LONDON BRIEFING: UK cuts NatWest stake below 40%, halved from peak

Mon, 22nd May 2023 07:53

(Alliance News) - Stocks in London were called to open flat on Monday, after news that UK house prices hit a new record high in May and amid resumed talks to break the impasse over raising the US debt ceiling.

US President Joe Biden returned from Japan and will meet with Republican House Speaker Kevin McCarthy on Monday for another round of talks on raising the US debt ceiling less than two weeks before a key deadline to avoid a disastrous default, officials said.

Anxiety was mounting in Washington on Sunday ahead of the June 1 deadline, set by the US Treasury, for Congress to authorize more borrowing, as the two sides appeared nowhere near a compromise.

In the UK, house prices hit a new record high in May, as the housing market continued to defy pessimistic forecasts at the start of the year, figures showed on Monday.

In company news, the UK government sold GBP1.26 billion in NatWest shares, reducing its stake to 39% from 41%.

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

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MARKETS

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FTSE 100: called flat at 7,767.60

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Hang Seng: up 1.8% at 19,800.63

Nikkei 225: closed up 0.9% at 31,086.82

S&P/ASX 200: closed down 0.2% at 7,263.30

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DJIA: closed down 109.28 points, or 0.3%, to 33,426.63

S&P 500: closed down 6.07 points, 0.1%, at 4,191.98

Nasdaq Composite: closed down 30.94 points, 0.2%, at 12,657.90

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EUR: up at USD1.0823 (USD1.0812)

GBP: down at USD1.2448 (USD1.2463)

USD: up at JPY137.87 (JPY137.64)

Gold: up at USD1,976.32 per ounce (USD1,972.99)

(Brent): down at USD74.81 a barrel (USD75.74)

(changes since previous London equities close)

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ECONOMICS

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Monday's key economic events still to come:

16:00 CEST EU flash consumer confidence indicator

11:00 IST Ireland wholesale price index

08:30 CEST Switzerland industrial production

08:30 EDT US Fed St Louis President James Bullard speaks at AGA Financial Forum

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US President Joe Biden said Sunday that ties between Washington and Beijing should thaw "very shortly", after the US shot down a suspected Chinese spy balloon earlier this year. Biden said relations had deteriorated in the months following his talks with Chinese President Xi Jinping at the G20 summit on the Indonesian island of Bali in November last year. Washington's decision in February to shoot down an alleged Chinese spy balloon that overflew the US sparked a diplomatic spat between the world's two largest economies. A visit to Beijing by Secretary of State Antony Blinken that had been billed as a chance to improve relations was cancelled over the incident.

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BROKER RATING CHANGES

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Citigroup adds BT Group to 'European focus list'

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UBS cuts Burberry price target to 2,362 (2,593) pence - 'neutral'

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Deutsche Bank cuts National Grid price target to 1,080 (1,100) pence - 'hold'

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COMPANIES - FTSE 100

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UK Government Investments said it sold shares in NatWest Group for a total of GBP1.26 billion. It said it sold 469.2 million shares, priced at 268.4p each, back to the company as part of a buyback agreement first put in place with NatWest back in 2019. As a result of the sale, the UK taxpayer's stake in NatWest will fall to 38.6% from 41.4%. The UK government first began building a majority stake in the bank from October 2008 during the financial crisis. The taxpayer ended up holding an 81% stake in the lender - called Royal Bank of Scotland Group PLC at the time - after a hefty GBP45.5 billion taxpayer bailout. This has been steadily reduced since.

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Johnson Matthey and Hystar have signed a three-year strategic supply agreement to ramp-up renewable hydrogen production. Under the agreement, Johnson Matthey will supply membrane electrode assemblies, components for electrolysers, as part of Hystar's commercialisation ramp-up. Mark Wilson, chief executive of Hydrogen Technologies at JM, said: "This strategic agreement with Hystar is an important endorsement of JM's electrolyser technology, manufacturing capability, supply chain access and our circularity offering. Partnerships such as this that bring together complementary capabilities and strengths of different organisations are essential to the development of the hydrogen economy."

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COMPANIES - FTSE 250

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Dechra Pharmaceuticals said operating profit for the financial year ending June 30 will be below GBP186 million, the guidance provided by the company back in February. It explained that the trading environment for the period January to April has been "more volatile and challenging" than previously anticipated. Dechra said that, in the US, the impact of de-stocking by wholesalers has been "deeper and longer" than initially expected and had a material impact on its third quarter performance. It added that there has now been some signs of the situation re-bounding. "The board is confident that the group remains very well positioned to continue to grow over the medium and longer term despite the unprecedented and, by nature, short term trading headwind," Dechra said.

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Kainos reported a 24% jump in revenue to GBP374.8 million in the financial year that ended March 31, up from GBP302.6 million the year before. Pretax profit climbed 18% to GBP54.3 million from GBP46.0 million. Kainos also said it will pay a final dividend of 16.1 pence, up from 15.1p a year ago. This brings the full-year dividend to 23.9p, up 8% from 22.2p. Looking ahead, Kainos said the ongoing economic volatility means that the pressure on its customers remains intense. "We can be certain that the economic uncertainty will continue. While it is sensible to be confident about our markets, our customers and our abilities, it is equally sensible to remain vigilant and be responsive to any changes," the company added.

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OTHER COMPANIES

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Ryanair said it returned to profit in its recently concluded financial year and is "cautiously optimistic" of further growth in the new year, amid robust demand. The Dublin-based budget airline said total revenue more than doubled to EUR10.78 billion in the financial year to March 31 from EUR4.80 billion a year before. Ryanair swung to a pretax profit of EUR1.44 billion from a loss of EUR429.8 million. From the previous year, load factor improved to 93% from 82%, as customer numbers rose by 74% to 168.6 million - which was also 13% ahead of financial 2020's levels, before the Covid-19 pandemic, Ryanair noted.

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Wise said Chief Financial Officer Matthew Briers plans to step down by March 2024 after eight years in the role. Its search for a new CFO will begin immediately. "Matt joined us at the time when only around 500,000 people had used Wise and we were losing money. He helped us scale up into a global service that today 16 million people and businesses around the world know they can count on," said CEO Kristo Kaarmann. "I will always be grateful that Matt decided to jump on and build this rocket ship with us. His contributions will continue to shape Wise for years to come."

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By Sophie Rose, Alliance News reporter

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