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Bestway Acquires 4.5% Stake in Sainsbury’s Amid Stock Fall

Share prices in London opened slightly lower on Friday as investors digested the implications of a better-than-expected reading of US GDP on Wednesday.

The FTSE 100 index opened down 7.38 points, 0.1%, at 7,753.73. The FTSE 250 was down 31.30 points, 0.2%, at 19,884.21, and the AIM All-Share was down 0.49 points, 0.1%, at 864.92.

The Cboe UK 100 was up 0.2% at 777.08, the Cboe UK 250 flat at 17,364.06, and the Cboe Small Companies down 0.3% at 14,132.05.

New York ended higher on Thursday, after the US GDP reading slightly beat market expectations. The Dow Jones Industrial Average finished up 0.6%, the S&P 500 1.1% and the Nasdaq Composite 1.8%.

The U.S. economy continued to grow in the last three months of 2022, at a pace slightly above expectations, according to the U.S. Bureau of Economic Analysis on Thursday.

The bureau’s first estimate of fourth-quarter gross domestic product showed year-over-year growth of 2.9%. Economists had forecast an annualized growth rate of 2.8% for the last quarter of 2022, according to the market consensus quoted by FXStreet.

The data may suggest a soft landing ahead for the world’s largest economy.

“If there are fears that the US economy is on the verge of recession, that is certainly not reflected in the economic data, which still looks strong, as we look to the Federal Reserve rate meeting of the next week,” said Michael Hewson, chief market analyst at CMC Markets.

Richard Hunter, head of markets at interactive investor, was less positive: “The most pessimistic investors suggest that the last quarter of growth could be the last before previous increases take full effect, potentially pushing the economy into recession in The severity of the recession remains the key element of investor jitters and, while an economic reading alone cannot predict a trend, the GDP figure was enough to suggest that a mild recession could be ahead. the agenda, sending stocks higher for the time being.”

A two-day meeting of the Federal Open Market Committee, responsible for setting policy, will begin next Tuesday.

Markets expect the US Federal Reserve to come back to a 25 basis point hike from the 50 and 75 basis point hikes it made in meetings last year.

“While yesterday’s GDP numbers looked increasingly supportive of the prospect of a soft landing, the labor market data also suggests the Fed has the room to continue to be much more aggressive.” , said CMC’s Hewson.

“Today’s core PCE deflator inflation data should confirm another modest slowdown, from 4.7% to 4.4%, and the weakest reading since October 2021. This would also support arguments in favor of a more modest 25 [bps] rate hike next week; however, as we near the end of the Fed’s rate hike cycle, there is some divergence on concerns what might follow.

In European stocks on Friday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was up 0.1%.

The pound was listed at $1.2364 early Friday, unchanged from $1.2363 at the close of London stock markets on Thursday.

The euro traded at $1.0870 early Friday, up from $1.0862 late Thursday. Against the yen, the dollar was quoted at 129.89 JPY, down from 130.40 JPY.

In the FTSE 100 index, J Sainsbury was the best performer in early trading in London, with a gain of 4.9%.

Bestway Group said it purchased or agreed to purchase 80.8 million shares of Sainsbury’s. This represents a 3.45% stake.

Bestway is a London-based conglomerate with operations in the UK, Pakistan and the Middle East. It was first established as a chain of convenience stores in 1963, but now has interests in wholesale, pharmacy, real estate, cement and banking.

“The Bestway Group intends to retain its shares in Sainsbury’s for investment purposes and is pleased to support the management team,” he said.

Bestway said it may consider making further purchases in the future and confirmed it was not considering making a takeover bid for Sainsbury’s.

The supermarket chain took note of the announcement and said it will “engage” with Bestway “in line with our normal interactions with shareholders”.

In the FTSE 250x, Direct Line was up 0.8% after announcing the departure of its chief executive following the motor insurer’s recent profit warning.

The Bromley, England-based insurance company said Penny James has agreed to step down, and is now looking for a new CEO.

In the meantime, Direct Line has named commercial director Jon Greenwood as interim CEO.

President Danuta Gray Said

President Danuta Gray said, “During her tenure as CEO, Penny has overseen significant strategic progress, transforming the company’s technology and capabilities, accelerating the digitalization of customer journeys and helping prepare the company for the future.”

Earlier this month, shares of Direct Line fell by a quarter in one day after announcing that it would not pay a final dividend due to a sharp rise in weather-related claims, which led to a loss of underwriting for the insurer.

Among London small caps, Superdry plunged 16% in morning trading.

The Cheltenham, England-based company announced that it had recorded an interim loss due to the underperformance of its wholesale segment, which continued to hurt the business after the end of the period.

In the six months to October 29, the clothing retailer posted a pre-tax loss of £17.7m, compared to a profit of £4.0m a year earlier. Turnover increased by 3.6% from £277.2m to £287.2m, although within this figure wholesale turnover was down 5, 2%, due to delayed recovery from Covid-19 and shipping delays. Superdry said this underperformance hurt its interim results.

Financial Year 2023

Superdry said it now expects to be broadly break even in financial year 2023 at the pre-tax adjusted level. Previously, the company had forecast adjusted pre-tax profit of between £10m and £20m.

YouGov, listed on the AIM market, lost 0.8%. The London-based data research and analytics firm said it performed well in the six months to January 31, with growth across most divisions.

YouGov said growth has been spurred by client spending on strategic market research, which has accelerated its panel-based custom research work, with growing opportunities for multi-year contracts and trackers. From a geographic perspective, the US remains a major growth driver with great market opportunities, while UK demand has picked up despite depressed market conditions.

Looking ahead, YouGov said it remains confident of delivering revenue growth for the full year, in line with current market expectations of £264m. In the financial year ended July 31, the company had sales of £221.1 million.

On Friday in Tokyo, the Nikkei 225 index was up 0.1%.

In China, Hong Kong’s Hang Seng Index was up 0.4%.

Stock markets in China were closed for most of the week to mark the Lunar New Year. Hong Kong reopened on Thursday, while Shanghai will remain closed until Monday.

In Sydney, the S&P/ASX 200 closed up 0.3%. According to the Australian Bureau of Statistics, annual producer price inflation in Australia fell to 5.8% in the fourth quarter from 6.4% in the third quarter.

Gold was quoted at $1,924.72 an ounce early Friday, down from $1,925.42 late Thursday in London. Brent oil was trading at $87.54 a barrel early Friday, up from $87.35 late Thursday.

In Friday’s economic calendar, the retail sales index for Ireland is released at 1100 GMT.

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