Weekly review
By Josh White
Date: Friday 19 Nov 2021
(Sharecast News) - The FTSE 100 ended the week 124.34 points lower, closing at 7,223.57 on Friday.
Equity view
Dechra Pharmaceuticals has selected Alison Platt to chair the board when Tony Rice steps down at the end of 2021. Platt has been a non-executive director at Dechra since March 2020 and sits on the boards of Tesco and Spectrum. She is also chair of Legal & General Financial Advice.
Halma said on Friday that it has bought Infinite Leap for its medical sector business, CenTrak, for up to $47m (£35m). CenTrak provides real-time location services for healthcare facilities. Based in North Dakota, USA, Infinite Leap is a healthcare consulting and services provider for real-time location technologies, which is also developing unique new hardware and software solutions for applications adjacent to CenTrak's core market.
Residential landlord Grainger has appointed Michelle Boothroyd as its chief people officer. Boothroyd was previously people director at Nationwide, where she was responsible for delivery of the building society's strategic people and cultural transformation agenda. Prior to that, she held senior HR roles at Santander and RBS.
Kingfisher said its annual results would be near the top of guidance after a strong third quarter for the DIY retailer. Total sales fell 6.3% to £3.25bn in the three months to the end of October from a year earlier and were down 2.4% on a like-for-like basis at constant currency. On that basis, sales were 15% higher than two years earlier, before the Covid-19 lockdown boosted sales of home improvement products.
Gambling firm Flutter Entertainment said it had bought UK bingo operator Tombola for £402m. Tombola, based in Sunderland and Gibraltar, specialises in low stakes bingo and was the first major UK-focused operator to introduce mandatory staking and deposit limits, Flutter said on Thursday.
Royal Mail said it would return £400m of cash to shareholders as the company reported soaring first-half profit fuelled by a boom in parcel deliveries. Pretax profit rose to £315m in the six months to 26 September from £17m a year earlier. Adjusted operating profit soared to £404m from £37m.
Specialist international distribution and services group Bunzl said it made two further acquisitions, taking the number of deals for the year to 13. The company said it had bought personalised workwear and promotional clothing firm Workwear Express, based in Durham and Hydropac, a distributor of insulated packaging solutions based in Buckinghamshire.
Halma posted record first-half results on Thursday amid strong growth across all sectors and it backed its full-year expectations as it forecast more typical rates of revenue growth in the second half of the year. In the six months to 30 September, adjusted pre-tax profit rose 27% to £154.9m, with revenue 19% higher at £737.2m. The interim dividend was lifted 7% to 7.35p a share.
British Land swung to a positive total return in the first half as rent collection increased and provisions fell. Total accounting return for the six months to the end of September was 6.1% compared with -10.3% a year earlier.
Caledonia Investments said investors in portfolio company Agilytix were selling their interest to Cinven. The company said its gross proceeds were expected to be $183m net of fees, with the cash to be held for future investment. Caledonia's shareholding in BioAgilytix was valued by Caledonia at £51m as at September 30.
Tyman said on Wednesday that full-year adjusted operating profit was set to be "marginally below" consensus expectations amid supply chain issues. In an update for the period from 1 January to the end of October, the supplier of engineered components said the positive trading momentum has continued into the second half of the year, with the international division performing particularly strongly. This has largely mitigated the widely-publicised supply chain constraints that have impacted North America and the UK.
GlaxoSmithKline said the European Commission has approved its Nucala treatment for asthma and other nasal conditions. The authorisation allows the drug to be used as an add on treatment in hypereosinophilic syndrome (HES), eosinophilic granulomatosis with polyangiitis (EGPA) and chronic rhinosinusitis with nasal polyps (CRSwNP).
Cigarette manufacturer Imperial Brands reported a small rise in annual profits as it managed to halve losses from its vaping and other products division. Underlying adjusted operating profit for the year rose 2.7% to 3.57bn as reported revenue grew 0.7% to £32.7bn. The dividend was lifted 1% to 139.08p a share.
Drinks group Diageo lifted medium-term sales growth guidance on Tuesday, driven by market share across its operating regions. The maker of Johnnie Walker whisky said it now expected organic net sales growth in a range of 5% - 7% and organic operating profit growth in a range of 6% - 9% for fiscal 23 to fiscal 25. This compared with sales growth of 4% - 6% in fiscal 2017-19.
Homeserve lifted its dividend on Tuesday as it posted a jump in interim profit and revenue thanks to a strong performance in North America and Continental Europe and from its Home Experts business. In the six months to 30 September, adjusted pre-tax profit rose 27% to £42.2m on revenue of £610.5m, up 14% on the same period a year ago.
Domino's Pizza on Tuesday said it had appointed David Surdeau as interim chief financial officer. Surdeau will start with the pizza delivery firm on November 17. He was previously interim CFO of Marks & Spencer and prior to that held senior finance roles within Tesco and BAT Industries.
Government outsourcer Serco on Monday lifted profits guidance after better-than-expected trading in Australia and the UK from Covid-related and other work. The company also said it expected to see much lower demand for Covid-19 related services in 2022, partially offset by the impact of new work secured in 2021 and growth in core non-Covid-related business.
European budget airline Wizz Air said it was buying 102 Airbus A321 aircraft for an undisclosed sum. The order is made up of 75 A321neo and 27 A321XLR aircraft, with the bulk to be delivered between 2025 and 2027. Wizz said it may also buy another 19 A321neo aircraft "under certain circumstances".
Engineering group IMI said it was buying US firm Adaptas Solutions for $271m (£202m). Adaptas makes critical mass spectrometry subsystems and components, such as electron multipliers, filaments, power supplies and ion optic grids, as well as liquid handling and lab automation components.
IT provider Kainos reported a jump in first-half profit and revenue on Monday amid "robust" market demand. In the six months to the end of September, pre-tax profit was up 3% to £24.8m, with adjusted pre-tax profit 12% higher at £29.2m. Revenue rose 33% to £142.3m and the interim dividend was lifted 11% to 7.1p a share. Bookings grew 81% to £187.4m.
Economic news
UK retail sales rose more than expected in October, underpinned by spending on toys and clothes in the run-up to Christmas. According to figures from the Office for National Statistics, retail sales were up 0.8% on the month, coming in ahead of expectations for a 0.5% increase and leaving sales 5.8% above pre-pandemic February 2020 levels. September's sales figure was revised up from a 0.2% fall to flat.
The UK government borrowed more than expected in October as increased interest payments outweighed higher tax receipts, official figures showed. Public sector net borrowing excluding public sector banks was £18.8bn - the second-highest October reading on record. Borrowing was £0.2bn less than October 2020's record and £7.2bn more than a year earlier.
UK consumer confidence edged up in November despite the rising cost of living but households' view of their own finances remained weak, a survey showed. The GfK consumer confidence index rose by three points to -14, reversing most of the four-point drop from the month before. Households were less gloomy about the general economic situation over the past 12 months and the coming year and were marginally more positive about their own finances for the coming year.
The fast-spreading variant of Covid-19 recently detected in the UK may be less likely to cause symptoms, the results of new research showed. According to the study, which was conducted by Imperial College London and Ipsos MORI, the new coronavirus variant, dubbed AY.4.2, two thirds of people infected with it reported "any symptom" against 75% of those infected with the dominant strain in the country, known as AY.4.
The Financial Reporting Council (FRC) warned on Thursday that professional scepticism and management challenges were still the two key areas of deficiency among audit firms. In its latest annual assessment of UK audit firms, the FRC said that after increasing the number of inspections of smaller firms over the last year, it found 10 of 16 audits reviewed required improvements.
The Environment Agency and the Water Services Regulation Authority has launched a major investigation into sewage treatment works after new checks saw multiple water companies admit they were potentially releasing unpermitted sewage discharges into rivers and watercourses. The investigation will see the EA and Ofwat look into more than 2,000 sewage treatment works, with any company caught breaching legal permits likely to face enforcement action, including prosecution and fines of up to 10% of annual turnover for civil cases, or an unlimited amount in criminal proceedings.
UK airline Flybe was relaunched with a new home base of Birmingham on Wednesday, although its route network was still up in the air. The then-largest regional carrier in the country collapsed overnight on 5 March last year, becoming one of the first victims of the plunge in passenger demand at the start of the Covid-19 pandemic.
UK house prices rose 11.7% on the year in September to a record average high of £270,000, as buyers rushed to get deals done before the end of the Stamp Duty holiday, according to data from the Office for National Statistics. Price growth was up compared to August, when it came in at 10.2%.
Consumer price inflation hit its highest level in a decade in October as energy and fuel costs rose, reinforcing expectations of a rate hike by the Bank of England. According to data released on Wednesday by the Office for National Statistics, inflation pushed up to 4.2% from 3.1% in September, coming in above expectations of 3.9% and well above the BoE's 2% target. It also marked the highest level since November 2011.
The UK unemployment rate fell again in September, while the number of workers on payrolls rose despite the end of the furlough scheme, reinforcing expectations of a rate hike by the Bank of England. According to figures released on Tuesday by the Office for National Statistics, the number of workers on payrolls rose 0.6%, or by 160,000 between September and October to 29.3m.
International events
Japan's Prime Minister Fumio Kishida unveiled a 56 trillion yen stimulus package on Friday to help the economy to recover from the impact of the pandemic. The package, which is much bigger than the 30 to 40 trillion stimulus markets had been expected, is set to reach just under 79 trillion yen.
Initial jobless claims remained relatively stable in the week ended 13 November, according to the Labor Department, potentially signalling that the elevated level of layoffs seen during the Covid-19 pandemic may have plateaued. First time claims for unemployment totalled 268,000 last week, a decline of 1,000 from the prior week to a fresh pandemic-era low but higher than estimates for a print of 260,000.
Manufacturing activity in the US mid-Atlantic region accelerated sharply in November, the results of a closely-followed index showed. The Federal Reserve Bank of Philadelphia's factory sector index jumped from 23.8 in October to 39.0 for November.
New passenger car registrations fell 30.3% year-on-year across the European Union in October for a fourth consecutive monthly decline. According to data from the European Automobile Manufacturers Association, just 665,001 units were sold across the region last month, marking the weakest October in volume terms for since it began keeping records.
The price of oil fell to a near-six week low after the US was reported to have asked large oil-consuming countries to consider releasing crude stockpiles. The US has asked China, Japan, India and other big oil users to tap their oil reserves to bring down prices, Reuters reported. China then said it was working to release some of its reserves.
US housing starts unexpectedly fell in October, according to figures released on Wednesday by the Commerce Department. Housing starts declined by 0.7% from September to 1.520m units, versus expectations for rebound to 1.579m. September's figure was revised down from 1.555m to 1.530m. Meanwhile, single‐family housing starts fell 3.9% from September to 1.039m.
Eurozone inflation rose to a 13-year high as expected in October as rising energy prices hit household budgets. The headline annual rate of inflation rose to 4.1% from 3.4% a month earlier, matching an earlier estimate and market expectations.
US business inventories increased 0.7% month-on-month to $2.10trn in September, according to the Census Bureau, down just a touch from August's revised print of 0.8%. The combined value of distributive trade sales and manufacturers' shipments for September was estimated at $1.66trn, up 0.9%, while the total business inventories/sales ratio, based on seasonally adjusted data at the end of September, came to 1.26.
Sentiment among US housebuilders unexpectedly improved in November amid strong demand, according to figures released on Tuesday. The National Association of Home Builders/Wells Fargo housing market index rose to 83.0 from 80.0 in October, beating expectations for it to remain unchanged.
Fund managers were the most overweight US stocks this month in eight years, according to the last fund manager survey from the Bank of America. The survey showed that investors were ending 2021 in "risk on" mode, with the biggest overweight of US stocks since August 2013. Allocation to US equities rose 13 percentage points month-on-month to 29% overweight.
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