European equities opened up in subdued mood this morning with the main indices in the red as we head into a week heavy on central bank policy announcements which could set the tone for the rest of the year and into 2023. The FTSE100 continued its meek start to December with a 0.3 per cent fall with the DAX and CAC off by a similar margin, meanwhile the domestically focused FTSE250 was down by 1 per cent.
Despite an unexpected rebound in UK GDP in October, it rose 0.5 per cent as pent up demand from the period of mourning for Queen Elizabeth II caught up, the Bank of England is still expected to raise rates on Thursday – the only real question is by how much. With the Federal Reserve slated to move rates on Wednesday and the ECB also announcing on Thursday the main focus will be on whether rapidly deteriorating economic indicators lead policymakers to start talk of a pivot in 2023.
The October rebound in UK economic activity is unlikely to change the travel of direction over the longer term, indeed the BoE is expecting GDP to shrink by 0.3 per cent over the final quarter of the year and remain under extreme pressure throughout next year. The picture is unlikely to be helped by the widespread strike action this week across railways, postal workers and even driving test examiners which is likely to have a dampening effect on economic activity.
Meanwhile, after the chancellor’s much vaunted Edinburgh speech on Friday which signalled a desire to pare back regulation of the financial services sector, another boost for the City of London today with news that tech giant Microsoft (MSFT) is taking a 4 per cent stake in the London Stock Exchange Group (LSE) and is putting a representative on the board of the exchange. The investment is part of a 10 year partnership deal which will see a revamp of the LSE’s technological infrastructure, alongside a commitment to spend at least $2.8bn over ten years on shifting to Microsoft’s Azure cloud platform.
Home Reit launches review into short seller’s allegations
Home Reit (HOME) has launched a review of the allegations raised by a short seller last month in order to “enhance shareholder confidence”. HOME’s value has been slashed by 42 per cent since Viceroy Research’s report was published.The company also said it had “taken on board investor feedback” following the report’s publication and hired “additional senior level investment professionals” following calls last month from investor The Boatman Capital Research for the board to step down.
Viceroy’s report and the subsequent allegations from Boatman and law firm Harcus Parker – all of which reference concerns raised by Investors’ Chronicle in August about the financial stability of Home Reit’s model and the inexperience of its tenants – were dismissed again by Home Reit this morning as “without foundation”. HOME was down 4 per cent this morning. ML
Argentex benefits from forex movement
In a trading update, Argentex (AGFX) confirmed that encouraging trading levels have persisted beyond the interim results announcement as its “growth strategy continues to deliver results with robust trading across all products and geographies”. That includes a decent showing from its new Amsterdam office and improvements to the product mix. The foreign exchange service provider now expects that revenue and earnings for the period ending 31 December 2022 will be ahead of current market expectations. MR
Metro Bank cops a fine
Metro Bank (MTRO) has received a slap on the wrist from the Financial Conduct Authority (FCA). The regulator imposed a £10mn fine on the challenger bank and censured two former executives for misleading investors ahead of a 39 per cent collapse in the bank’s share price.
The former chief executive Craig Donaldson and former chief financial officer David Arden misled the market over the bank’s risk-weighted assets, effectively giving a false impression of the group’s capital adequacy. Both former executives were fined by the FCA as it charged that the bank “was aware at the time” of the misstatement. MR
Ryanair declines appeal
In January of this year, the Court of Appeal decided that strike action by airline staff at Ryanair (IE:RYA) was not an ‘extraordinary circumstance’. The ruling came after action taken against the budget carrier by the UK Civil Aviation Authority. Initially, Ryanair secured permission to appeal the decision to the Supreme Court, but it has now decided not to go ahead with the appeal, thereby opening the way for passenger compensation payments. MR
NHS boost for Totally
Totally (TLY), an Aim-traded provider of healthcare and corporate fitness services has just been handed a new contract, worth up to c. £66mn by the NHS South-East London Integrated Care Board for the provision of two urgent treatment centres in Bromley. MR
Primary Healthcare Properties CEO and founder to retire
Hospital landlord Primary Healthcare Properties’ (PHP) chief executive and founder Harry Hyman has announced his plans to retire in 2024. The search for a successor to Hyman, who started the company in 1996, will be led by chair Steve Owen. The company hopes to make the appointment next year and have the new chief executive in post from the annual general meeting in 2024. Shares were down 1.5 per cent this morning. ML
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