- FTSE 100 loses 161 points
- Wall Street weighed by more strong data
- UK construction PMI hit by weak housing market
4.45pm: Stocks sink on a volatile day
The FTSE 100 had sunk like a stone at the end of Thursday trading, losing 161 points to finish at 7,281 for a 2.2% loss on the day.
Stocks were in full retreat following more strong US jobs data, while higher interest rate forecasts for the UK pummelled the index, according to Chris Beauchamp, Chief Market Analyst at online trading platform IG.
“The FTSE 100 has been assailed on all sides today. Commodity prices are down as the dollar strengthens, but it is the wave of expectations that UK interest rates will go even higher than previously thought that has really done the damage," Beauchamp commented.
"While the calls for rates to hit 7% seem a little overeager, they do have further to go, diminishing the already limited-appeal of the FTSE 100 for income hunters.”
3.50pm: Packaging thoughts
Packaging firms Mondi and Smurfit Kapp both retreated with the market on Thursday in spite of an upgrade in ratings for both by analysts at JP Morgan.
Noting that concerns over lower prices, destocking and the macro environment have seen both firm’s share prices fall by around 15% this year, the US investment bank’s analysts now think testliner prices are at/close to the bottom as costs are starting to support prices, implying cardboard box prices will bottom in the second half of 2023.
The JPMorgan analysts accept that the timing and quantum of the de-stocking cycle continues to be a risk, but think that de-stocking should also improve in the second half.
They haven’t factored in a sharp recovery in prices due to ample supply but think bottoming prices should see earnings trough in the financial year 2024.
The analysts upgraded both Smurfit Kappa and Mondi to ‘overweight’ from ‘neutral’ and maintained DS Smith at ‘overweight’.
"We prefer Smurfit Kappa over DS Smith on its lower gearing and better FCFF profile, while we think Mondi represents longer-term value," they said.
3.35pm: US services sector solid
Activity in the US services sector bounded higher last month, with the Institute for Supply Management (ISM) Purchasing Managers' Index (PMI) rising to 53.9% for June, up from a May reading of 50.3%, and the sixth consecutive monthly increase.
The US services sector has grown in 36 of the last 37 months, with the lone contraction in December of last year.
In a statement, Anthony Nieves, chair of the ISM’s Services Business Survey Committee commented: “Fifteen industries reported growth in June. The Services PMI, by being above 50 percent for the sixth month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector. The composite index has indicated expansion for all but three of the previous 160 months.”
Nieves added: “There has been an uptick in the rate of growth for the services sector. This is due mostly to the increase in business activity, new orders and employment. Increased capacity, backlog reduction and continued improvements in logistics have impacted delivery times (resulting in a decrease in the Supplier Deliveries Index). The majority of respondents indicate that business conditions remain stable; however, they are cautious relative to inflation and the future economic outlook.”
3.20pm: Crude drops
Oil prices fell back on Thursday afternoon as the market worried about the impact of further US interest rate hikes after strong labour market data and fretted about tighter crude supplies.
UK Brent crude was down 1.7% at $74.46 a barrel, after a 0.5% gain in the previous day, while US West Texas Intermediate lost 1.9% at $70.43 a barrel after rising 2.9% in post-holiday trade on Wednesday to catch up with Brent's gains earlier in the week.
Craig Erlam, senior market analyst, UK & EMEA, OANDA commented: "Oil prices are retreating in risk-averse trade today. The ADP report has clearly had a negative impact given it likely means we're facing another red-hot jobs report tomorrow and the prospect of higher rates for longer.
"It also came at an opportune time, with the price flirting with the peak from two weeks ago, only to turn south having fallen just shy of surpassing it. That means we're seen yet another failed new high or low in recent weeks and the gradual consolidation, roughly between $72-$77 is still in play."
The market has been expecting interest rates in the US to rise further after last month’s pause in hikes to combat high inflation. Minutes released on Wednesday from the US central bank’s June meeting showed that most attendees expected they would eventually need to tighten policy further.
On the supply side, top oil exporters Saudi Arabia and Russia announced a fresh round of output cuts for August. The total cuts now stand at more than five million barrels per day (bpd), equating to 5% of global oil output.
OPEC is likely to maintain an upbeat view on oil demand growth for next year when it publishes its first outlook for 2024 this month, predicting a slowdown from this year but still an above-average increase, sources close to OPEC told Reuters.
OPEC ministers and executives from oil companies told a two-day conference in Vienna that governments needed to turn their attention from supply to demand.
2.45pm: Wall Street wobbles
The FTSE 100 index languished near session lows, just hanging on to the 7,300 level, as Wall Street dropped back at the open following a trio of stronger-than-expected US labour market reports ahead of Friday's June payrolls report amid worries about further Federal Reserve interest rate hikes
After 15 minutes of trading in New York, the Dow Jones Industrial Average was down 306 points, or 0.9%, at 33,982, while the broader S&P 500 fell 1.0%, and the tech-laden Nasdaq Composite dropped 1.1%.
Commenting on the day’s US data, Ian Shepherdson, chief economist Pantheon Macroeconomics said: “All three reports are stronger than expected but none are reliable in the short term.”
He noted: “ADP’s methodology was comprehensively rebuilt last summer, since when it has not been a reliable month-to-month guide to the official payroll numbers. Errors have ranged from a 337K undershoot in January to a 66K overshooting April, with an average of -67K. With only 10 observations we just don’t know if this means ADP is systematically biased to the downside, but note that in the 10 months to May, ADP understated the cumulative official private payroll numbers by a total of 392K. We have no way of knowing whether the huge June ADP print represents a catch-up or is a signal that the official payroll print tomorrow also will be very strong; our second chart shows no meaningful relationship between the series. We’re sticking with our 200K payroll forecast but, as usual, the range is enormous.
“The jobless claims numbers suggest that the Juneteenth holiday was not the only factor behind the sharp drop in the week of June 24; we expected a bigger rebound, to about 260K. But the claims numbers are always difficult to interpret at this time of year, because the seasonals struggle to cope with changes in the timing, duration, and extent of the annual automakers’ retooling shutdowns. For example, if the increase in unadjusted claims this week is in line with the average for the past three years when July 4 fell on a Tuesday, the headline seasonally adjusted print will leap to about 290K. The underlying picture will be clearer by late August, but in the meantime the weekly numbers need to be viewed with skepticism.
“Finally, Challenger’s announcement of a sharp slowing in layoff announcements in June is a surprise. The y/y rate fell to 25% from 287% in May, and our seasonally adjusted measure almost halved to 43K from 84K. These numbers are volatile, but adjusted June layoffs were the lowest since November. It’s far too soon to argue that this represents a sustainable downturn, not least because it is inconsistent with how the economy usually behaves 16 months after the start of an aggressive Fed tightening cycle. But so many unlikely things have happened in the economy in recent years that we have to keep an open mind; it is possible, at least, that businesses’ balance sheets are in so much better shape than usual by the time the Fed is tightening that they are able to ride out the impact of much more expensive credit.”
Shepherdson concluded: “As always, none of these numbers will matter much if tomorrow’s payroll print is 100K. But we can’t rule out 400K, either.”
2.20pm: US jobs strong
Ahead of tomorrow’s June US non-farm payrolls, a trio of reports on the labour market all proved stronger than expected on Thursday, sending Wall Street stock futures even lower.
ADP announced a surprising 497,000 leap in June private payrolls, more than double the consensus forecast of 225,000.
Challenger reported a 25% increase in June layoff announcements, slowing dramatically from a 287% leap in the year to May.
And the latest US initial unemployment claims increased by 12,000 to reach 248,000 during the week ending 1 July, 2023, a touch higher than the 245,000 number economists had forecast. Initial claims for the previous week were revised down by 3,000 to 236,000.
Secondary unemployment claims meanwhile, which are those not being filed for the first time and referencing the week that ended on 24 June. 2023, fell by 13,000 to reach 1.720mln.
Commenting on the data, Ryan Brandham, Head of Global Capital Markets, North America at Validus Risk Management, said: “This figure is slightly higher than last week, but still within recent ranges, and down from two elevated figures in June. This is not likely to impact US rate expectations or drive markets today, with attention instead focused on the elevated ADP Nonfarm Employment Change figure from earlier today, and the upcoming Nonfarm Payrolls release tomorrow.”
With 10 minutes to go until the New York open, futures for the Dow Jones Industrial Average (DJIA) were 0.8% lower, while those for the S&P 500 also lost 0.8%, and contracts for the Nasdaq-100 futures dropped 1.1%.
In London, awaiting the US restart, the FTSE 100 index sunk to hefty new sessions lows at 7,307, down 134 points, or 1.8%.
2.00pm: Thursday's Market Movers
Risers
i(x) Net Zero PLC (AIM:IX) shares spiked over 90% higher as its investee WasteFuel Global, which is developing bio-methanol from agricultural waste, landed a US$10mln investment from BP. The oil giant backed the early-stage company via a Series B funding round and the injection of funds triggers a “material uplift” in valuation for AIM-quoted i(x) which now sees its stake worth US$131.69mln, up from its last valuation of US$46.91mln at the end of December.
Petro Matad Limited (AIM:MATD, OTC:PRTDF) shares shot up around 50% as the explorer landed a new permit from the authorities in Mongolia. The company, which for over a decade has sought to unearth oil resources from the Mongolian expanse, told investors that the Cabinet of the Mongolian Government has approved the certification of the Block XX Exploitation Area, including the firm’s Heron oil discovery.
Fallers
Pod Point Group Holdings PLC (LSE:PODP) saw its shares fall over 11% after it announced that it is looking for new leadership to navigate a “challenging” market and seek growth opportunities in the electric vehicle (EV) market. The provider of EV charging points said chief executive officer Eric Fairbairn is leaving with immediate effect, with Andy Palmer, currently a senior independent director, to become interim CEO while the company looks for a permanent replacement.
Currys PLC (LSE:CURY) shares dropped 8% following the cancellation of the electrics retailer's dividend in the face of tough trading. The pre-tax profit fell 38% to £119mln, primarily hindered by the weaker performance in its Nordics business, although the UK and Ireland branches remained stable.
1.00pm: Weak start seen across the pond
US stocks are expected to start lower on Thursday, extending the weak return following the Independence Day holiday as investors worried about further Federal Reserve interest rate hikes ahead of Friday's June jobs report.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.5% lower, while those for the S&P 500 also lost 0.5%, and contracts for the Nasdaq-100 futures shed 0.4%.
On Wednesday, after the Fourth of July break, the DJIA closed 129 points, or 0.4%, at 34,288, while the S&P 500 lost 0.2% - both indexes snapping three-session winning streaks - and the Nasdaq Composite also finished 0.2% lower.
The falls came as investors digested minutes from June’s Federal Reserve policy meeting, where members opted to skip a rate hike, which showed that most officials would support more increases ahead.
As of late Wednesday, traders are pricing in a nearly 89% chance of a hike at the central bank’s meeting later this month, according to CME Group’s FedWatch tool.
Joshua Mahony, chief market analyst at Scope Markets commented: "It may have been a bumper first half to the year but Wall Street seemingly returned after the 4th July break carrying something of a hangover, with the FOMC meeting minutes doing little to soothe the pain.
The hawkish tone and clear division over the call to leave rates unchanged last month left stocks lower and bonds in favour, with futures extending the sell-off overnight."
He added: "There’s mounting support for the idea that the US can avoid recession despite the aggressive tactics from the Fed, but today’s ADP Payroll survey will be under scrutiny as traders look for clues as to the pace of any economic normalisation.
The JOLT job openings are also published today and again this could be a telling print if there’s a meaningful undershoot."
Ahead of Friday's, always crucial, non-farm payrolls report, a batch of economic data is due ahead of the market open on Thursday, including those ADP private payrolls for June, JOLT openings, and the latest initial weekly jobless claims.
The S&P Global services PMI and ISM services PMI are also due for release around 10.00am ET.
On the corporate front, JetBlue Airways shares slipped in after-hours trading after the company said it would end its partnership in the northeast US with American Airlines to focus on Spirit Airlines. American shares moved slightly lower, while Spirit added about 2%
12.38pm: Jet2 shares dive as Chair retires
Shares in Jet2 PLC slumped as news that the airline’s long-serving chairman would depart dented the mood.
Shares fell 10.4% as xecutive chairman Philip Meeson announced he would be retiring from the company after 40 years.
The fall came despite the airline reporting an operating profit of £394mln in the year to March 2023, up on a £324mln loss in 2022.
12.17pm: Hunting soars on bullish outlook, guidance raised
One company bucking the weaker markets is Hunting PLC.
Shares in the London-based energy services firm surged 23% after forecasting revenue and operating profit would be ahead of the targets set at the start of the year.
Chief Executive Jim Johnson said: “The outlook for 2023 continues to be strongly positive, with 2024 revenue visibility also improving due to the orders secured during the period."
Analysts at Jefferies pointed out this was the second increase to guidance this year.
The firm anticipates EBITDA to be in the range of US$125m-US$135m for the year ended 31 December 2024.
Jefferies pointed out this was well above consensus expectations of US$107mln while first half Ebitda is expected between US$48-US$50mln, 23% ahead of Jefferies estimate of US$40mln.
The broker reiterated a buy rating.
11.46am: Sterling jumps as gilt yields rise
Sterling jumped as money markets priced in higher expectations for interest rates after a survey showed UK bosses expect inflation to remain stubborn.
The yield on the 2-year gilt rose to 5.48%, up 10 percentage points, while the yield on the 5-year gilt climbed a similar amount to 4.87%.
???? UK 10-YEAR GILT YIELDS RISE TO 4.592%, HIGHEST SINCE OCT 2022, UP MORE THAN 9 BPS ON DAY - Reuters News https://t.co/op2fKeAY4M pic.twitter.com/1TAbb1yYdb
— PiQ (@PriapusIQ) July 6, 2023
A survey from the Bank of England showed UK companies expect growth of their own prices to remain high in the year ahead, pushed up by strong wage pressures.
The BoE’s Decision Maker Panel, a monthly survey of chief financial officers from small, medium and large UK businesses, showed that in the three months to June, businesses expect year-ahead output price inflation to be 5.3%, only marginally down from 5.4% in the three months to May.
The pound rose 0.5% to US$1.2769.
Meanwhile, as the 3rd Test starts the FTSE 100 has brought up an unwanted century of its own, down 102 points at 7,340.
11.16am: UK construction sector contracts as housing sector plummets
More evidence of distress in the housing market.
Figures from S&P Global show residential work (index at 39.6) decreased at the steepest pace since May 2020 reflecting weaker demand due to rising borrowing costs.
Aside from the lockdown-related fall in house building, the rate of contraction was the fastest since April 2009.
The figures came within the S&P Global/CIPS UK Construction PMI which showed a renewed decline in business activity during June.
#Construction output in the #UK falls for the first time in 5 months in June, as house building activity declines at the steepest pace since May 2020. Read more: https://t.co/cEQptncxK6 pic.twitter.com/pTB25dbhTx
— S&P Global PMI™ (@SPGlobalPMI) July 6, 2023
At 48.9 in June, the index was down from 51.6 in May, and below the neutral 50.0 threshold for the first time in five months.
Civil engineering was the best-performing segment (index at 53.1), with business activity rising at the second-fastest pace since June 2022 while commercial building also expanded at a solid pace in June (index at 53.0).
Housebuilders reflected the general malaise in the markets. Taylor Wimpey PLC (LSE:TW.) fell 2.7%, Persimmon PLC (LSE:PSN) slipped 2.6% and Barratt Developments PLC (LSE:BDEV) eased 2.3%.
The FTSE is down 1.3%.
11.01am: Bitcoin looking bullish
Bitcoin saw an early-morning rally aboe US$31,000, kicking off a bullish session for the world's largets cryptocurrency.
As of 10.58, the BTC/USDT pair was swapping for US$31,094, a 2% day-on-day gain.
Investors have been mulling the possibility of a BlackRock's spot bitcoin ETF application getting an approval in the US.
Although there is not definitive timeline for if and when it gets approved, investors have priced in the possibility, with bitcoin around 20% in the past month.
10.57am: Shell boss says we need more oil
Shell PLC (LSE:SHEL, NYSE:SHEL) boss Wael Sawan has bluntly warned that oil and gas companies should not be cutting production, claiming the move could be “dangerous”.
Sawan argued the world still “desperately needed” oil and gas in response to backlash from climate activists over the company’s backtracking on plans to cut production.
"What would be dangerous and irresponsible is cutting oil and gas production so that the cost of living, as we saw last year, starts to shoot up again,” he told the BBC on Thursday.
Shell scrapped plans to cut oil production by up to 2% each year until 2030 in last month’s capital markets day, amid a move to bump up shareholder distributions.
Shares in the oil giant dropped 1% to 2,303p.
10.45am: i(x) Net Zero stands out after BP investment
i(x) Net Zero PLC (i(x) Net Zero PLC (AIM:IX)) is standing out in the sea of red after an eye-catching deal for one of its portfolio companies, WasteFuel Global.
Shares in Aim-listed i(x) leapt 85% after BP no less decided to invest US$10mln into WasteFuel Global, which is developing bio-methanol from agricultural waste.
BP has backed the early-stage company via a Series B funding round.
The injection of funds triggers a “material uplift” in valuation for AIM-quoted i(x) which now sees its stake worth US$131.7mln, up from its last valuation of US$46.9mln at the end of December.
It lifts the value of the entire i(x) portfolio to US$148.6mln from US$63.8mln, the investment company said in a statement.
"This is a highly significant milestone,” said Pär Lindström, i(x) chief executive.
Footsie still down 1.2%.
10.25am: CAB Payments off to slow start
Another debut today, though possibly not as big as Mark Zuckerberg’s Twitter killer Threads, was CAB Payments which marked its first day of trading on the London Stock Exchange in a rare IPO for the City this year.
Unlike Threads, which is getting rave reviews from most who have used it today, the payments company has made a muted start.
Shares in the foreign exchange specialist slipped 5% to 318p from a listing price of 335p.
The company raised £291mln in new money with the firm valued at £851mln ahead of the start of trading.
FTSE 100 is firmly in the doldrums on the US rate news, down 88 at 7,354.
10.06am: Bitcoin surges higher
Mere minutes after our previous update, bitcoin surged over 2%, as bulls pushed the BTC/USDT pair way above the US$31,000 price point.
At the time of writing, the pair was trading at US$31,400.
Stay tuned for more updates…
9.56am: Bitcoin remains rangebound
Bitcoin fell 0.85% on Wednesday, marking the second day of declines in a row, to hit the midnight bell at US$30,500.
This was the precise support line marked out by buyers in yesterday’s trading session, so naturally the BTC/USDT pair saw a bit of a lift in the following hours.
As of 9.56am today, the pair was around 0.7% higher at US$30,800, while buyers’ support, according to the Binance order book, appears to have slipped back to US$29,500.
For the most part, bitcoin has trended sideways between the 30k and 31k channel for the past two weeks, indicating a tentative atmosphere among traders.
Ethereum (ETH), the world’s second-largest cryptocurrency, is decidedly more choppy than bitcoin.
The ETH/USDT pair dipped 1.3% on Wednesday before regaining 0.85% of lost ground this morning. At the time of writing, the pair was trading at US$1,925.
Global cryptocurrency market capitalisation currently stands at US$1.2tn, with bitcoin comprising 51.43% of the market.
9.50am: The morning as it happened
Murmurings of further interest rate hikes across the Atlantic have pushed the FTSE 100 down so far today, as US central bankers continue to try and bring down stubbornly high inflation.
Here in the City, Curry’s have had a difficult morning as shares in the electricals retailer plummeted on reports of a statutory pre-tax loss for the year, compared to a £126mln profit in 2022.
Oil major Shell stock also started the day lower after CEO Wael Sawan publicly contradicted the Head of the UN António Guterres by saying that it would not be "economic and moral madness" to keep investing in new oil projects, but instead ‘dangerous and irresponsible’ to do anything else.
Also taking a tumble was Jet2, despite reporting a return to profit in a market still benefiting from a post-Covid boom.
Investment firm Man Group shares are up meanwhile, after securing a controlling stake in US private credit company Varagon Capital Partners for US$183mln.
Elsewhere, Meta boss Mark Zuckerberg revealed 10mln users signed up to the firms Twitter-rivalling Threads app in its first hour online.
And finally with the small caps, Graft Polymer jumped after announcing a research, development and supply contract with Austria’s Gabriel Chemie.
9.03am: Sea of red but utilities and packing firms hold firm
The FTSE 100 remains firmly in the red, now down 81 points, but there are some flickers of green on trading screens.
Leading the way are utilities after some positive words from US investment bank, Morgan Stanley (NYSE:MS).
The broker has upgraded United Utilities to overweight from equal weight with a price target of 1,220p and reiterated an overweight stance on Severn Trent, despite cutting its price target to 3,160p from 3,290p.
Shares rose 2.4% and 1.0% respectively.
Paper and packaging firms were also in the green with Mondi up 0.8%, Smurfit Kappa Group up 0.5% and DS Smith up 0.4%.
JP Morgan has upgraded Mondi and Smurfit Kappa to overweight from neutral and reiterated an overweight rating on DS Smith.
The broker pointed out all three have declined by 15% year-to-date on market concerns over lower prices, destocking and general macro woes.
But JPM thinks testliner prices are “at/close to the bottom” as costs are starting to support prices.
It accepts the timing and quantum of the de-stocking cycle continues to be a risk, but thinks that de-stocking should improve in the second half of 2023.
“We think bottoming prices should see earnings trough in FY24e,” the bank added, believing these risks “are reflected in the price.”
8.30am: Bailey stokes 'greedflation' war, some evidence firms overcharging
Andrew Bailey had stoked the fires surrounding so-called ‘greedflation’ warning there is some evidence that retailers are overcharging customers.
In an to the BBC’s Newsround programme, the Bank of England governor said: “If you look at petrol prices, some sellers of petrol have possibly been charging too much for it.”
He said regulators have an important role to play tackling overcharging.
“It helps us with inflation, but it’s just fairer if these things are tackled.”
“It’s important that these steps that can be taken to make things fairer, and to save money for people by doing so, are taken,” he added.
"In the Night Garden" moves on from the Ninky Nonk according to Bloomberg pic.twitter.com/eJQft5Czc6
— Simon French (@shjfrench) July 6, 2023
Earlier this week, the UK’s competition regulator said drivers buying fuel at supermarkets last year paid more than they would have done otherwise due to major supermarkets increasing their margins.
In the interview, Bailey reiterated that inflation is “way too high.”
“We have a target that prices should rise by no more than 2%. It is, sadly, above that at the moment, above 8%.”
“I understand it is difficult. People are having to make very difficult choices about what they buy, what they need for their lives.”
8.15am: Sea of red as blue chips tumble
The FTSE 100 sat firmly in the red at the open Thursday as the US Federal Reserve signalled more interest rates rises were on the way.
At 8.15am, London’s blue chips were down 63.73 points, or 0.9%, at 7,378.37 while the FTSE 250 tumbled 139.55 points, or 0.8%, to 18,253.78.
Minutes from the June’s Federal Open Market Committee meeting showed officials believe further tightening is required to stamp out inflation in the world's largest economy.
"Almost all participants noted that in their economic projections that they judged that additional increases in the target federal funds rate during 2023 would be appropriate," the minutes said.
“The narrative that emerged from the minutes of the June FOMC meeting fell unequivocally on the hawkish side of the spectrum,” said ING’s Francesco Pesole.
“The minutes offered no reason to doubt the Fed will go ahead with a July hike unless data points firmly in the opposite direction on the economic and inflation side.”
Currys fell 6% after it pulled the final dividend and gave a cautious view of economic prospects.
Adjusted annual pre-tax profits came in at the top-end of guidance, despite falling year-on-year, but the electricals retailer said it was “wary optimism about consumer spending power.”
Analysts at Liberum said there were “no surprises” in the results.
“The well-documented Nordics challenges remain, yet self-help is delivering improvements,” the broker felt.
It plans to hold forecasts at current levels.
Recruitment firm Robert Walters PLC (LSE:RWA) eased 2.3% after reporting a 10% fall in net fee income for the second quarter.
Chief Executive Toby Fowlston said: “Candidate confidence and time to hire are not yet showing the anticipated signs of sustained improvement.
But holding firm in a sea of red were shares in Mondi PLC (LSE:MNDI) and Smurfit Kappa Group plc (LSE:SKG) which rose 1.0% and 0.6% respectively as JP Morgan upgraded to overweight from neutral.
7.47am: Man Group bolsters US business
Man Group PLC (LSE:EMG) has beefed up its operations with the US$183mln acquisition of a controlling stake in Varagon Capital Partners, a US middle market private credit manager.
Varagon had US$11.8bn of assets under management and US$15.4bn of total client commitments as at December 31, 2022.
The cash deal will be funded from existing resources and Man Group expects the transaction to be “meaningfully accretive” to management fee and total EPS in the first full year following completion.
Man Group said the deal would bring “significant institutional credibility” to support its growth in US private credit.
Founded in 2014, Varagon is a leader in the US middle market, having completed US$24.5bn of financings to over 300 companies and 138 sponsors.
Walter Owens, CEO of Varagon, will continue to manage the Varagon business, supported by its existing 88 team members across offices in New York, Fort Worth and Chicago.
7.33am: Currys pulls final dividend, profit falls
Electricals retailer Currys kicks off proceedings today and it is a mixed bag.
The firm pulled the final dividend, citing an uncertain outlook, as it reported lower profits hit by a poor performance in its Nordics business.
The electricals retailer said its markets had “been tough everywhere, with depressed demand, high inflation and unforgiving competition.”
But it pointed out adjusted pre-tax profit for the year to April 29 of £119mln was at the tope-end of guidance albeit down from £192mln the year prior.
On a statutory basis, the fridge and computer retailer swung into the red with a pre-tax loss of £450mln compared to a £126mln profit reflecting a £511mln non-cash impairment of goodwill arising out of the Dixons Carphone merger in 2014.
Revenue fell 6% to £9.51bn from £10.14bn while loss per share of 43.6p compared to EPS of EPS 6.3p the previous year.
Chief Executive Alex Baldock said: “We've had a very mixed year. Our strengthening UK&I performance shows our strategy is working well. But our long track record of success in the Nordics was brought to an abrupt halt.”
EBIT in the Nordic region fell 82% year-on-year to £26mln with falling consumer demand exacerbated by a general overstocking in the market.
Trading in the new financial year is in line with company expectations but Currys said it was “wary of optimism about consumer spending power.”
Baldock said “Accordingly, we're being prudent in our planning, and in further strengthening our balance sheet.”
Consistent with this cautious approach, the firm decided not to declare a final dividend.
7.00am: FTSE called lower as Fed signals more rate pain
The FTSE 100 is expected open lower on Thursday extending yesterday’s falls after the Federal Reserve minutes signalled further interest rate rises were on the way.
Spread betting companies are calling London’s blue-chip index down by around 38 points. The index of London large-caps closed down 77.62 points, or 1.0% at 7,442.10 on Wednesday
Minutes from the June’s Federal Open Market Committee meeting showed officials believe further tightening is required to stamp out inflation in the world's largest economy.
"Almost all participants noted that in their economic projections that they judged that additional increases in the target federal funds rate during 2023 would be appropriate," the minutes said.
Although inflation figures are due before the next rate call, Paul Ashworth at Capital Economics thinks "barring an unexpected collapse, the odds strongly favour another 25bp rate hike this month."
Ipek Ozkardeskaya Swissquote Bank felt the minutes “were more hawkish than expected.”
US markets closed lower with the Dow down 0.4% and the S&P and Nasdaq 0.2% lower. The downbeat mood spread to Asia where markets also eased. In China, the Shanghai Composite was down 0.7%, while the Hang Seng index in Hong Kong was down 3.0%. In Japan, the Nikkei 225 index in Tokyo was down 1.7%.
Back in London, and updates are expected from Currys, Ferrexpo, Robert Walters and Victrex.