Weekly review
By Josh White
Date: Thursday 28 Mar 2024
(Sharecast News) - The FTSE 100 ended the Good Friday-truncated week up 70.07 points, or 0.89%, closing at 7,952.62 on Thursday.
Equity view
Keysight Technologies has reached a deal to buy Spirent Communications for £1.16bn, outbidding US peer Viavi Solutions which had already agreed to take over the UK telecoms group earlier this month. Spirent said on Thursday it is now recommending a 201.5p-per-share offer from Keysight, which represents a "superior proposition" for shareholders at a 26.5p or 15% premium to Viavi's offer on 5 March.
Britain's Competition and Markets Authority on Thursday said it would not open an in-depth investigation into Aviva's £460m acquisition of AIG Life UK. "The CMA has decided, on the information currently available to it, not to refer the above merger to a phase 2 investigation under the provisions of the Enterprise Act 2002," the regulator said in a statement.
Gambling group 888 has announced it is selling its B2C operations in the US to online sports betting and interactive gaming company Hard Rock Digital after a strategic review of the business. The sale of the struggling unit is expected to boost adjusted EBITDA by £25m each year from 2025 onwards, £10m of which will be reinvested into "growth and value-creation initiatives".
Capricorn Energy announced plans for a proposed $50m special dividend alongside its full-year results on Thursday. The company reported revenue of $201m for 2023, driven by an average oil price of $81.2 per barrel and a gas price of $2.9 per million standard cubic feet, while production costs amounted to $60m.
Infrastructure investment group 3i Infrastructure said trading towards the end of its financial year has been in line with expectations with its portfolio performing well and delivering strong earnings growth. The company said it remains on track to deliver its dividend target of 11.9p per share for the year ending 31 March, up 6.7% on the year before.
Diploma said it had bought Peerless Aerospace Fastener, a distributor of specialty fasteners into the US and European aerospace markets for £236m. Based in Farmingdale, New York and founded in 1952, Peerless is an approved supplier to all major aerospace companies globally, primarily serving around 80 sub-contractors to the major equipment manufacturers.
Peel Hunt said on Wednesday that BC Omega Holdco sold 50m ordinary shares in TI Fluid Systems in a placing. BC Omega Holdco is an entity indirectly controlled by investment funds advised by Bain Capital, LP or its affiliates. The shares were sold by way of any accelerated bookbuild to institutional investors at 135p each, raising gross proceeds of around £67.5m. The price is a 20.2% discount to Tuesday's closing price.
CMC Markets said on Wednesday that FY 2024 net operating income was set to exceed the top end of the previously-guided range of £290m to £310m as positive momentum continued into the fourth quarter after a strong performance in Q3. In a trading update for the year to the end of March 2024, it said: "We continue to see strength in the institutional and B2B business as the group benefits from the long-term investments in this area.
Gambling software firm Playtech said on Wednesday that it was on track to meet its medium-targets after it performed ahead of expectations in FY2023. In results for the year to the end of December 2023, the company said adjusted earnings before interest, tax, depreciation and amortisation jumped 9% to €432.3m - ahead of previously-raised expectations - on revenue of €1.7bn, up 7% on the previous year.
Revolution Beauty lifted its full-year outlook on Wednesday after continued strong trading. In an update for the year to 29 February 2024, the company said it had continued to deliver "a strong operational performance" and year-on-year improvement in profitability since its capital markets event and trading update on 8 February.
Affordable housing group Vistry has signed two new partnership agreements that will see it build 1,900 new homes in East Anglia and the South of England. The first deal, with registered housing provider Abri, will be a 50:50 joint venture in Arundel of which half of the 1,500 homes to be built will be presold for affordable housing.
UK engineering group Smiths named a new chief executive and launched a £100m share buyback as it reaffirmed annual guidance after a rise in half-year earnings. The company which covers the industrial, energy and aerospace sectors said insider Roland Carter would take over as CEO , succeeding Paul Keel who will step down with immediate effect.
Pets at Home backed its full-year profit guidance on Tuesday as fourth-quarter trends have been as expected. In a pre-close update for the year to 28 March, the company said trends in the fourth quarter have been broadly as expected across the retail and vets businesses, with group underlying pre-tax profit set to be in line with previous guidance of £132m.
Ocado Group reported strong trading at its Ocado Retail venture in the first quarter on Tuesday, with an 8.1% year-on-year increase in total item volumes propelling retail revenue to £645.3m, itself up 10.6%. The FTSE 100 company said the operation - a joint venture with Marks and Spencer - saw its online market share, as measured by Nielsen, climb to 13.5% by the end of February, representing a 0.7% increase over the previous year.
Interim profits at UK housebuilder Bellway dropped by more than a half on the back of a slump in housing completions and a deterioration in margins, but the company pointed to an improving economic outlook as mortgage rates continue to fall back. The company slashed its dividend for its first half to just 16p per share, down from 45p at the half-year stage a year earlier, but in line with its target of underlying dividend cover of 2.5 times for the full financial year.
AstraZeneca has announced that its autoimmune disease treatment Ultomiris has been given the green light by US regulators. The drug, which is already approved for certain patients in Japan and the EU, is to be used for the treatment of adult patients with anti-aquaporin-4 (AQP4), antibody-positive neuromyelitis optica spectrum disorder (NMOSD) - a disease that affects the central nervous system including the spine and optic nerves.
Water group Pennon said it expects to report full-year results in line with expectations as it makes record levels of investment in the current pricing cycle, though challenging weather conditions have impacted its waste-water operational performance. In a pre-closing trading update, the company said it expects to record £850m of capital expenditure through to 2025 in the K7 cycle, which covers 2020-25, and is set to deliver on its ambitious business plan for K8 (2025-30).
Direct Line said on Monday that it was confident in its standalone prospects after Belgium's Ageas announced it would not be making an offer for the insurer following two failed attempts at engaging with the board. "As communicated at Direct Line Group's 2023 preliminary results on 21 March 2024, the board believes under Adam Winslow's leadership the company is well-positioned to drive material improvement in performance that is expected to unlock significant value for Direct Line Group shareholders," the London-listed insurer said.
Virgin Wines said on Monday that it was confident of meeting its full-year 2024 profit expectations following a "positive" first-half performance. In the six months to 29 December 2023, pre-tax profit came in at £1.1m, up from £90,000 a year earlier, with revenue 2% higher at £34.3m.
Octopus Renewables Infrastructure Trust (ORIT), the clean energy investment fund of Octopus Energy Group, reported a small drop in net asset value in 2023, but still upped its payouts to shareholders after what it deemed a "resilient" performance. The company, which holds renewable energy assets in Europe and Australia, said NAV fell to £599m by the end of last year, down from £618m in 2022, driven primarily by falling power price and inflation forecasts, along with increases applied to discount rates. NAV per share slipped to 106.04p from 109.44p.
Economic news
Struggling UK utility Thames Water faced a funding crisis on Thursday as shareholders pulled a £500m bailout after regulators refused its demands to hit customers with massive price hikes, greater leniency for polluting waterways and pay out higher dividends, while its parent company also admitted it couldn't pay back a £190m loan. The largely foreign group of investors were due to hand over the first tranche of a £750m cash injection at the end of March, but said they now regarded the company as "uninvestible" and tried to shift blame onto regulator Ofwat for rejecting Thames Water's latest business plan to fix its leak-ridden network of pipes.
The UK economy fell into recession in the second half of last year, according to final figures released on Thursday by the Office for National Statistics. The data showed that GDP contracted by 0.3% in the last three months of the year, unrevised from an earlier estimate. This followed a 0.1% contraction between July and September.
Almost a quarter of UK households are struggling financially despite a 4.5% fall in grocery price inflation, according to survey data published on Tuesday. The fall in price inflation for the four weeks to March 17 compared with 5.3% in the prior four-week period, said industry market research firm Kantar.
Bank of England policy maker Catherine Mann said on Tuesday that financial markets are pricing in too many interest rate cuts this year and that it's unlikely the UK will move before the Federal Reserve. Markets are currently expecting three quarter-point rate cuts this year, starting in August. "They're pricing in too many cuts - that would be my personal view - and so in some sense, I don't have to cut because the market already is," Mann said in an interview with Bloomberg TV.
UK retail sales rose slightly in the year to March, according to a survey released on Monday. The Confederation of British Industry's retail sales balance increased to +2 from -7 in February following 10 consecutive months of decline. However, the survey also found retailers expect sales to fall again next month.
Ofgem announced a consultation to refine the energy price cap on Monday, to ensure ongoing customer protection amidst the evolving energy market landscape. The energy regulator said the price cap, coupled with the temporary ban on acquisition-only tariffs, had been effective in shielding customers from the adverse effects of the 'loyalty penalty' and volatile market conditions stemming from recent energy crises.
International events
Revisions to fourth-quarter GDP figures showed that the US economy grew at a faster-than-expected rate at the end of 2023, according to data out on Thursday from the Bureau of Economic Analysis. US GDP expanded at a 3.4% annual rate in the fourth quarter, following the 4.9% year-on-year growth seen in the third quarter.
Consumer confidence in the US improved slightly in March amid lessened concern about inflation, the results of a closely-followed survey revealed. The University of Michigan's consumer confidence index rose from 76.9 in February to 79.4 for March (Preliminary: 76.5).
The US jobs market remained tight during the preceding week. According to the Department of Labor, in seasonally adjusted terms the number of first-time unemployment claims dipped by 2,000 over the week ending on 23 March to reach 210,000. Economists polled by Dow Jones Newswires had forecasts 211,000.
German retail sales unexpectedly fell in February, according to official data published on Thursday, showing that consumer spending was unable to drive economic recovery. Retail sales were down 1.9% compared with the previous month and the fourth consecutive decline.
The Japanese yen plunged to its weakest level against the US dollar in about 34 years on Wednesday. It saw the yen breach its previous record low of JPY 151.95, which was set in October 2022.
Trade at the vital US port of Baltimore has come to a standstill after a container cargo ship hit and collapsed a large section of the Francis Scott Key Bridge. The port is the biggest port facility for specialised cargo - roll-on/roll-off ships - and passenger facilities. It has seen growth in large container ships such as the 289-metre-long Dali carrying goods for the shipping giant Maersk that hit a pillar of the bridge around on Tuesday morning.
Consumer confidence in the US held broadly steady in March, as improving perceptions about the current economic climate were offset by rising anxiety about future conditions. The closely followed Conference Board Consumer Confidence Index came in at 104.7 this month, more or less unchanged from a downwardly revised 104.8 in February. This was below the consensus forecast of 107.
House-price growth in major US cities picked up slightly in January, accelerating to its fastest pace in 14 months, according to S&P/Case-Shiller data released on Tuesday. The 20-City Composite index, which measures residential real estate prices in 20 major metropolitan areas across the country, showed prices were up 6.6% on January 2023, picking up from the 6.2% annual growth seen in December.
Orders for goods made to last more than three years increased by a bit more than expected last month. According to the US Department of Commerce, in seasonally adjusted terms, durable goods orders rose by 1.4% in comparison to the prior month to reach $277.9bn. Economists had pencilled-in a rise of 1.0% month-on-month.
German consumer sentiment remains sluggish, but continues to make slow progress towards recovery, a survey showed on Tuesday. The joint GfK and the Nuremberg Institute for Market Decisions (NIM) consumer sentiment index rose slightly looking ahead to April, to -27.4 from a revised -28.8 in March.
Reporting by Sharecast.com staff and contributors.
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