Tesco sells banking business to Barclays, Victrex flags soft start to year

Stocks to watch

UK supermarket giant Tesco has sold its retail banking business to Barclays for £600m, the two companies said on Friday. The duo also unveiled a 10-year partnership to market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand, as well as explore other opportunities to offer financial services to Tesco customers. Tesco said it expected to rake in a further £100m after the settlement of certain regulatory capital amounts and transaction costs. Combined with the previously announced special dividend of £250m paid by Tesco Bank last August, this is expected to result in total cash received of around £1bn, the majority of which will be returned to shareholders in the form of an incremental share buyback.

Polymers group Victrex has announced a "soft start" in its first quarter as a result of continued end-market weakness and tough comparatives with the prior year, with group revenues falling by over a fifth. Nevertheless, the company said the downturn in the three months to 31 December was in line with the wider chemicals sector, with chief executive Jakob Sigurdsson noting "signs of monthly run-rate improvement" in the second quarter.

Bellway said in a trading update on Friday that its half-year housing revenue topped £1.25bn, in line with expectations, as it completed 4,092 homes completed at an average selling price of £309,300. Despite moderated build cost inflation, the housebuilder said its private reservation rate increased by 15.4%, reflecting improved customer demand, with plans to open over 40 new outlets in the second half, supported by net cash of £77m, down from £292.5m year-on-year.

Newspaper round-up

The former chief executive of Barclays Jes Staley allegedly stayed in contact with Jeffrey Epstein long after joining the UK bank, according to legal documents that reportedly contradict claims he cut ties with the convicted child sex offender and disgraced financier in 2015. Documents from a now-settled lawsuit, seen by Bloomberg News, allegedly suggest that the two men used an unnamed third person, who “acted as an intermediary for messages between Staley and Epstein”, to stay in contact after Staley took over as chief executive of Barclays in December 2015. – Guardian

A leading business lobby group has urged Jeremy Hunt to resist calls for large-scale tax cuts in his budget next month, saying the government needs to avoid “short-termism” and devote spending to projects that boost the economy. Adding its voice to a growing clamour for green investment, the Confederation of British Industry said pre-election giveaways at the budget should be kept to a minimum to allow for a surge in spending to achieve net zero. – Guardian

Britain’s biggest offshore wind farm is facing a year-long delay to its completion because of a chronic shortage of construction ships. The Dogger Bank site has suffered from significant disruption because of bad weather, storms and a lack of vessels able to build it according to its developer, the power company SSE. – Telegraph

Britain’s working-age benefits bill will hit £100bn for the first time this year amid a surge in disability claims since lockdown. The cost of welfare payments including universal credit, housing subsidies and disability benefit is expected to jump by almost 30pc in real terms to £130bn by the end of the decade, according to forecasts published by the Department for Work and Pensions (DWP). – Telegraph

Mexico has overtaken China as the biggest exporter to America for the first time in 20 years as geopolitics and “friend-shoring” redraw global trade patterns. Mexico exported $475 billion of goods to the US in 2023, a 5 per cent increase on the year, while the value of Chinese exports fell 20 per cent to $427 billion, according to the US Department of Commerce. – The Times

US close

Wall Street stocks edged higher on Thursday but the Dow and S&P 500 still managed to set new record closing highs, with the latter briefly topping the key psychological mark of 5,000 mark for the first time.

The S&P 500 finished just 0.06% higher at a new high of 4,997.91, having risen to a high of 5,000.40 in afternoon trade, as the index set its ninth record close of 2024, having already gained nearly 5% in the year to date.

The Dow rose 0.13% to a fresh closing peak of 38,726.33, while the Nasdaq gained 0.24% to 15,793.71 as it comes ever-nearer to its record closing high of 16,057.44 reached in November 2021.

On the macro front, Americans lined up for unemployment benefits at a decelerated clip in the week ended 2 February, according to the Labor Department.

Initial jobless claims dropped by 9,000 to 218,000 from the prior week's upwardly revised value, slightly below estimates for a reading of 220,000 but firmly above the last two months' average and pointing to a slowing, yet, strong labour market.