Weekly review
By Josh White
Date: Friday 22 Mar 2024
(Sharecast News) - The FTSE 100 ended the week up 203.5 points, or 2.63% closing at 7,930.92 on Friday.
Equity view
Vodafone and Three UK have been told to find ways to assuage Britain's competition regulator that their planned $19bn merger would not leave consumers worse off or face a full investigation. The Competition and Markets Authority (CMA) gave the duo five working days to provide "meaningful" solutions to concerns that the merger of the two UK operations would lead to higher prices for customers and lower investment.
Jefferies said on Friday that KKR Dark Aggregator sold 19.4m shares in cybersecurity firm Darktrace in a placing. KKR Dark Aggregator is a technology growth fund advised by US private equity firm KKR.
Intercede said on Friday that its full-year performance was set to be ahead of market expectations following an order for a new licence test environment and further "strong" trading. Current market expectations for the year ending 31 March 2024 are for revenue of £19.2m and adjusted EBITDA of £5.6m.
Shares in James Fisher and Sons surged on Friday after the marine, oil and gas services group announced the sale of its RMSpumptools division to US oilfield tech firm ChampionX for £90m. The company said the disposal is in line with its strategy to simplify and focus its portfolio by selling non-core assets.
Savings and investments firm M&G beat analysts' forecasts with its 2023 results, with net client flows, adjusted profits and operating capital generation all up materially on the previous year. Adjusted operating profit before tax totalled £797m, up from £625m in 2022, which the firm put down to a resilient performance in Asset Management, and improved contributions from Life, Wealth and Corporate Centre. This was well ahead of the consensus forecast of £750m, according to UBS.
Gold miner Centamin said its outlook for 2024 remained unchanged as it delivered annual production in line with guidance despite local inflationary cost pressures. The company on Thursday said gold production rose 2% to 450,058 ounces and said its all-in sustaining costs of $1,205 per ounce sold were a guidance-beating 14% improvement on 2022.
Warhammer maker Games Workshop said trading in the three months to the end of February 2024 had been in line with expectations. In a brief trading update ahead of its capital markets day, the company added that it had declared a dividend of £1.05 a share taking dividends declared so far in 2023/24 to £4.20 per share, up from £4.15 per share last year.
Ascential saw shares rise on Thursday after the events, intelligence and advisory company announced a capital return of £850m to shareholders after beating analysts' forecasts with its 2023 results. The capital return, which will be delivered through a combination of tender offer, special dividend and on-market buyback programmes, comes shortly after the £1.2bn disposal of Digital Commerce and WGSN which completed since the year-end.
Johnson Matthey is selling its medical device components business to Montagu Private Equity for $700m (£550m), the company said on Wednesday. The business makes parts for medical device manufacturers globally with a focus on precious metal alloys and nitinol. It operates manufacturing sites in the US, Mexico, and Australia.
Fintech and consultancy group Alpha Group International reported double-digit growth across the board for 2023 and said that 2024 has started well, but sounded a note of caution about how the year will play out as monetary policy begins to ease. Higher interest rates have generated significant net treasury income for the company - coming in at £73m for 2023, up from £9.3m the year before - but have also worked to suppress underlying trading activity.
Vitruvian Partners has sold 15.5m Trustpilot shares in a placing at 200p each. Berenberg, which conducted the accelerated bookbuild, said on Wednesday that the size of the placing was increased from the 12.5m originally proposed due to "strong investor demand".
Bakery chain Greggs was facing disruptions in its operations on Wednesday morning, due to an IT issue impacting card payments. The BBC reported that a number of the FTSE 250 company's stores had been forced to close or to accept cash only.
Diageo has announced that non-executive director and former Cabinet Office official Sir John Manzoni will step in as its new chair when Javier Ferrán retires from the head of the board next year. Manzoni joined Diageo four years ago, after working as the chief executive of the UK Civil Service and permanent secretary for the Cabinet Office until 2020, but holds more than 30 years' experience in the private sector, having served on the boards for SSE, KBR, SAB Miller and BP. He was also president and chief executive of Canadian oil firm Talisman Energy.
DIY and trade home-improvement retailer Wickes beat market forecasts despite a drop in its annual profits, but warned that trading since the start of the year continues to be challenging. The company left its full-year dividend at 10.9p per share after a 7.3p final payment, in line with 2022, and said it expects to maintain its payout again for 2024.
DFS cut its FY24 profit and revenue guidance on Tuesday as it said market demand has weakened "significantly" over the last two months following a solid start to January. The furniture retailer said market order volumes are down around 16% year-on-year across January and February. As a result, it now expects revenue of between £1bn and £1.02bn for the year, while pre-tax profit is expected to be between £20m and £25m. This represents a £60m to £65m reduction in revenue and a £10m reduction in pre-tax profit.
Crest Nicholson said on Tuesday that it has become aware of build defects on four sites that were completed prior to 2019 that could cost it up to £15m to fix. In an update on trading for the period from 1 November 2023 to 15 March 2024, the housebuilder said remediation on the four sites will take place over the next three years.
Marshalls downgraded its profit and revenue outlook for 2024 on Monday and posted a slump in full-year profits and revenue as the landscape products manufacturer was hit by "challenging end markets". In the year to the end of December 2023, adjusted pre-tax profit fell 41% to £53.3m on revenue of £671.2m, down 7% on the previous year.
Consumer healthcare company Haleon said Monday that Pfizer plans to sell around 630m shares in the company in a public offering. The sale will reduce Pfizer's stake from 32% to approximately 24%. Haleon - which was spun off from GSK - said the offer price per share will be determined via a book building process and is expected to be announced on or about 19 March, following completion.
British Land said Monday it has sold half its stake in London office 1 Triton Square - the former HQ of Facebook owner Meta - to Royal London Asset Management. A new 50:50 joint venture will be formed "to accelerate the delivery of 1 Triton Square into a best in class science and innovation building at Regent's Place," British Land said. The agreement values the property at £385m.
UK defence contractor Chemring said it had received €66.7m (£57m) from the European Union as part of a €513m funding round to enhance ammunition production capacity. The EU aims to increase the bloc's annual output of shells to two million by 2025 to help counter a shortage in Ukraine as it continues to fight invading Russian forces.
Economic news
British manufacturers expect conditions to pick up in the coming months, a closely-watched survey showed on Friday, despite reporting another slide in output volumes. According to the latest CBI Industrial Trends Survey, output volumes fell in the first quarter, with a weighted balance of -18. That was little changed on the previous three months to February, at -19.
Expectations of interest rate cuts this year are "not unreasonable", the governor of the Bank of England has said. On Thursday the BoE kept the cost of borrowing unchanged at a 16-year high of 5.25%, as widely expected.
UK retail sales were flat in February as wet weather dented spending in stores, according to figures released on Friday by the Office for National Statistics. Sales were steady following 3.6% growth the month before. This was ahead of expectations for a 0.4% decline.
UK consumer confidence stalled in March, a long-running survey showed on Friday. The latest GfK consumer confidence index was -21, unchanged on February, when it fell two points. It is, however, an improvement on March 2023, when the index was -36.
The Bank of England left interest rates on hold Thursday, as widely expected. The rate-setting Monetary Policy Committee voted eight-to-one to leave the cost of borrowing unchanged at 5.25%, a 16-year high.
UK service sector output continued to grow in March, albeit at a slower pace, according to a survey released on Thursday, suggesting the economy has likely moved out of recession. The S&P Global flash UK composite purchasing managers' index - which measures activity in both the services and manufacturing sector - nudged down to 52.9 from 53.0 in February, but remained above the 50.0 mark that separates contraction from expansion.
Public-sector borrowing in the UK dropped significantly in February and was down year-on-year for the fourth straight month, according to figures released on Thursday by the Office for National Statistics. Net borrowing excluding public-sector banks totalled £8.4bn last month, £3.4bn less than in February 2023 and around half of that in February 2021 during the Covid pandemic.
London Underground drivers belonging to the Aslef union will walk out in April and May, it was announced on Wednesday. The decision came on the heels of a resounding mandate from members of the union, with 98% voting in favour of industrial action.
UK house prices dipped only marginally in January, official data showed on Wednesday, providing more hope that the market was stabilising. According to the latest provisional UK house price index from the HM Land Registry, average UK house price inflation was -0.6% in the year to January. Although still in negative territory, it was a marked improvement on December's revised 2.2% fall.
UK inflation eased a little more than expected in February, according to figures released Wednesday by the Office for National Statistics, fuelling expectations of a rate this summer. The consumer price index declined to 3.4% from 4% in January, versus expectations for a fall to 3.5% and getting a touch closer to the Bank of England's 2% target.
International events
German business sentiment improved in March, according to a survey released Friday by the Ifo Institute. The business climate index rose to 87.8 from 85.7 in February, coming in comfortably above consensus expectations of 86.0.
The Turkish central bank announced Thursday that it was raising its policy rate to 50% from 45% in a surprise move. Annual consumer price inflation in Turkey hit 67.07% in February, exceeding expectations.
Norway's central bank kept its main interest rate unchanged, as expected, but indicated it would only make one cut this year. The benchmark interest rate was unchanged at 4.50%.
The Swiss National Bank surprised markets Thursday after cutting interest rates for the first time in nearly a decade. The central bank reduced its headline rate by 25 basis points to 1.5%, after inflation fell to 1.2% in February, its lowest level for well over two years.
Business activity across the Eurozone showed early signs of stabilising in March, according to closely-watched research published on Thursday. The latest HCOB flash Eurozone composite PMI output index came in at 49.9, a nine-month high and an improvement on February's 49.2.
The U.S. central bank kept interest rates unchanged but nudged its forecasts for economic growth and interest rates in 2025 and 2026 a tad higher. "The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," the Federal Open Market Committee said in its statement.
German producer prices in February fell a further-than-expected 4.1% on an annualised basis, the federal statistics office said on Wednesday. The reading beat the 3.8% decline forecast by economists, driven by falling energy prices. Intermediate goods were also cheaper than in February 2023, while consumer and capital goods were more expensive.
Chinese banks held benchmark lending rates after the country's central bank last week to keep monetary policy unchanged. The one-year loan prime rate (LPR) was held at 3.45%, in line with forecasts. The five-year rate, used to set mortgage pricing, remained at 3.95%, the People's Bank of China (PBOC) said on Wednesday.
Both building permits and housing starts surged across the US in February, according to the Census Bureau, beating forecasts. Building permits rose 1.9% to a seasonally adjusted annualised rate of 1.51m in February, exceeding market forecasts for a reading of 1.49m to hit the highest level seen since August 2023.
German business sentiment improved in March, according to a survey released Tuesday by the ZEW Center for European Economic Research in Mannheim. The headline ZEW investor expectations index rose to 31.7, up 11.8 points from February.
Reporting by Sharecast.com staff and contributors.
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