Centrica signs $8 billion LNG deal and H&T and Begbies Traynor are upbeat as clouds gather

“In typical fashion the FTSE 100 dipped early on Tuesday in the face of strength in the pound,” says AJ Bell investment director Russ Mould.

“With sterling at a 15-month high the value of the overseas earnings which dominate the index is relatively less. The reason for the pound’s move higher is today’s UK jobs data. 

“While there are some signs the tightness in the labour market is starting to ease, wage growth remains uncomfortably high in the context of the Bank of England’s efforts to get surging prices under control.

“If inflation is like toothpaste, to borrow the well-worn analogy, then the Bank is likely to have to make a big mess of the economy trying to get it back in the tube. Borrowers face more pain with the prospect of further rate hikes to come.

“The US may still have more work to do in the inflation battle but it is certainly some way ahead of the UK – inflation data from across the Atlantic later this week will reveal just how far ahead it is.

“Given the uncomfortable headlines around Centrica’s British Gas operation and its treatment of vulnerable customers, it’s probably no bad thing the company is seen to be doing its bit for the UK’s energy security. 

“It follows up the recommissioning and planned extension of the Rough energy storage facility with an $8 billion deal with US-based Delfin Midstream to buy enough liquefied natural gas to heat 5% of UK homes for 15 years.”

H&T / Begbies Traynor

“If you want evidence of how the cost-of-living crisis, persistent inflation and higher interest rates are affecting consumers and businesses, look at two companies reporting today on the UK stock market.

“Pawnbroker H&T has been doing incredibly well over the past year or so as more people pledge assets as collateral for loans. Individuals who turn to pawnbrokers typically cannot get credit from banks and so they must seek alternative ways to borrow money if times are hard. H&T says demand for pledge lending is at record levels and continues to gather momentum. If the economy does fall into recession, one might expect H&T to do even better.

“Professional services consultancy Begbies Traynor tends to thrive when economic conditions are gloomy. It has seen increased work for insolvencies, which reflects how businesses can crumble under the pressure of higher rates. Many companies have reached a tipping point where they cannot generate enough cash to service borrowings and so they have no choice but to fold.

“While it is easy to conclude these companies are profiting from the misery of others, both would argue they are doing an important service.”

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