Good morning. It looks like US private equity giant Apollo Global Management may face less competition in its pursuit of The Restaurant Group Plc. Wheel Topco, known for the Pizza Express chain, has decided not to go ahead with an offer for the Wagamama owner, “due to market conditions.” Amid all the hubbub, the stock has already surpassed Apollo’s offer price of 65 pence per share.
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Key Business News
Associated British Foods Plc expects Primark’s adjusted operating profit margin to top 10% this year, up from 8.2% for the year ended Sept. 16, with further improvement depending on levels of consumer demand. The fast-fashion retailer reported what it called a “substantial recovery,” with customers seemingly more willing to accept higher prices amid the biggest inflationary surge in decades.
Metro Bank Holdings Plc said deposit trends had normalised following a rescue deal in October that had triggered outflows. Its deposits were £15.6 billion at the end of September, up 1% from three months earlier and 5% lower than a year ago, the bank said, citing “continued momentum in personal and business current account growth and customer acquisition.”
IWG Plc kept its full-year outlook unchanged, saying Ebitda and year-end net financial debt are likely to remain in line with expectations thanks to “increasing demand for hybrid and flexible working solutions.” The owner of the Regus and Spaces brands also said it plans to report earnings in US dollar as of January next year.
King Charles III will be doing more than setting out the UK government’s legislative agenda at the opening of Parliament later today. The 74-year-old monarch will be effectively launching Rishi Sunak’s bid to keep his Conservative Party in power at a general election expected next year. It’s trailing the Labour Party by about 20 points in opinion polls. The King’s Speech is one of the biggest remaining chances for Sunak to convince voters he’s pursuing policies they want. Crime, energy and housing are expected to feature heavily as he tries to get Labour on the back foot.
Markets Today’s Take
The direction of travel for UK domestic stocks is being dominated by factors beyond company earnings. Higher-for-longer rates, debates on when interest-rate cuts may emerge and volatile bond markets are all playing their part.
The FTSE 250 had its worst month in more than a year in October, immediately followed by its best weekly performance in a year and then a slump yesterday as bond yields, which had dropped at the end of last week, reversed course. That’s pushing shares in rate-sensitive sectors like homebuilders and commercial property landlords -- which have a big weighting in the midcap index -- all over the map.
The interest rate path and bond yields will the dominant story for UK stocks for now. But eventually the focus will turn back to the UK’s economy, its housing and property markets, and the ongoing impact of increased borrowing costs across the spectrum.
— Sam Unsted
For more news and analysis throughout the day, follow Bloomberg UK’s Markets Today blog.
What’s Next?
Marks & Spencer Group Plc, ITV Plc, and J D Wetherspoon Plc are among companies scheduled to update the market tomorrow. A key question is whether M&S can sustain recent market share gains in both clothing and food, as well as deliver a profit growth this fiscal year.
“M&S and some peers are likely benefiting from a survivor boost after many rivals closed permanently,” Bloomberg Intelligence’s senior analyst Charles Allen writes. “Improved styling and value may sustain the momentum into fall, when M&S' strengths in tailoring and knitwear will be more important,” he adds.