Spending limits fuel US recession outlook
The spending limits agreed under the Biden-McCarthy debt ceiling compromise deal mean the US economy is facing even greater growth headwinds at a time when the Federal Reserve is still tightening monetary policy.
UBS Global Wealth Management said this morning: “According to minutes from its latest policy meeting, the Fed has already had a recession in its baseline projection, with real GDP contracting in the final quarter of this year and the first quarter of next year.
“We reiterate our view that the US growth is set to slow as the lagged effect of the Fed tightening feeds through the economy amid stricter lending standards from banks.”
Billionaire Issa brothers merge Asda with EG Group UK in £2.3 billion deal
The billionaire Issa brothers are to merge the UK operations of EG Group with Asda in a £2.3 billion deal.
EG Group said its UK and Ireland fuel, foodservice, grocery and merchandise business would be sold off to Asda as part of the deal. The Issa brothers completed their £6.8 billion acquisition of Asda from Walmart in February 2021.
EG Group said the proceeds from the deal would be used to repay its debts as it wrestles with soaring interest rates on its billions of pounds of loans. The firm said it “will look to address upcoming maturities” on its existing portfolio of loans.
The group will continue to operate in the USA and several European countries whilst retaining arount 30 UK sites and the Cooplands bakery brand.
Zuber Issa CBE, co-founder and co-CEO of EG Group, said: “This transaction with Asda represents an important strategic step for EG Group. Following this sale, EG Group will benefit from a significantly strengthened balance sheet, supporting the continued roll out of its successful convenience retail, fuel and foodservice strategy and drive innovation to transform the consumer experience.
“This includes the ongoing investment and expansion of our EV charging business, evpoint, as well as hydrogen and other sustainable fuel retail infrastructure, which we continue to see as a significant future opportunity.“
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(Richard Walker/Asda/PA)
/ PA MediaDebt ceiling agreement calms US markets, FTSE 100 steady
A debt ceiling deal between President Biden and House Speaker Kevin McCarthy appears to have calmed markets at the start of the new trading week.
The agreement struck over the weekend suspends the debt ceiling until January 2025, with federal spending capped over the next two years.
The deal has to clear Congress before 5 June, which is the latest date that Treasury Secretary Janet Yellen has said the US can pay its bills.
US stock futures are broadly positive with the S&P 500 seen rising 0.2% and the Nasdaq 100 by 0.4% from Friday’s close.
The response has been more subdued in Europe, with CMC Markets expecting the FTSE 100 index to open unchanged at 7627.
