ shop price index increased at its slowest annual rate since November 2021, the British Retail Consortium said. Non-food prices remained in deflation at 0.8%, steepening from a 0.6% annual decline in April. Food price inflation, meanwhile, slowed to 3.2% this month from 3.4% in April. Fresh food prices were up by 2.0% on a year before in May, slowing from 2.4% in April. Ambient food prices were up 4.8%, slowing from 4.9%.

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Rishi Sunak is gambling on a GBP2.4 billion tax break to help secure the support of pensioners as he battles to remain in No 10. The prime minister promised to increase the income tax personal allowance for pensioners, giving them a tax cut worth around GBP95 in 2025-26, rising to GBP275 in 2029-30. Labour said it was a "desperate move" from a party which was "torching" what was left of its claims to economic credibility. Keir Starmer's party was busy wooing business leaders, with shadow chancellor Rachel Reeves promising to lead "the most pro-growth Treasury in our country's history".

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BROKER RATING CHANGES

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RBC raises Marks & Spencer price target to 325 (300) pence - 'outperform'

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JPMorgan cuts SSP Group price target to 300 (320) pence - 'overweight'

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Deutsche Bank cuts Ryanair to 'hold' (buy) - price target 22 (28) EUR

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COMPANIES - FTSE 100

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Intermediate Capital posted improved returns for the year ended March 31, making the case for "long-term financial growth". Pretax profit rose to GBP597.8 million from GBP258.1 million a year prior, while fee-earning assets under management were up 11% to USD69.7 billion from USD62.8 billion. Performance fee income rose 5.0% to GBP505.4 million from GBP481.4 million. At March 31, the private equity investment firm's net asset value per share came to 801 pence, up from 694p a year prior. ICG proposed a final dividend of 53.2p from 52.2p, taking its dividend to 79.0p from 77.5p. Looking ahead, ICG acknowledged that "heightened geopolitical risk, high interest rates and weak economic growth" means the current investing environment is uncertain, and potentially volatile. However, the firm backed its "expertise" in navigating "complex and uncertain market conditions".

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COMPANIES - FTSE 250

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Ithaca Energy launched several leadership changes, including the appointment of Luciano Vasques as chief executive officer after the Eni UK business purchase has completed. Iain Lewis will return to his position as chief financial officer from interim CEO after the Eni deal. Meanwhile, Yaniv Friedman is set to replace Gilad Myerson as executive chair, while Dave Blackwood will be interim non-exec chair until Friedman joins. Odin Estensen will be chief operating officer. These changes come alongside mixed quarterly results. For the three months ended March 31, the exploration and production firm posted earnings before interest, tax, depreciation, amortisation and exploration expense of USD339.0 million, down from USD518.1 million a year prior. Statutory net income fell to USD42.7 million from USD158.1 million, while adjusted net debt narrowed to USD461.1 million from USD899.6 million.

Guidance remained unchanged at 80,000 to 87,000 barrels of oil per day.

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OTHER COMPANIES

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Revolution Bars received a non-binding takeover offer from Nightcap, but rejected it. The offer would still have required Revolution to proceed with its restructuring plan, but not the existing fundraising of GBP12.5 million. According to the board, the plan was "incapable of being delivered", due to a number of challenges associated with its delivery. The Nightcap proposal, Revolution explained, would have required two equity raises rather than one, and included "significant procedural driven risk and cost". Nevertheless, Revolution said it remains open to considering any future proposal from Nightcap, and or any other party.

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By Holly Beveridge, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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