Weekly review

By Josh White

Date: Friday 26 Nov 2021

(Sharecast News) - The FTSE 100 ended the week 179.54 points lower, closing at 7,044.03 on Friday.
Equity view

Essentra said it had decided to start a strategic review of its packaging division as it continued to move towards becoming a pure play components business. The company said the review would run in parallel with the previously announced strategic review of its filters unit.

ScS shares tanked on Friday after the furniture and floor coverings retailer reported a slowdown in trading. In an update ahead of its annual meeting, the company reported total two-year like-for-like order growth of 0.9% for the 16 weeks ending 20 November. Meanwhile, there was a 10.6% decline in one-year like-for-like orders following "an unprecedented period of pent-up demand at the beginning of the prior year".

Silence Therapeutics updated the market on the planned cancellation of its shares on AIM on Friday, which it originally announced on 15 October. The company confirmed that the last day of trading of its ordinary shares on AIM would be 29 November, with the proposed delisting to become effective at 0700 GMT on 30 November.

Clinical diagnostics specialist Novacyt announced on Friday thatots 'genesig' Covid-19 real-time PCR test has been approved in the UK. The AIM-traded firm said it was its first test to be added to the Coronavirus Test Device Approvals (CTDA) register, with it now preparing to resume the sale of the product in the UK.

Hochschild Mining said it welcomed the Peruvian government's conditional u-turn on a decision to close the company's mines. Investors dumped the stock on Monday after Lima said four mines in Peru's southern Ayacucho region, which included Hochschild's flagship Inmaculada operation, would be closed as soon as possible.

Mitchells & Butlers said it returned to profit after Covid-19 restrictions were lifted but the pub operator warned that rising energy costs and wages would affect its results in the current year. The company's pretax loss narrowed to £42m in the year to 25 September from £123m a year earlier as revenue fell to £1.07bn from £1.48bn. Adjusted operating profit fell to £29m from £99m.

Hill & Smith said it expected annual profit to meet market expectations after "robust" trading in the previous four months. The sustainable infrastructure group said organic revenue rose 4% to £237.1m in the four months to the end of October from a year earlier at constant currency.

Studio Retail posted a rise in interim profit and revenue on Thursday but warned on full-year profits as it highlighted "challenging" conditions in the third quarter. In the 26 weeks to 24 September, group revenue rose 3.2% to £239.6m, while pre-tax profit jumped 67% to £26.5m. Adjusted pre-tax profit was 36% higher at £23.7m.

United Utilities reported a 4% increase in first-half profit as water consumption increased along with economic activity. Underlying operating profit rose to £332.8m in the six months to the end of September from £318.5m a year earlier as revenue increased 4% to £932.3m. The interim dividend rose to 14.50p from 14.41p.

Intertek said it was on track for solid annual growth as the product testing company reported revenue up 6.7% in the most recent four-month period. Excluding currency movements, revenue rose to £961.5m from £941m in the four months to the end of October, helped by acquisitions.

Animal genetics company Genus said on Wednesday that based on current trading, especially in China, pre-tax profit for 2022 is set to be "moderately lower" than its previous expectations. In an update for the period from 1 July to 23 November, genus said trading in both its bovine and porcine businesses made continued progress and it met profit expectations, except in its PIC operations in China, which continue to face challenging market conditions.

Anglo American said on Tuesday that the value of rough diamond sales at its De Beers unit fell in the ninth cycle of the year. The value declined to $430m from $492m in the eighth cycle, and from $462m in the ninth cycle of 2020.

UK newspaper publisher Reach on Tuesday said trading was ahead of expectations, driven by a rise in customer registrations for its websites. The company, which owns the Daily Mirror newspaper and other titles reported a rise in revenues between June 28 and November 21. Digital sales rose 17.2%, offsetting a 3.5% decline in print for an overall rise of 1.2%.

Industrial thread maker Coats reported a rise in organic revenue as demand recovered from the Covid pandemic and new business wins lifted performance. The company on Tuesday said revenue for four months to October 31 grew 22% year-on-year, and up 6% from the pre-pandemic period in 2019.

IT infrastructure technology and services company Softcat reported first-quarter profit and revenue growth driven by high demand. In a short trading statement, the company said it had continued to perform well during the three months to October 31, with "good growth from both mid-market and enterprise corporate customers as well as the public sector".

Pets at Home backed its full-year profit guidance on Tuesday as it posted a jump in interim profit and revenue, highlighting a rise in pet ownership. In the 28 weeks to 7 October, total group revenue was up 18% to £677.6m, with underlying pre-tax profit 77.2% higher at £70.2m. On a like-for-like basis, revenue grew 22.2%.

Diploma reported a jump in full-year pre-tax profit on Monday amid improved demand, as it backed its outlook for FY22. In the year ended 30 September, adjusted pre-tax profit rose 68% to £141.9m, while underlying revenue grew 12% and reported revenues were up 46% on the year to £787.4m. Diploma said this includes a "very pleasing" contribution from acquisitions, particularly Windy City Wire.

Australia's BHP Group and Woodside Petroleum have signed their AUD$40bn petroleum merger deal, which will see Woodside acquire BHP's petroleum assets in return for a 48% in the combined company. Woodside will pay close to $20bn for the assets, and issue scrip to BHP which will be passed on to its own shareholders. The merger ratio is 52% of the combined group for Woodside and 48% for BHP's shareholders.

Residential landlord Grainger announced two key appointments within its investment team on Monday, with Eliza Pattinson promoted to director of investments - asset management, and Steven Clark appointed as director of investments - acquisitions. The FTSE 250 company said Pattinson, already a senior leader within the business, first joined Grainger in 2000 as sales and acquisitions manager within the investment team.

Casino operator Rank Group said on Monday that it will get a £77.5m refund after reaching an agreement with HMRC on its claim for a refund of VAT paid on slot machine income between April 2006 and January 2013. The refund should be received "shortly," it said, adding that interest is also due on the claim. This is expected to be around £5.5m and both amounts will be subject to corporation tax at 19%.

Economic news

Authorities in the UK and many other European countries moved quickly to cut travel links with South Africa and several other countries in southern Africa following the detection of a new variant of Covid-19 with a large number of mutations on the so-called 'spike' protein. The fear was that the large number of mutations might make the virus more transmissible and allow it to better evade vaccines.

The Competition and Markets Authority announced on Friday that it had secured "improved commitments" from Alphabet subsidiary Google on its proposals to remove third-party cookies and other functions from its Chrome browser software. It had been investigating Google's proposals since the start of the year in response to concerns that Google's plans could impede competition in digital advertising markets.

UK car manufacturing fell 41.4% year-on-year in October, with just 64,729 vehicles rolling off production lines, making it the industry's worst October since 1956. According to the Society of Motor Manufacturers and Traders, the main cause for the weak level of production was the ongoing global semiconductor shortage, which was also compounded by the closure of Honda's Swindon factory towards the end of July.

The Information Commissioner's Office set out clear data protection standards on Thursday that firms must meet in order to safeguard people's privacy online when developing new advertising technologies. The privacy standards published in a Commissioner's Opinion were designed to serve as a warning to companies designing new methods of online advertising, with the firms now required to comply with data protection laws and stop their "excessive collection" and usage of people's data.

UK retail sales were at their strongest level for this time of year in November, according to the latest survey from the Confederation of British Industry. The CBI's monthly retail sales balance rose to a three-month high of +39 from +30 in October and is expected to pick up again in December. Analysts had been expecting a balance of +33.

UK factory orders surged in November, leaving manufacturers struggling to keep up, according to the latest survey from the Confederation of British Industry. The monthly order book balance rose to +26% from 9% in October, marking the highest reading since the series began in April 1977 and coming in above expectations of +8%.

The number of homes sold in the UK tumbled by more than half last month, official data showed on Tuesday. According to HM Revenues & Customs, the provisional seasonally-adjusted estimate of UK residential transactions in October was 76,930. That was a 28.2% fall on October 2020 and a 52% drop on September, when the stamp duty holiday finally ended.

Consumer demand jumped alongside surging input costs in November, a closely-watched survey showed on Tuesday, fuelling expectations that the Bank of England could put rates up next month. The flash IHS Markit CIPS UK composite output index was 57.7 in November, marginally down on October's 57.8 but otherwise above the third-quarter average of 56.3. It also beat consensus for 57.5.

Footfall across UK retail destinations increased week-on-week in the seven days ended 20 November as the Christmas trading period began in earnest. According to retail experts Springboard, footfall in UK retail destinations rose 4.1% last week, with increases being seen on six out of seven days, a marked improvement when measured against the previous week's 1.5% improvement.

International events

The European Commission is planning to activate emergency powers to ban air travel from Southern Africa in response to the new Covid variant, EC President Ursula Von der Leyen said on Friday. Known as B.1.1.529 and expected to be renamed 'Nu', the variant has been detected in South Africa, Hong Kong, Israel and Botswana.

Germany's economy grew a tad less quickly than expected in the third quarter and economists believed that a notable slowdown was on the cards for the final three months of 2021. Revised figures from the Federal Office of Statistics showed that gross domestic product in the euro area's largest economy expanded at a quarter-on-quarter pace of 1.7%.

America's economy expanded at a slightly quicker pace than previously estimated during the third quarter. According to the Department of Commerce, in seasonally adjusted terms, US gross domestic product grew at a quarterly annualised clip of 2.1% over the three months ending in September.

Consumer confidence in the US edged past forecasts last month but Americans were the least upbeat about their personal finances and the overall economy than at any other time over the preceding decade. The University of Michigan's consumer confidence index fell from an October reading of 77.1 to 67.4, although that was better than a preliminary reading of 66.8.

Americans continued splashing out briskly last month with price gains continuing to accelerate alongside. According to the Department of Commerce, personal incomes increased by 0.5% month-on-month, beating economists' forecasts for a rise of 0.3%.

America's shortfall on trade with the rest of the world dropped sharply last month amid a jump in exports. According to the Department of Commerce, in seasonally adjusted terms, the US foreign trade deficit shrank at a month-on-month pace of 14.6% to reach $82.9bn.

Orders for goods made to last more than three year undershot forecasts last month amid a decline in orders for airplanes, both civilian and military. However, the underlying figures were strong.

Initial jobless claims dive-bombed in the week ended 20 November, according to the Labor Department, hitting a level not seen in more than half a century. First-time claims for unemployment totalled 199,000 last week, a drop of 71,000 from the prior week to a seasonally adjusted print of 199,000, a number not seen since November 1969 and well and truly below median estimates for a reading of 260,000 applications.

US mortgage applications grew 1.8% in the week ended 19 November, following a 2.8% fall in the previous week. According to the Mortgage Bankers Association, its purchase index jumped 4.7% week-on-week and its refinancing one edged up 0.4% despite the average fixed 30-year mortgage rate increasing four basis points to 3.24%.

German business sentiment deteriorated in November amid supply bottlenecks and rising Covid cases, according to a survey released on Wednesday by the Ifo Institute. The business climate index fell to 96.5 from 97.7 in October, coming in just a touch below expectations for a reading of 96.6.

The Biden administration was preparing to release 50 million barrels of crude oil, it announced on Tuesday, in a first-time coordinated effort between countries to push gasoline prices lower. It came after repeated announcements from the White House that it was considering its entire range of available tools to combat petrol prices that recently reached seven-year highs in the United States.


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