BUSINESS LIVE: Petrofac mulls asset sale; Capita completes sell-off; Gold hits new highs on rate cut hopes

Derren Nathan, head of market research at Hargreaves Lansdown:

‘As we enter the final furlong for 2023, US markets are back to 12-month highs. But the optimism provided by Federal Reserve Bank Chairman Jerome Powell’s comments on Friday, that monetary policy is starting achieve its goals, hasn’t spread to Asian markets in overnight trading.

‘So, it’s still too early to call if this was the starting gun for a Santa Rally. Despite strengthening hopes that rates have peaked, a recent string of poor output indicators for China are weighing on the region.

‘The Hang Seng has dropped over 1% and the major Chinese and Japanese indices are also down. The FTSE 100 has also started the week in negative territory.

‘The notion that monetary policy’s grip isn’t going to get any tighter has helped push bullion prices to record highs. An ounce of the shiny stuff will now set you back close to $2,100 and speculation is building that there could be more to come.

‘But there are also longer-term forces building that could see other commodities prosper. A Brussels-based campaign group Transport & Environment (T&E), reveals that European automobile manufacturers have only secured some 16% of the transition metals (lithium, cobalt and nickel) to meet their promises for sales of electric vehicles by 2030, just five years before gasoline powered cars are banned completely.

‘Concerns about long-term demand are a constant factor in today’s oil market but for now its supply that is driving prices. Scepticism over how tightly enforced the latest round of OPEC+ production cuts, as well as concerns about demand from China are keeping a lid on prices. At just over $78, the value of a barrel of Brent Crude has fallen nearly 8% in just one week including nearly a 1% slide today.’

The FTSE 100 is down in early trading as heavyweight energy stocks ease tracking declining crude prices and lower copper prices pulled mining stocks lower, while the focus slowly shifts to US jobs data.

The oil and gas sector is down 1.8 per cent as crude oil prices fell amid persistent pressure from the OPEC+ decision and uncertainty over global fuel demand growth.

Industrial metal miners have slipped 2.1 per cent as copper prices fall on a stronger dollar.

The market is awaiting US employment data this week, with an October JOLTS number and November ADP National Employment report due during the week leading up to the more comprehensive November non-farm payrolls report on Friday.

Rolls-Royce has gained 1.7 per cent after J.P. Morgan upgraded the engineering company’s stock to ‘overweight’ from ‘neutral’.

An insurance firm is swerving London for a £3.15billion listing in New York.

Although Aspen is domiciled in Bermuda, more than half of its 1,100-strong workforce are based in the City of London.

There is no secret, certainly not to Jeremy Hunt, that we need businesses to invest more in Britain.

Minds in government were focused on this by some frank remarks by Pascal Soriot, the boss of drugs giant AstraZeneca, on his decision to set up a new manufacturing plant in Ireland rather than the UK.

Banks face losses of £6.6billion after a major Selfridges shareholder collapsed.

Signa, which co-owns New York’s Chrysler Building and other department stores in Europe, has been hit by high interest rates and the cost of energy and construction.

Its two main firms have borrowed millions from European banks, according to estimations from JP Morgan.

Spotify will reduce its total headcount by around 17 per cent across the company, its boss told staff on Monday, after laying of 6 per cent of its workforce in January citing higher costs.

In the latest third quarter, the company swung to a profit aided by price hikes in its streaming services and growth in subscribers in all regions, and forecast that its number of monthly listenerswould reach 601 million in the holiday quarter.

Capita has completed the sell-off of non-core assets after agreeing the disposal of its 75 per cent stake in research group Fera Science for £32million.

The sales to Bridgepoint Group values the joint venture with DEFRA at £80million and represents a 10.8x multiple on a 2022 standalone EBITDA of £7.4million.

Jon Lewis, Capita CEO, said: ‘Capita and Defra have partnered together to grow and professionalise Fera over the past eight years, creating significant value for us and the taxpayer.

‘Fera is now a vibrant and profitable commercial business, successfully serving private sector and government customers in both the UK and overseas.

‘We had previously announced our intention to sell our stake in Fera, as part of our ongoing strategy to simplify and strengthen Capita. It was the appropriate time to find a new partner to build on the strong, successful foundations now in place at Fera and take the company onto the next stage of its development.

‘This is the latest excellent example of Capita successfully collaborating with the UK Government to commercialise and transform Government assets into valuable businesses, following previous successes including Constructionline and AXELOS.

‘I am particularly delighted that, subject to successful completion of this transaction and our travel businesses, which completed on 14 November, we will have completed our non-core disposals programme. These disposals have enabled us to significantly strengthen the balance sheet and materially reduce our debt.’

William Hill owner 888 rejected a takeover by a gambling software firm this summer, it has been revealed.

The betting giant received a £700million written offer from Playtech in July.

But the offer – a price of 156p per share – was deemed to be too low for the company, according to The Sunday Times.

Petrofac is mulling a sell-off of non-core assets after the oilfield services firm warned it will no longer be able to meet its full-year guidance of ‘broadly neutral free cash flow’ due to payment delays.

‘While the group has made progress in reaching contractual settlements and unwinding working capital, given delays in securing advance payment guarantees, it no longer expects to receive these advances before the year-end,’ Petrofac said in a statement.

The company added it is exploring potential new financial options across all its classes of capital, and is actively engaged in discussions with investors to take a non-controlling position in certain other components of its business portfolio.

Last week, shares in London-listed Petrofac dropped to a record low as analysts flagged concerns over its balance sheet due to payment delays.