Dechra Pharmaceuticals shares down nearly 10%
London-listed shares of Dechra Pharmaceuticals fell 9.7% in afternoon trade after the company reported full-year financial results.
Dechra said revenue grew 13.8 percent to 681.8 million pounds ($783 million) for the year ended June 30.
There was also a 60 basis point decline in margin to 32.3% in the organization’s European pharmaceuticals segment as operations normalize post-Covid-19.
– Hannah Ward-Glenton
A sterling crisis could be imminent, says Deutsche Bank
A Deutsche Bank banner is shown in front of the German stock price index, DAX dashboard, at the stock exchange in Frankfurt, Germany, on September 30, 2016.
Reuters
Following the news that Liz Truss will become Britain’s new prime minister, Deutsche Bank says policy announcements in the coming weeks will be crucial if the UK is to avoid extreme macroeconomic events, particularly a balance of payments crisis.
Sterling was slightly lower against the dollar on Monday afternoon, trading just below $1.15, but Deutsche Bank currency strategist Shreyas Gopal warned that the risks of a “sterling crisis” should not be underestimated.
“With the current account deficit already at record levels, sterling requires large capital inflows supported by improving investor confidence and falling inflation expectations. However, the opposite is happening,” he Gopal said in a note on Monday.
“The UK is suffering from the highest inflation rate in the G10 and weakened growth prospects. A large, unfunded and untargeted fiscal expansion, accompanied by possible changes in the BoE’s mandate, could lead to an even greater increase in inflationary expectations and, in the extreme, — the emergence of fiscal domination”.
Truss has also suggested scrapping the Northern Ireland Protocol, a key part of Britain’s post-Brexit withdrawal deal with the European Union, a move that could spark retaliation from the bloc.
Gopal suggested that added uncertainty over trade policy would further cloud the macroeconomic picture and reduce investor confidence.
“The risk premium on UK gilts is already rising, coinciding with unusually large foreign outflows. If investor confidence erodes further, this dynamic could turn into a self-fulfilling balance of payments crisis in which foreigners are refusing to fund the UK’s external deficit,” he said. .
– Elliot Smith
Liz Truss will be the new Prime Minister of the United Kingdom
Liz Truss will succeed Boris Johnson as British Prime Minister after being elected leader of the Conservative Party in the UK government.
After a long contest with former finance minister Rishi Sunak, Truss won 81,326 votes from Conservative Party members, while Sunak got 60,399.
Truss will take the reins during one of the most turbulent economic periods in recent British history, as the country faces rising energy bills and a rapidly worsening cost of living crisis.
– Elliot Smith
UK markets await decision on next Prime Minister
Britain’s next prime minister will be announced in about 15 minutes, and market participants hope the news will end the political no-man’s land created when Boris Johnson resigned in July.
The results of a grueling, and sometimes bitter, leadership contest within the ruling Conservative Party are due to be announced at 12.30pm London time.
The next Prime Minister will be the current Foreign Secretary, Liz Truss, or the former Finance Minister, Rishi Sunak, with Truss the firm leader.
The FTSE 100 index was trading around 0.7% lower by midday, while sterling was flat against the dollar.
— Katrina Bishop
Stoxx 600 down 1.2%, euro pars losses, Uniper down 11%
The pan-European Stoxx 600 index was down 1.2% in afternoon trade, while the euro clawed back some of its earlier losses to trade back above $0.99.
Shares in German utility company and major gas importer Uniper were still down more than 11% as gas prices soared following the shutdown of flows to Europe from Russia.
The European situation is “gloomy” and the bad news is not fully priced, says the market analyst
The outlook for European markets looks “very bleak,” an analyst told CNBC on Monday, as reality sinks in that Russia will likely continue to curtail gas supplies to the region.
“Investors will be very cautious going forward,” Janet Mui, head of market analysis at British wealth management firm Brewin Dolphin, told “Squawk Box Europe.”
“The very clear implication is that euro assets will be under pressure, and we saw the euro hit a new low against the dollar.”
The flip side, he said, was that the dollar would be much stronger against both the euro and sterling. The dollar index, which measures the greenback against a basket of currencies, hit a fresh 20-year high on Monday morning.
In turn, this could be disinflationary for the US economy, meaning the Federal Reserve need not be as aggressive in rate hikes going forward. He said the current market price of a Fed funds rate of around 4% next year could be as high as it could get.
“A lot of bad news is already being put into the US market, while in Europe it probably isn’t there yet,” Mui said.
—Jenni Reid
The Kremlin blames sanctions and Europe for the gas shutdown
Russia’s Gazprom saw its shares rise on Wednesday after reporting impressive first-half profits and announcing a new dividend to shareholders.
Stoyan Vassev | Press service of Gazprom Neft | via Reuters
The Kremlin rejects blame for its shutdown of gas supplies to Europe through its Nord Stream 1 pipeline, pointing instead to sanctions imposed by the West that it says have made it impossible to acquire the parts needed to maintain the pipeline infrastructure in operation.
Western sanctions were “wreaking havoc” on necessary maintenance work on the pipeline, Kremlin spokesman Dmitry Peskov said in a conference call with media, contradicting accusations by European leaders that it was arming its gas supplies
Russian state gas supplier Gazprom, which supplies the gas for the Nord Stream 1 pipeline connection to Russia and Germany, completely halted its supply to Europe after detecting what it said was an oil leak.
– Natasha Turak
The European Stoxx 600 index is down 1%, with lows
Here’s an update on how the pan-European Stoxx 600 is trading this morning:
European gas prices rise as Russia cuts gas flows
European gas prices soared about 30% on Monday after Russia said it would shut off gas flows to the continent through its Nord Stream 1 pipeline indefinitely, renewing fears of widespread gas shortages and a rationing
The first-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was last seen at 281 euros per megawatt hour.
Stocks in motion: Uniper down 11%
Shares in German utility Uniper fell more than 11 percent in early trade as gas prices soared in the wake of Russia’s shutdown of flows to Europe.
The company, Germany’s biggest gas importer, has already been forced to agree a 15 billion euro bailout with the German government because of the Russian supply cut.
Euro falls below $0.99 as Russia halts gas flows to Europe
The dollar index hits 110, the highest level since 2002
The US dollar index hit 110.086 in early Asian trade, hitting a new two-decade high.
The Japanese yen weakened further to 140.3 after hitting a 24-year low last week. The Korean won stood at 1,370.87 against the greenback, a level not seen since April 2009.
CNBC Pro: This tech stock is up nearly 20% over the past year, and one pro says it has further to go
Tech stocks have endured a rough year so far, with some of the biggest names in the red.
But one cybersecurity company has stood out for its relative resilience, and market veteran Nancy Tengler believes the stock is just getting started.
Tengler, who is CEO and chief investment officer of Laffer Tengler Investments, said his bullish stance on the company could be interpreted as “controversial,” but argued that it is actually a safer bet within the technological space.
Professional subscribers can read more here.
— Katrina Bishop
The Caixin Services PMI shows that Chinese services activity grew in August
China’s Caixin Services Purchasing Managers’ Index for August was 55.0, compared with July’s print of 55.5.
The official non-manufacturing PMI for August is 52.6.
PMI readings are sequential and represent month-on-month expansion or contraction, where the 50-point mark means no change from the previous month.
— Abigail of
CNBC Pro: Mohamed El-Erian reveals where to invest right now
With equity and bond valuations falling simultaneously, investors should look to exit “distorted markets,” according to Mohamed El-Erian, chief economic adviser at Allianz.
“There was a time when all asset prices went up (stocks and bonds) and we forgot about correlations. Why do we care about correlations when you get paid to own risk assets and risk mitigation assets risk? It’s a lovely world,” he said. CNBC’s Steve Sedgwick on Friday.
“”But the first half taught us, and what we’ve learned since mid-August, [is] that both can go down at the same time.”
Investors looking for alternatives have a couple of options, El-Erian says.
CNBC Pro subscribers can read more here.
— Elliot Smith and Katrina Bishop
Wednesday, August 17, 2022 at 12:29 PM EDT
European markets: here are the opening calls
European stocks are expected to open cautiously on Wednesday with the UK’s FTSE up 18 points at 7,560, Germany’s DAX up 33 points at 13,944, France’s CAC 40 up 18 points at 6,616 and the FTSE MIB from Italy up to 42.029, according to 42.0292. GI data.
The data released includes preliminary second-quarter eurozone unemployment data, as well as second-quarter gross domestic product. The latest UK inflation figures for July will be released, as will preliminary Dutch GDP for the second quarter.
Earnings come from Uniper, Carlsberg, Persimmon, Balfour Beatty, BAT and National Grid.