Level 2

Weekly review

By Josh White

Date: Friday 26 May 2023

(Sharecast News) - The FTSE 100 ended the week down 129.67 points, or 1.67%, closing at 7,627.2 on Friday.
Equity view

AstraZeneca said results from a Phase III trial showed its Imfinzi treatment in combination with chemotherapy showed a significant improvement in patients with endometrial cancer. The pharmaceutical company said the drug, followed by either Imfinzi plus its Lynparza drug or Imfinzi alone as maintenance therapy showed a "statistically significant and clinically meaningful" improvement in progression-free survival compared to chemotherapy alone in patients with newly diagnosed advanced or recurrent endometrial cancer.

UK Commercial Property REIT said it had sold its Wembley180 logistics asset in London to Covent Garden IP for £74m. The deal reflects a net initial yield of 3.49% and is broadly in line with the company's March 2023 valuation.

Kin and Carta slumped on Friday as it cut revenue guidance after new business growth slowed. The digital transformation company said in a statement that following its interim results in March, a number of external factors have combined to reduce its expectations for the year.

Fast fashion retailer Asos has raised £75m from shareholders, it confirmed on Friday, as it looks to shore up its finances. The placing, announced late on Thursday, will support plans by management to return the struggling business - which also owns the TopShop and Miss Selfridge brands - to sustainable profitability and cash generation in the second half.

Johnson Matthey reported a fall in annual profit on Thursday as lower average precious metal prices and higher costs hit the bottom line. The specialist technology group said underlying operating profit came in at £465m the year to end-March, down 21% from a year earlier, but higher than the £455.1m forecast in company-compiled estimates. Revenue fell 7% to £15bn.

Office space provider Workspace said on Thursday that it swung to a full-year loss due to a drop in its property valuation. In the year to the end of March, the company swung to a pre-tax loss of £37.5m from a profit of £124m a year earlier as its property valuation declined 3.2% to £2.7bn.

Infrastructure company Hill & Smith said on Thursday that full-year operating profit was set to be "modestly ahead" of the top end of analyst expectations following a strong start to the year. Consensus expectations are for FY23 underlying operating profit of £107m, with a range of between £105.2m and £110.2m.

Cineworld said on Thursday that it expects to exit Chapter 11 bankruptcy in July. The beleaguered cinema chain also said that its proposed restructuring now has the support of lenders holding around 99% of legacy facilities.

Asset manager Petershill maintained annual guidance as its aggregate partner-firm assets under management rose 2% in the first quarter to $290bn, and 9% year-over-year. Aggregate Fee-paying Partner-firm AuM was $195bn, increasing 1% during the quarter and 6% year-over-year.

Testing company Intertek held annual guidance as revenues rose 11% in the first four months of the year. Group revenue hit £1.059bn in the period to April 30. On a like-for-like basis sales were up 6.5% on a constant currency basis, with products up 5.5%, trade 5.2% and resources 12.5%.

B&Q owner Kingfisher posted a decline in first-quarter sales, hit by poor weather in the UK and France, but backed its guidance for the year as it hailed an improvement in recent trading. Sales came in at £3.3bn, up 0.8% on a reported basis but down 2% at constant currency and 3.3% lower on a like-for-like basis.

Gambling software maker Playtech upgraded its full-year core profit expectations on Wednesday following continued strong trading, but cautioned that current growth rates are set to moderate somewhat later in the year. In an update for the period from 1 January to the end of April, the company said its performance has been driven by Snaitech and Caliente and has been "consistent with the structural growth drivers within the industry".

Hilton Food said trading has been in line with board's expectations, with sales ahead of the prior year. In a trading update for the year to date, the company said the performance reflected continued increases in raw materials prices and the positive effect of a full year of ownership of Foppen following its acquisition in March 2022.

Upper Crust and Ritazza owner SSP said on Tuesday that FY 2023 sales and core profit are set to be at the upper end of its expectations, as it hailed a strong first half performance, particularly in North America. The company had guided to sales of £2.9bn to £3bn and earnings before interest, tax, depreciation and amortisation of £250m to £280m.

US health regulators have approved Indivior's Opvee nasal spray treatment for opioid addiction, the company said on Tuesday. The drug will help combat overdoses caused by fentanyl and other opioids driving America's drug crisis. Opvee works by blocking the effects of opioids in the brain, which can restore breathing and blood pressure in people who have recently overdosed.

House builder Barratt Developments said it had asked chairman John Allan to step down from his role as chairman earlier than planned, to stop allegations of impropriety towards women becoming a distraction to the company. Allan will step down as chair and as a director of the Company at the end of June instead of September as originally planned. He will be replaced by non-executive director Caroline Silver.

The chief financial officer of Wise on Monday said he planned to leave the fintech just days after its chief executive announced he would be taking a leave of absence. CFO Matthew Briers said he will quit the board by March 2024 in order to aid his recovery from a serious accident last year. A search for his replacement has begun.

Software firm Kainos reported a jump in full-year profit and revenue on Monday amid "robust" underlying demand. In the year to the end of March, adjusted pre-tax profit rose 15% to £67.6m, on revenue of £374.8m, up 24% on the previous year, as Kainos pointed to "strong" demand.

The UK government has cut its stake in NatWest Group to 38.6% via a £1.26bn off-market buyback deal. NatWest will buy 469,200,081 shares at 268.4 pence each, the closing price on May 19. The government previously held 41.4% in the bank.

William Hill owner 888 Holdings said on Monday that it has agreed to sell its Latvian business for up to €28.3m (£24.6m) as it looks to focus on core and growth markets. The Latvian business operates with a local licence, using the William Hill and Mr Green brands. The group will provide a brand licence to continue the usage of these brands within Latvia for a limited period.

Economic news

UK retail sales rose more than expected in April as shoppers returned to the high street, according to figures released on Friday by the Office for National Statistics. Retail sales increased by 0.5% following a 1.2% decline in March. This was ahead of analysts' expectations of 0.3% growth.

UK car production rose 9.9% in April, with 66,527 new models being built in the month, according to industry figures published on Thursday. According to figures revealed today by the Society of Motor Manufacturers and Traders (SMMT), 82.4% of cars built in the UK in April were made for export. A total of 54,820 cars manufactured were produced for overseas markets, up 14.7% year on year.

UK retail sales dipped in the year to May following an increase in April, but retailers expect sales volumes to stabilise next month, according to the latest survey from the Confederation of British Industry. The CBI reported sales balance fell to -10 in May from +5 the month before, coming in below consensus expectations of +10.

Britain's energy regulator has cut its price cap after a fall in wholesale prices, although it admitted that hard-pressed families were likely to see little benefit. Ofgem said the current cap would fall from July 1 to £2,074 from £3,280 per year for the average household in England, Wales and Scotland.

Manufacturers' expectations for selling price inflation fell to their lowest level in more than two years in May, according to the latest survey from the scandal-hit Confederation of British Industry. The index of manufacturers' average selling price expectations declined to +21 from +23 in April, hitting the lowest level since March 2021. Still, expectations remained well above the long-run average of +6.

Five global banks have been provisionally found to have broken UK competition law, it was announced on Wednesday, by allegedly sharing competitively sensitive bond market information. The Competition and Markets Authority (CMA) alleged Citi, Deutsche Bank, HSBC, Morgan Stanley and the Royal Bank of Canada engaged in one-to-one conversations in chat rooms, resulting in the exchange of sensitive details related to the buying and selling of UK government bonds.

UK house prices fell for the fourth month in a row in March, according to data released on Wednesday by the Office for National Statistics. House prices declined by 1.2% on the month following a 0.1% drop in February.

UK inflation fell in April - albeit less than expected - but food prices remained near record highs, according to figures released on Wednesday by the Office for National Statistics. Consumer price inflation declined to 8.7% from 10.1% in March, versus expectations for a fall to 8.2%. Nevertheless, it was the first time consumer price inflation came in below 10% since August last year, as energy prices eased off their highs. Inflation is now at its lowest level since March 2022.

The International Monetary Fund said on Tuesday that it no longer expects the UK to fall into recession this year. Publishing its latest update on the UK, the IMF said the economy had been "buoyed by resilient demand in the context of declining energy prices". It also noted that the financial system had weathered recent stresses in the global banking sector, prompted by the collapse earlier this year of Silicon Valley Bank.

UK private sector growth slowed in May, according to a survey released on Tuesday. The flash S&P Global/CIPS composite purchasing managers' index - which measures activity in the manufacturing and services sectors - fell to 53.9 in May from 54.9 in April, falling short of expectations for a reading of 54.7.

International events

Americans resumed splashing out last month, pushing the savings rate lower. According to the Department of Commerce, personal incomes increased at a month-on-month pace of 0.4% in April (consensus: 0.4%).

The US economy grew faster in the first quarter than initially estimated, according to figures released on Thursday by the Commerce Department. Gross domestic product in the first three months of the year rose at an annualised rate of 1.3%, up from an initial estimate of 1.1% growth. In the final quarter of 2022, GDP growth was 2.6%.

The German economy entered a technical recession in the first quarter of this year, as households tightened spending, according to official data released on Thursday. GDP was revised downwards to -0.3% for the first three months of the year from an initial reading of zero.

German business sentiment deteriorated in May, according to a survey released on Wednesday by the Ifo Institute. The business climate index fell to 91.7 from 93.4 in April, coming in below consensus expectations for a reading of 93.0.

Sales of newly built homes in the US increased by more than expected last month, even if from a lower than anticipated base. According to the Department of Commerce, in seasonally adjusted terms, new home sales grew by 4.1% month-on-month to reach an annual rate of 683,000.

Eurozone business activity slowed more than expected in May as services slipped slightly and the manufacturing sector slowdown continued, according to initial survey results released on Tuesday. The S&P Global flash Composite Purchasing Managers' Index (PMI) for the single currency bloc fell to 53.3 in May from April's 54.1 and against estimates for a reading of 53.5. A mark of 50 separates growth from contraction.

A top US central bank official made the case for two more 25 basis point interest rate hikes in 2023. St.Louis Fed president, James Bullard also recommended doing so "sooner rather than later", even as he conceded the timing was uncertain.

Construction output in the euro area fell by 2.4% month-on-month in March, compared with a revised 1.7% increase in February, according to official data released by the European Union on Monday. Output fell by 2.4% and 2.3% in building activity and civil engineering, respectively," it added.

China kept its benchmark lending rates unchanged for the ninth month in a row on Monday, in line with forecasts. The one-year loan prime rate (LPR) was kept at 3.65% and its five-year LPR was unchanged at 4.30%. Commercial one and five-year loan prime rates were held in line with the central bank decision.

Reporting by staff and contributors for Sharecast.com.


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