Proactive Investors –
- gains 9 points to reach 7,577.
- Hunt says unsurprising as UK enters recession.
- Centrica (LON:) rallies as British Gas profits rocket.
EU warns Red Sea attacks could spark new inflation crisis
Conflict in the Middle East, including attacks by Houthi rebels on Red Sea vessels, risk pushing the world into another inflation crisis, the European Commission has warned.
Red Sea attacks, which have targeted cargo ships passing through the Suez Canal, “could bring renewed stress to supply chains, hampering production and adding price pressures,” the EU said in its Winter 2024 Economic Forecast.
“Protracted geopolitical tensions and the broadening of the Middle East conflict to the Red Sea tilt the balance of risks towards more adverse outcomes,” the commission added.
US stocks called higher at the open
The was called higher in the 5,000 points region ahead of Thursday’s opening bell, as analysts awaited a host of data on the likes of retail sales and industrial production.
Futures had the S&P 500 opening 0.1% higher at 5,024, with the and being called marginally higher at 38,535 and 17,900 respectively.
Retail sales, industrial production, jobless claims, and manufacturing indices from Philadelphia and New York, are all scheduled for release on Thursday.
According to City Index analyst Fawad Razaqzadal, markets will want to see figures weakening in the hope base rate cuts come sooner rather than later.
Indeed, consensus is for retail sales, alongside New York and Philadelphia manufacturing, to decline, while jobless claims are expected to tick up slightly.
On the equities side, Deere & Co, Applied Materials Inc (NASDAQ:), Coinbase Global Inc (NASDAQ:), Liberty Global (NASDAQ:) and Trade Desk Inc (BVMF:) are all due to report.
Barclays mulling takeover of SocGen’s UK private bank
Barclays (LON:) is reportedly contemplating the acquisition of SocGen’s UK private bank, Kleinwort Hambros.
According to Reuters, SocGen has initiated an auction process for its Kleinwort Hambros unit.
This is in addition to the sale of its Swiss private banking operations, signalling a potential shift in strategic direction.
London-based Kleinwort Hambros had more than £12 billion in assets under management in 2022 and could be worth up to £700 million in a sale, as per Reuters.
Lloyds (LON:), Rathbones, and Raymond James are also said to have been invited to participate in the bidding process.
Reuters added that sources stressed talks were only at a preliminary stage, with a sale far from guaranteed.
However, were the acquisition to go ahead by Barclays, it would follow the lender’s takeover of Tesco (LON:) Bank, which marked a bid to diversify from the volatile investment market.
Government blamed for recession as Hunt holds firm on inflation goal
Analysts have slammed Rishi Sunak’s government after confirmation came on Thursday that the UK slipped into a technical recession late last year.
TaxPayers’ Alliance chief executive John O’Connell said: “The evidence is clear that the government has been suffocating the economy with excessive regulation, dangerous levels of debt and a record high tax burden.”
Figures from the ONS showed UK GDP contracted 0.3% over the final three months of 2023, following a 0.1% fall in the previous quarter.
Commentators argued that GDP per capita, which declined 0.7% over the course of the year, was a more important metric though, given implications on living standards.
“If ministers hope to restore growth in the long term they need to rein in spending and provide the tax cuts that individuals, families and businesses desperately need,” O’Connell added.
Chancellor Jeremy Hunt said the UK’s lack of growth was unsurprising though, as he stuck to his guns on the government’s aim to cut inflation.
“High is the single biggest barrier to growth which is why halving it has been our top priority,” he commented.
“While are high – so the Bank of England can bring inflation down – low growth is not a surprise.”
Hunt added that there were signs of the UK economy “turning a corner,” with data earlier this week showing wage increases above inflation and low unemployment.
Wednesday’s inflation reading of 4% for January, which was lower than market expectations, also raised hopes of base rate cuts in the coming months.
However, Hunt suggested imminent changes were unlikely.
“Although times are still tough for many families, we must stick to the plan,” he said.
