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FTSE Down, Pound Falls After Retail Sales, Seen Vulnerable to EU Trade Disputes

Markets News: 

Pound Falls After Retail Sales, Seen Vulnerable to EU Trade Disputes

The pound falls, hitting a six-week low of 1.3855 against the dollar after U.K. data showed retail sales fell by 1.4% during May, raising concerns about a slowing economic recovery. This was below expectations in a Wall Street Journal poll for a rise of 1.6%, as demand slowed following an initial rush to buy goods the previous month after the economy reopened. The currency is also vulnerable to trade tensions between the U.K. and the EU, with the former threatening to unilaterally extend a grace period for processed meat exports to Northern Ireland, ING says. The next few weeks "could be a vulnerable period" for GBP/USD, which risks falling to 1.3800, ING says.

Companies News: 

Victoria Oil & Gas to Issue Up to $7.5 Mln Loan Notes

Victoria Oil & Gas PLC said Friday that it has entered into a facility agreement with Meridian Capital Ltd. to raise gross proceeds of up to $7.5 million through the issue of unsecured loan notes.


Unite Group Closes Disposal of London Properties for GBP342 Mln

Unite Group PLC said Friday that has sold two London properties to its London Student Accommodation joint venture with GIC, the Government of Singapore's real estate portfolio, for 342 million pounds ($476.3 million).


Braveheart Investment Group Swung to FY 2021 Pretax Profit

Braveheart Investment Group PLC said Friday that it swung to a pretax profit for fiscal 2021 as total income rose, and that the board will seek opportunities for enhancing shareholder value as the year progresses.


Smartspace Software Wins Contract with Gategroup

Smartspace Software PLC said Friday that it has closed a new contract with Gategroup Holding AG for the use of its SwipedOn Visitor Management solution across the company's international estate.


Sabien Technology Appoints Athan Fox Chief Scientific Officer

Sabien Technology Group PLC said Friday that Athan Fox has been appointed chief scientific officer effective immediately.


Lekoil Nigeria Chairwoman, CEO Resign From Lekoil Cayman Board

Lekoil Nigeria said Friday three of its directors and executives have resigned from the board of Lekoil Cayman.


Tesco 1Q Retail Sales Growth Slowed, Backs FY 2022 Profit Outlook -- Update

--Sales growth slowed down in its core U.K. market


Lightsource BP Acquires 703 MW Solar-Project Portfolio in Spain

BP PLC's subsidiary Lightsource bp has acquired a pipeline of three solar projects in Aragon, Spain, totaling 703 megawatts of generation capacity.


Braemar Likely to Book GBP900,000 Loss if Wavespec Buyer Doesn't Fulfill Obligations

Braemar Shipping Services PLC said Friday that it will likely book a 900,000 pounds ($1.3 million) non-cash loss from discontinued operations in fiscal 2022 if the buyer of its Wavespec business doesn't fulfill obligations.


Serabi Gold Says It Won't Need to Restate Past Financial Accounts

Serabi Gold PLC said Friday that it won't need to restate past financial accounts after finding unauthorized cash withdrawals from its Brazilian subsidiary Serabi Mineracao SA.


HSBC Hires Former Barclays Banker Ginsburg in Investment Bank Shake-Up -- Financial News

Of Financial News

Market Talk: 

Food-Price Inflation Seen Posing Challenge for Tesco

0956 GMT - Tesco must deal with food-price inflation while it tries to bring down costs which shot up during the coronavirus pandemic, AJ Bell's Russ Mould says. The FTSE 100 grocer in April said it expects a strong recovery in profitability this year as the majority of pandemic-related costs it booked in fiscal 2021 won't be repeated. However, food inflation poses a fresh challenge as Tesco has to decide if it can pass on all extra costs to customers or risk a squeeze on profits, Mould says. "The forthcoming launch of Russian discount supermarket Mere in the U.K. will add to the competition, so Tesco needs to be very careful that any changes to its prices don't alienate its customers," Mould says.


Tesco's 1Q Numbers Point to Normalizing Spending Patterns

0940 GMT - Tesco's 1Q numbers seem to suggest that U.K. consumers are normalizing their spending patterns and aren't necessarily reining in expenditure despite lingering economic uncertainty, Hargreaves Lansdown's Sophie Lund-Yates says. The FTSE 100 retailer said like-for-like general merchandise and clothing sales rose 10% and 52%, respectively, in the three months to the end of May after the pandemic hit demand during the same period last year, Lund-Yates says. "The shakedown in consumer habits hasn't finished yet, but this early indication could have positive connotations for other retailers," she says.


UK Plans to Ease Restrictions for Fully-Vaccinated Travelers a Positive for Spain

0909 GMT - Plans by the U.K. government to allow travelers who have had two Covid-19 vaccines to skip quarantine upon their return to England would be very positive for Spain's tourism sector, Banco Sabadell says. In the case of IAG--which owns British Airways and Iberia among others--U.K. business represents 33% of global sales and this would support expectations the group would reach 60% capacity during 3Q, when compared with 3Q 2019, the Spanish bank says. For Spanish hotel chain Melia the U.K. represents 14% of EBIT, whereas for NH hotels the effect would be residual given that its business model is mostly city hotels, the bank says. Banco Sabadell has a buy rating on IAG. The company's shares in London are up 0.2% at 200.70 pence.


Small Decline in UK Retail Sales Isn't a Reason to Worry

0907 GMT - U.K. retail sales unexpectedly fell 1.4% on month in May but given the biggest fall was in food stores, some of this might reflect people returning to eating and drinking outside of their homes, HSBC says. The retail sales decline was mainly driven by a 5.7% on-month drop in supermarkets. "What we may be seeing is the beginning of a rotation from spending on goods to spending on services," Elizabeth Martins, senior economist at HSBC, says. May's small decline follows a strong April, where volumes rose 9.2%, meaning levels of spending are still above pre-pandemic levels, Martins says.


Tesco Says Unchanged Guidance Is Result of Continuing Uncertainty

0903 GMT - Tesco's reiteration of its guidance for fiscal 2022 is purely a reflection of market uncertainty for the rest of the year, the U.K. grocer's chief executive officer and chief financial officer say in a call with analysts. CEO Ken Murphy says it is unclear how Tesco's customers are going to respond to the lifting of the remaining coronavirus-related restrictions, whether or not they will be able to travel, what the outlook for the labor market looks like and what inflation will do. CFO Imran Nawaz says Tesco delivered a strong first quarter, but guidance hasn't changed because the market outlook remains uncertain. "None of that uncertainty has changed in the last six weeks since we last spoke to the market," Nawaz says.


Soft UK Retail Sales Data Could Signal Weaker Than Expected Economic Growth for May

0843 GMT - The 1.4% on-month fall in retail sales in May could suggest that economic growth wasn't as strong as previously expected that month, Paul Dales, chief U.K. economist at Capital Economics, says. The drop in goods spending will have taken 0.1 percentage points off GDP in May, which is expected to have risen by between 1.5% and 2% compared with the previous month, he says. "As the Covid-19 restrictions continue to be eased, it makes sense that retail sales will be softer," Dales says, as consumers shift spending from the shops toward social activities.


UK Retail Spending Recovery Is Expected to Lose Momentum This Year

0811 GMT - The current quarter's high level of retail spending in the U.K. is unlikely to be sustained for the rest of the year, Pantheon Macroeconomics' U.K. chief economist Samuel Tombs says. Consumer spending is approaching its pre-pandemic level, and households' real disposable income looks set to fall in 4Q as the end of the furlough program reduces employment and inflation rises, he says. U.K. retailers are also likely to take a smaller share of overall spending compared to the last few months as consumers start to spend more on services amid the reopening, Tombs says.


Tesco Could Be More Generous to Shareholders Going Forward

0811 GMT - Tesco's progress in reducing debt in recent years means the U.K. grocer is now in a better position to be progressively more generous to shareholders going forward, Shore Capital says. "Management has tended to talk of favoring a share buyback route as the prime mechanism to distribute surplus cash, which makes sense at current stock valuation levels to our minds, the commencement being held back due to understandable concern about the scope for ongoing costly pandemic controls," Shore says. If England's full reopening takes place in July, Tesco is more likely to have scope for a share buyback following its half-year results in October, Shore says.


Contact: London NewsPlus, Dow Jones Newswires; +44-20-7842-931

(END) Dow Jones Newswires

June 18, 2021 06:28 ET (10:28 GMT)

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