FTSE 100 Rises, Led by AB Foods; Smurfit Kappa -2-

0942 GMT - Metro Bank's delay in proceeding with a capital raise elevates the perennial question around capital sufficiency, Goodbody analyst John Cronin says in a note. The Prudential Regulation Authority asked the lender to do more work for its advanced internal rating-based, or AIRB, application for residential mortgages, effectively delaying its ability to raise funds. "It is important to remember that MTRO has options in this respect including the potential to strike portfolio sales as it has done in the past to bulk up capital," Cronin notes. He adds that the news also raise questions on the significance of what issues with the models or the wider business the PRA has observed. Goodbody rates the stock buy. Shares fall 7.5% at 93.8 pence. ([e-mail])

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UK Labor Market Shows Signs of Easing, But Rate Hike Still Likely

0939 GMT - U.K. consumers will be pleased that wages now outpace consumer-price rises, after over a year of facing negative real pay, but the Bank of England will no doubt be concerned about the inflation impact, Daniel Mahoney, U.K. economist at Handelsbanken says in a note. Wage growth continues to break records, although the May-July growth rate of 8.5% including bonuses are skewed by one-off public-sector payments, he says. However, the labor market continues to show some signs of loosening, both on the supply and demand side, Mahoney says. Falling vacancies and growing unemployment will reduce pressure on the BOE to act, though inactivity levels will likely remain a concern, he adds. Nevertheless, the bank will still probably hike in September, he concludes. ([e-mail])

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Metro Bank's Capital Raise Faces Delays

0930 GMT - Metro Bank's capital shortfall will remain until at least 2024, Peel Hunt says in a note after the lender said more regulatory work is needed before a capital raise can take place. The company has previous said it won't seek to raise capital until it has the approval from the Prudential Regulation Authority regarding its advanced internal rating-based, or AIRB, application for residential mortgages. "AIRB is a notoriously lengthy process and this delay does not in our view reduce Metro's chance of obtaining accreditation in the medium term," analysts write, noting that the news is disappointing but not unexpected. Peel Hunt rates the stock hold. Shares fall 8.2% at 93.1 pence. ([e-mail])

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Smart Metering Systems' Shares Seen With Significant Upside

0917 GMT - Smart Metering Systems' portfolio continues to benefit from inflation as shown by the increase in its index-linked annualized recurring revenue, and its battery-storage capacity seems to progress on track, RBC Capital Markets analyst Alexander Wheeler writes in a research note. The energy-infrastructure company's strong growth in ILARR--a key metric--rose 13% in the first half of the year, with meter installation set to increase in the second half. "We see significant upside at the current share price," Wheeler says. RBC maintains a buy rating on the stock, with a 1,150-pence price target. Shares are down 1.3% at 661 pence. ([e-mail])

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Pound, Gilt Yields Fall as UK Jobs Data Don't Necessarily Point to Higher Rates

0906 GMT - The pound and gilt yields fall after U.K. jobs data, the details of which don't necessarily point to further interest-rate rises despite high wage growth, ING analysts say in a note. Annual growth in average weekly earnings, excluding bonuses, held steady at 7.8% in the three months to July, matching the highest rate since records began in 2001. However, unemployment ticked higher and private-sector pay barely increased in level terms between June and July, ING says, adding that the data "doesn't scream a need to keep hiking rates much further." GBP/USD falls 0.2% to 1.2483, while EUR/GBP trades flat, having traded lower before the data. Ten-year gilt yields fall nearly 7 basis points to 4.414%, according to Tradeweb. ([e-mail])

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Getlink's August Traffic Missed Citi Estimates

0852 GMT - Getlink's August traffic missed Citi's estimates, analysts say in a research note. The Channel Tunnel operator's LeShuttle transported 90,427 trucks in August, a 15% decline compared with the prior year. Passenger vehicle shuttle traffic also declined 3% on year in August to 305,107. Passenger vehicle traffic for the month came in well below Citi's estimate of 358,000 vehicles, while truck traffic also missed Citi's estimate of around 100,000. The analysts maintain Citi's neutral view on the stock. August traffic recovered to 82% of 2019's prepandemic levels. Citi says. ([e-mail])

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Wickes' Results Deliver a Positive Surprise

0851 GMT - Wickes Group delivered a surprising set of first half results--the market may not have been expecting such a solid set of interim--and as such the shares should fair better, Liberum says. The home-improvement retailer had previously disclosed its revenue, but there were several other positives, including the gross margin rising 30 basis points due to some solid efficiency work on distribution costs, second-half inflation forecast to be flat, and the possibility interest income could surprise to the upside, Liberum analysts say in a research note. "All in, a very pleasing set of numbers which is not reflected in [the current share price]," the brokerage says. Liberum retains its buy rating and 360 pence price target. Shares are up 1.4% at 140.4 pence. ([e-mail])

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BOE Still Expected to Hike Rates Despite Signs of Looser Labor Market

0844 GMT - Despite signs that the U.K. labor market is loosening, rapid pay-growth figures mean that the Bank of England will still press on with a hike next week, according to Davy economist Conall MacCoille. Employment fell by 207,000 in the three months to July, with vacancies now falling two-thirds of the way back to prepandemic levels, he says in a note. The U.K. services PMI has also recently signaled a slowdown in job creation, he adds. But the key point is that pay growth remains at "eye-watering levels", MacCoille says, with annual pay growth at 8.5% and 7.8% including and excluding bonuses respectively. "Early signs of looser labor-market conditions have likely come too late to stop the BOE raising rates by 25 basis points to 5.5%," he adds. ([e-mail])

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BOE Unlikely to Change Track Despite Continued Wage Growth

0838 GMT - The Bank of England is likely to stick to its course of interest-rate increases this month, despite rising unemployment and some signs of easing in wage inflation, Investec economist Sandra Horsfield writes in a note. Unemployment rose to 4.3% in the three months to July, and vacancies fell. A jump in wage growth, including bonuses, might raise concerns that salaries could keep inflation high; but the growth was largely down to one-off payments made to workers in the National Health Service and Civil Service, Horsfield notes. "As the burden of paying for their services falls largely on the public purse, the direct link between costs and prices is broken," she says. The BOE is as such likely to raise rates by a further quarter-point this month, she says.([e-mail]; @joshualeokirby)

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BOE Should Pause Rate Hikes as Jobs Market Eases, IoD Says

0831 GMT - The Bank of England should keep interest rates where they are, despite continued high wage growth, argues Kitty Ussher, chief economist at pressure group the Institute of Directors. Unemployment increased in the three months to July, and this loosening of the labor market should lead the BOE to keep interest rates at its next policy meeting later this month, Ussher says in a release. This is despite wage inflation that stayed at a high rate in the same period, but which was due more to public-sector pay settlements than private-sector wage growth, which is easing, she says. With the recent cycle of higher interest rates hitting firms' outlook, the bank "should now give its medicine time to work," Ussher says.([e-mail]; @joshualeokirby)

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Wickes Group Continues to Gain Market Share

0830 GMT - Wickes Group should expect only limited change to the market consensus' full-year pretax profit forecast, in spite of sharing positive news in today's update, Goodbody analyst David O'Brien writes in a research note. The key incremental pieces of news were the performance since 1H-end said to be in line, as well as being well on track to deliver on full-year targets, the analyst said. In addition, the home-improvement retailer has seemingly continued to gain market share through the first half to the year, aided by its TradePro loyalty scheme growing rapidly with 65,000 new customers in the half-year, O'Brien noted. Goodbody keeps a buy rating on the stock with a 139-pence price target. Shares are up 1.9% at 141.10 pence. ([e-mail])

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(END) Dow Jones Newswires

09-12-23 0647ET