Weekly review
By Josh White
Date: Friday 07 May 2021
(Sharecast News) - The FTSE 100 ended the week 159.9 points higher, closing at 7,129.71 on Friday.
Equity view
InterContinental Hotels Group said trading improved in the first quarter and that a pickup in March continued into April, particularly in the US and China. Revenue per available room (Revpar) was down 50.6% in the three months to the end of March compared with two years ago and 33.7% from a year earlier. Revpar reflects a 23% reduction in occupancy with the rate at about 80% of 2019 levels, the FTSE 100 company said in a trading update.
Carlyle is one of the potential buyers of Reckitt Benckiser's infant nutrition business in China, Sky News reported. The private equity group, one of the world's largest, is among several buyers preparing offers for the Greater China unit of Mead Johnson before a deadline of Thursday, Sky said.
Syncona portfolio company Gyroscope Therapeutics Holdings has postponed plans for its initial public offering in light of current market conditions, the healthcare firm said on Friday. "In light of market conditions, we have decided to postpone our planned initial public offering," said Gyroscope Therapeutics chief executive Khurem Farooq.
AstraZeneca reported on Friday that 'Imfinzi' and tremelimumab with chemotherapy demonstrated an overall survival benefit in the 'POSEIDON' trial for first-line stage four non-small cell lung cancer, making it the first phase 3 trial to demonstrate an overall survival benefit with tremelimumab. The AIM-traded firm said Imfinzi plus chemotherapy, meanwhile, demonstrated a progression-free survival benefit, but a trend in overall survival did not achieve statistical significance.
St Modwen Properties said on Friday that US private equity firm Blackstone has made a possible cash offer for the group at 542p a share. The offer represents a 21.1% premium to Modwen's closing share price on Thursday. It follows a series of unsolicited proposals received from the Blackstone Funds.
Barratt said it expects full year results to be "modestly above" prior expectations after a strong start to the new year and was refunding £3.5m in Covid business rate relief. The house builder on Thursday forecast 2021 wholly owned completions to be between 16,000 and 16,250 homes and to deliver around 650 joint venture completions. Total forward sales for the January 1 - May 2 period were £37bn, compared with £2.8bn for the same period last year.
Next upgraded its guidance for annual profit after a post-lockdown shopping surge caused sales to beat expectations in the first quarter. Full-price sales fell 1.5% in the 13 weeks to 1 May from two years earlier - exceeding the fashion retailer's previous central guidance for a 10% reduction. Sales beat expectations by £75m, Next said in a trading update.
Property company Derwent London reported improved rent collections in March and £1.3m of new lettings in the year to date as the capital started to return from the latest Covid-19 lockdown. The company on Thursday said it had collected around 93% of first quarter day rent, up from 87% on 13 April with another 4% expected later in the quarter. Vacancy rates rose to 2.3% from 1.8% in December.
Mondi said demand was strong for its packaging as online shopping surged and customers looked for more eco-friendly products in the first quarter. The FTSE 100 maker of cardboard boxes and other packaging products said underlying earnings before interest, tax, depreciation and amortisation fell 8% to €353m in the three months to the end of March from a year earlier. Earnings were 14% better than the fourth quarter of 2020.
Wealth manager Rathbone Brothers posted a rise in first-quarter funds under management and income on Thursday as it hailed a strong performance from its funds business. In the three months to 31 March 2021, funds under management and administration edged up 2% to £55.8bn, reflecting "continued good organic growth".
ITV said it was cautiously optimistic about the year ahead as advertising revenue recovered from the Covid-19 crisis. Total external revenue rose 2% to £709m in the first quarter. ITV Studios revenue rose 9% to £372m as media and entertainment income fell 3% to £484m.
Virgin Money said first-half profit more than doubled as Covid-19 impairment charges tumbled and the bank signalled a cautiously optimistic outlook driven by Britain's Covid vaccination programme. The company on Wednesday said underlying pre-tax profits came in at £245m from £120m a year ago, with a return to statutory profit before tax of £72m and impairment charge of £38m, a significant reduction from £232m.
Direct Line stuck to its full-year targets after premiums fell and motor claims were subdued in a first quarter affected by the Covid-19 lockdown. Gross written premiums declined 4.7% to £752.3m in the three months to the end of March, led by a 10.6% drop in motor business to £367.3m. This more than offset a 1.8% increase in home premiums to £140.3m and a 16.1% rise in commercial premiums to £154m.
Croda International has announced a strategic review of its Performance Technologies and Industrial Chemicals (PTIC) businesses to establish what ownership structure best serves this part the business "to create a stronger platform for its future growth". The speciality chemicals company said on Wednesday that the review is consistent with its prioritisation of investments in faster-growth life science and consumer markets, which now represent over 80% of its profitability.
Buy-to-let lender OSB Group maintained full-year guidance as loans and advances rose in the first three months of 2021. Underlying net loans and advances for the three months through March were up 3% in the three months to March 31 to £19.6bn.
AstraZeneca said on Tuesday that Farxiga has been approved in the US for the treatment of chronic kidney disease in patients at risk of progression with and without type-2 diabetes. The pharmaceuticals giant said the approval by the US Food and Drug Administration is "the most significant advancement in the treatment of chronic kidney disease in more than 20 years".
Oxford Nanopore has raised £195m in new cash ahead of its planned stock market float expected later this year, the company's investor IP Group said. Singapore state investor Temasek, Wellington Management, M&G Investments and Nikon have made new investments worth a combined £125m into the life sciences company with existing investors contributing another £70m.
Centamin has awarded the engineering, procurement and construction contracts for the 36MW solar farm and 7.5 MW battery-energy storage system at the Sukari Gold Mine, it announced on Tuesday. The FTSE 250 company said Juwi was contracted to design, supply and integrate the Sukari solar and battery plant into the current diesel power plant, while Giza Systems had been contracted to install the Sukari solar plant.
Environmental infrastructure fund JLEN has snapped up a 50% equity stake in Sandridge Battery Storage, which holds the development rights to construct a 50-megawatt lithium-ion battery energy storage plant in Wiltshire. JLEN said on Tuesday that the acquisition, which was made alongside Foresight Solar Fund, would see it invest up to £12.7m over the next 12-18 months.
Britvic said on Tuesday that it has bought plant-based drinks maker Plenish for an undisclosed sum. Founded in 2012 as a direct-to-consumer brand, Plenish, which makes organic milk alternatives, juices and shots, has since expanded into retail distribution.
Economic news
UK construction output rose strongly in April as Covid-19 restrictions eased but costs increased at the fastest pace for at least 24 years, a survey showed. The IHS Markit/CIPS UK construction purchasing managers' index recorded a score of 61.6 in April, broadly in line with a six-year peak established in March. A reading of 50 or more indicates growth.
The number of UK companies that have claimed furlough dropped from the January peak of 852,000 by 12,000 in the month of February. Nonetheless, there were still over 840,000 dependent on the government's scheme for aid to pay staff.
The UK service sector surged in April, buoyed by the loosening of lockdown restrictions and growing consumer confidence, data published on Thursday showed. The IHS Markit/CIPS UK services PMI business activity index reached 61.0 in April, up from 56.3 in March and the highest since October 2013. It was also ahead of both consensus and the flash estimate of 60.1.
The UK government dispatched naval gunboats to the coast of Jersey after 80 French vessels gathered at the port in St Helier in protest over post-Brexit rules on fishing rights. According to reports, HMS Severn and HMS Tamar held back while observing the French ships amassing at 6am on Thursday. The ships cleared at 7am to allow passage through the harbour as they were keen to maintain a peaceful protest.
The Bank of England stood pat on monetary policy on Thursday to support the recovery and ensure that consumer price inflation returned to its 2.0% target sustainably. As expected by economists, Bank Rate was kept at 0.1%, the stock of corporate bond purchases at £20bn and the stock of UK government bonds purchased at £875bn.
The number of workers on furlough has fallen to 4.2m, government data published on Thursday showed. There were 4m people on furlough in December, which rose to 4.9m in January as the third national lockdown came into effect. But the figure has been falling since then, with 4.7m on furlough at the end of February and 4.2m as at 31 March.
Ikea UK is launching a plan to buy back unwanted furniture from customers to resell it and reduce its impact on the environment. The group pledged a move towards a more circular model of consumption as items can be reused, recycled and rejigged.
New car registrations motored ahead in April, industry data showed on Wednesday, as showrooms reopened and customers returned. According to the Society of Motor Manufacturers and Traders, there were 141,583 new cars registered last month. That compares to just 4,321 registrations in April 2020, when the first national lockdown was in full effect.
The UK manufacturing sector surged in April, a closely-watched industry survey showed on Tuesday, but disruptions to the supply chain continued to cast a shadow. The IHS Markit/CIPS purchasing managers' index rose to 60.9 in April from 58.9 in March. That was marginally above both consensus and the flash estimate, for 60.7, and the highest reading since a record 61.0 in July 1994.
Mortgage borrowing surged to an all-time high in March, official data showed on Tuesday, as the UK property market continued to boom. According to the Bank of England's latest Money and Credit report, net mortgage borrowing reached £11.8bn in March 2021, the strongest since the series began in April 1993 and higher than the previous record of £10.4bn, seen in October 2006. It was also a significant jump on February's figure of £6.2bn.
International events
China's trade surplus jumped to $42.9bn in April, outstripping expectations as exports continued to rise, official figures showed. The surplus rose from $13.8bn in March and was well ahead of analysts' consensus estimate of $27.7bn.
German industrial production rose 2.5% in March led by a sharp rise in construction activity. The result for March slightly beat analysts' consensus forecast for a 2.2% rise. Core manufacturing rose 0.7% and construction increased 10.8%.
America's labour market last month generated the fewest jobs ever relative to economists' forecasts. The Department of Labor reported non-farm payrolls grew by just 266,000 in April, possibly due, according to some observers, in part to the large increase in entitlement spending in the wake of the pandemic.
German factory orders beat expectations in March as Europe's biggest manufacturing sector continued to recover from the Covid-19 crisis. New manufacturing orders rose 3% in March as business accelerated from a revised 1.4% increased in February, Destatis said. Analysts had on average expected orders to increase 1.5% month-on-month.
The European Union's top court upheld on Thursday the decision to partially ban three Bayer pesticides that are thought to harm bees. Bayer will not be allowed to use those three products on certain crops after the European Court of Justice (ECJ) dismissed an appeal by the company, which argued that there was insufficient scientific knowledge to justify the restrictions.
Weekly jobless claims dropped sharply in the week ended 1 May, with first-time claims hitting a new Covid-19-era low. Initial claims came to 498,000 last week, according to the Labor Department, better than estimates for a reading of 527,000 and down from the previous week's print of 590,000, which was upwardly revised from the initially reported 553,000.
Business activity in the eurozone rose in April, suggesting the currency zone's economy began to recover after shrinking in the first quarter. The IHS Markit composite purchasing managers' index rose to 53.8 in April from 53.2 in March and was slightly stronger than a preliminary reading of 53.7. A reading of 50 marks the difference between growth and contraction.
The head of the US Treasury issued a clarification of her earlier remarks on interest rates. On Tuesday evening, Janet Yellen told the Wall Street Journal she had neither predicted nor recommended interest rate hikes.
Moscow is seeking additional fines worth $321,586 from Twitter for failing to remove content banned in the country fast enough. According to TASS news agency, a Russian court said on Wednesday that the state communications regulator's current restrictions were not enough.
US private payrolls grew in April, with firms rallying to hike production amid a surge in demand. Private payrolls rose by 742,000 jobs last month, according to the ADP's national employment report, while data for March was revised higher to show 565,000 jobs being added - a further improvement on the initially reported figure of 517,000.
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