London pre-open: Stocks to edge up ahead of BoE announcement
By Michele Maatouk
Date: Thursday 20 Jun 2024
(Sharecast News) - London stocks were set to rise at the open on Thursday as investors eyed the latest policy announcement from the Bank of England, which is widely expected to stand pat on rates at 5.25%.
The FTSE 100 was called to open around 15 points higher.
Policy announcements are also due from the Swiss National Bank and Norges Bank.
As far as the BoE is concerned, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Yesterday's CPI release showed that headline inflation in the UK fell to the BoE's 2% policy target and the UK ended up being - against all odds at this time last year - the first nation among comparable peers to make this achievement.
"Yet two things worry the BoE doves and slow down rate cut expectations. First, services inflation remains high - perhaps too high near 6% - to let the BoE cut rates with a peace of mind as services make up around 80% of the British economy. And second, consumer prices could rapidly rebound if natural gas market tightens as traders rush to replenish their stockpiles before winter.
"As such, if the BoE doesn't announce a rate cut today, it's not because they don't want to put their nose into the country's political affairs with the upcoming general election, but it's mostly because the underlying inflationary factors are not yet convincing enough to allow them to do so."
In corporate news, NatWest announced it was acquiring the core banking business of Sainsbury's Bank, taking over £2.5bn of outstanding credit card, unsecured personal loan and saving accounts.
Simon Roberts, chief executive of Sainsbury's, said the deal would allow the supermarket chain to focus "all our time and resources going forward on growing our core retail business".
Energean said it had signed a deal to sell its portfolio in Egypt, Italy and Croatia to Carlyle International Energy Partners for an enterprise value of up to $945m.
The gas explorer and producer said it planned to use the cash to repay a $450m corporate bond and pay out a $200m special dividend.
"This sale enables Energean to rationalise the portfolio and focus on its gas-weighted, gas-development strategy, underpinned by the Karish Field in Israel and recent farm-in to the Anchois field in Morocco," the company said.
Phoenix Group said it has completed the initial phase of its deleveraging programme, which involved debt redemption and refinancing exercises.
The FTSE 100 company said it had redeemed £250m of Tier 2 notes and refinanced $500m of its RT1 notes, maintaining its annual debt interest costs while reducing its outstanding debt. It said it was aiming to repay at least £500m of debt and achieve a Solvency II leverage ratio of around 30% by the end of 2026.
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