Weekly review
By Josh White
Date: Friday 05 Jul 2024
(Sharecast News) - The FTSE 100 ended the week up 39.81 points, or 0.49%, closing at 8,203.93 points on Friday.
Equity view
Kingswood has announced the immediate exit of chief executive David Lawrence from the AIM-listed wealth and investment management firm. The company did not give a reason for the resignation but thanked Lawrence for his "outstanding contribution" since joining the firm in 2020.
AIM-listed 1Spatial, the location and geospatial data solutions group, said it expects to hit forecasts this year on the back of new contract wins and a "substantial" sales pipeline. The company said it has secured several new contracts in Europe and the US since the start of the financial year in February, and continues to make progress with its 1Streetworks software, which provides traffic management solutions to the highways market.
Performance nutrition business Science in Sport said on Friday that it has raised approximately £8.0m via a placing of 47.05m ordinary shares. Science in Sport said that the shares were issued at a price of 17.0p each, which represents a discount of approximately 8.1% to the stocks closing price on 3 July.
Oil and gas giant Shell is bracing for a financial impact of up to $2bn (£1.6bn), it revealed on Friday, following its decision to halt construction on a major biofuels plant and sell a refinery in Singapore. The halted project, a biofuels plant in Rotterdam, Netherlands, was expected to produce 820,000 tonnes of biofuels annually, including sustainable aviation fuel and renewable diesel, starting in 2025.
UK precision instrument maker Spectris on Thursday said it was buying US-based SciAps for up to $260m (£205m). The deal consists of an up-front payment of $200m plus a deferred element of up to $60m payable on the delivery of agreed financial metrics.
Healthcare property investor Assura said it delivered on its strategic objectives in its first quarter, with rents stable over the three months to 30 June. The company's portfolio of 612 properties across the UK generated an annualised rent roll of £149.2m, marginally below the £150.6m reported at the end of March.
Battery energy storage systems investment fund Gresham House Energy Storage Fund (GHESF) has announced that it has passed the one-gigawatt hours (GWh) milestone with both its Enderby and West Didsbury projects now trading at increased capacity. The "augmentation" of Enderby (50MW) and West Didsbury (50MW) sites involved upgrading each from a one-hour duration to two hours, adding 100MWh of additional operational capacity.
Barclays said on Thursday that it has agreed to sell its German consumer finance business to Austrian bank Bawag Group. Bawag will buy Consumer Bank Europe for a "small premium" to net assets, payable in cash on completion. The sale is expected to release around €4.bn of risk-weighted assets, increasing Barclays' CET1 ratio by about 10 basis points on completion, which is expected to occur within six to nine months.
Vodafone UK and Virgin Media O2 have agreed to extend and enhance their existing mobile network sharing agreement for more than a decade, forming a new company that will invest £11bn in the project. The agreement is subject to the planned merger of Vodafone and Three. If that deal goes through then Virgin Media O2 will buy spectrum "establishing three scaled mobile network operators each with better alignment of spectrum holding", the companies said in a statement on Wednesday.
Topps Tiles on Wednesday said challenging market conditions had continued into the second half of its fiscal year, leading to a fall in sales. "Market conditions have remained challenging overall, with subdued demand in the domestic repair, maintenance and improvement sector, especially for bigger ticket projects," the company said in a third-quarter trading statement.
Cairn Homes reiterated its full-year outlook on Wednesday, after interim revenues surged on the back of bumper demand. Updating on trading, the Irish housebuilder said market conditions had been "very favourable" during the first half, with "exceptional" demand for its homes. In the six months to 30 June, it sold 894 units, generating revenues of €365m, compared to 535 closed sales a year previously and revenues of €220m.
GSK announced on Wednesday that it has restructured its collaboration with CureVac into a new licensing agreement, granting GSK exclusive rights to develop, manufacture, and globally commercialise mRNA-based candidate vaccines for influenza and Covid-19. The FTSE 100 pharmaceutical giant said the agreement included vaccine combinations.
Budget airline Wizz Air said capacity numbers were held back in June by the ongoing impact of groundings of Pratt & Whitney GTF engines, while CO2 emissions increased as it was forced to use older planes. Capacity as measured by the total number of seats increased by just 0.4% on last year to 5.79m, however the load factor - a measure of how full planes are - decreased to 91.7% from 92.2% last June.
Endeavour Mining announced the first gold pour at its Lafigué mine in Côte d'Ivoire on Tuesday, achieved on budget and ahead of schedule. The FTSE 250 company said the milestone was reached 21 months after construction began, and marked the fifth project in West Africa it had delivered within the last decade.
Neobank and fintech group Revolut posted a sharp increase in annual revenues on Tuesday as it continues to work towards obtaining a UK banking licence. Revolut said revenues surged 95% in 2023 to reach £1.8bn, giving the group a net profit of £344.0m, as it expanded operations to the likes of Brazil and New Zealand and saw its customer base grow 45% to 38.0m. Monthly active users rose nearly 47% and customer balances increased 38% to £18.2bn.
Sainsbury's shares were in the red on Tuesday despite the supermarket reporting a "market-beating" grocery performance in its first quarter, as like-for-like group sales growth slowed dramatically on the back of declines in general merchandise and at Argos. Total retail sales excluding fuel increased by 2.6% year-on-year in the 16 weeks to 22 June, with like-for-like sales rising by 2.7%. That's down from the 4.8% LFL growth seen in the fourth quarter of the previous financial year and 7.4% growth in the third.
Croda International on Monday said it had appointed Johnson Matthey chief financial officer Stephen Oxley to the same role at the chemicals company. Oxley was previously a Partner at KPMG where he spent nearly 30 years advising global companies across consumer, healthcare and industrial sectors, Croda said in a statement. He is expected to join the firm no later than April 1, 2025 following a notice period.
Mining giant Anglo American was forced to suspend production at its Grosvenor steelmaking coal mine in Queensland after an underground fire at the weekend. No injuries were reported and all workers were evacuated safely, though it is expected to take "several months" to get operations back up and running following a "coal gas ignition incident".
B2B events and media group Ascential has said that the sale of its loss-making Hudson division is still ongoing despite earlier expectations that it would be wrapped up in the second quarter. The company said the sale process is still underway with "multiple parties" but would provide a further update at or before its half-year results in September.
AstraZeneca announced on Monday that 'Imfinzi', or durvalumab, and 'Lynparza', or olaparib, have received a recommendation for approval in the European Union (EU) as treatments for primary advanced or recurrent endometrial cancer in patients with specific genetic profiles. The FTSE 100 pharmaceuticals giant said the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) endorsed Imfinzi in combination with chemotherapy as a first-line treatment, followed by Lynparza and Imfinzi for patients with mismatch repair proficient (pMMR) disease.
Economic news
Britain's Labour Party, led by Keir Starmer, swept to power after the ruling Conservative Party was booted from office in a humiliating defeat - the worst in its history. Prime Minister Rishi Sunak called Labour leader Keir Starmer to concede defeat well before Labour passed the 326 seats required to take an absolute majority in the 650 member House of Commons. Starmer was formally invited to form a government by King Charles at midday in a traditional meeting at Buckingham Palace and then travelled to Downing Street to greet supporters and make his first speech as prime minister.
High street sales jumped last week, industry data showed on Friday, supported by a surge in online shopping. According to the latest high street sales tracker from BDO, total like-for-like sales increased by 6.41% in the week ending 30 June, compared to a 4.36% uplift in the same week a year previously. Within that, in-store sales rose 1.51%, but non-store sales soared 18.27%.
Shares in UK housebuilders jumped on Friday, on hopes that the new Labour government would reinvigorate the sector. The Labour Party, which has won the UK general election by a historic landslide, pledged in its manifesto to overhaul the planning system and boost housing stock. Markets generally showed a muted reaction to the election result, with the FTSE 100 up just 21 points at 8,262.91 as at 1030 BST.
Growth in the UK construction sector eased by more than expected in June due to a renewed fall in housing activity, according to a purchasing managers' index released by CIPS and S&P Global on Thursday. The construction PMI fell to 52.2 last month, down from the two-year high of 54.7 in May.
More than 1.0m new motorcars hit British roads throughout the first six months of 2024 for the first time since the Covid-19 pandemic, according to the Society of Motor Manufacturers and Traders. New car registrations rose 1.1% in June to reach 179,263 units. As a result, year-to-date registrations were up 6.0% year-on-year at 1,006,763, hitting the "million motors" mark at the halfway point of the year, but were still down 20.7% on 2019's level.
The pace of growth in the UK service sector softened in June, a closely-watched survey showed on Wednesday, weighed down by the forthcoming general election. The seasonally-adjusted S&P Global UK services PMI business activity index was 52.1 in June, the eighth consecutive monthly increase in output.
The annual growth in prices at UK tills slowed significantly in June, according to the latest shop price index released by the British Retail Consortium (BRC) and NielsenIQ. Shop price inflation eased to a year-on-year rate of just 0.2% last month, down from 0.6% in May and the lowest rate of price growth since October 2021.
UK mortgage approvals dipped in May as higher mortgage rates continued to take their toll, according to data released on Monday by the Bank of England. Net mortgage approvals for house purchases edged down to 60,000 from 60,800 in April. Economists were expecting a figure of 59,900.
Growth in the UK manufacturing sector slowed slightly in June, according to a survey released on Monday. The S&P Global manufacturing purchasing managers' index nudged down to 50.9 from a 22-month high of 51.2 in May. It came in above the 50.0 mark that separates contraction from expansion but below the flash estimate of 51.4.
UK house price growth was broadly stable in June, according to data released on Monday by Nationwide. House prices rose 1.5% on the year following 1.3% growth in May. On the month, meanwhile, prices were 0.2% higher in June, down from 0.4% growth a month earlier. The average price of a home stood at £266,604, versus 264,249 in May.
International events
Hiring and wage growth in the US eased as expected last month, but after a much faster-than-expected slowdown over the previous two months. According to the Department of Labor, non-farm payrolls grew by 206,000 in June. Consensus had been for an increase of 190,000.
Industrial production in Germany unexpectedly declined in May, registering its worst contraction in two and a half years, according to data by the Federal Statistical Office. Production fell 2.5% month-on-month, following a revised 0.1% increase in April, originally estimated at -0.1%, Destatis reported on Friday.
Retail sales in the eurozone rebounded in May after dropping the previous month, according to data out on Friday from Eurostat, but rose less than expected. The volume of retail trade rose by just 0.1% during the month of May, with growth limited by a 0.2% decline in sales for non-food products (excluding fuel).
The Eurozone's beleaguered construction sector reported another sharp decrease in output in June, a closely-watched survey showed on Thursday. The latest HCOB Eurozone construction PMI total activity index fell to 41.8 from 42.9 in May. A reading above the neutral 50.0 indicates growth, while one below it suggests contraction.
German factory orders posted a shock fall in May, highlighting the troubles faced by Europe's manufacturing sector. Demand fell 1.6% from the prior month and 8.6% year on year, the economy ministry said on Thursday. Analysts had forecast a rise of 0.5%.
Services sector activity in the US slowed very sharply last month, a closely followed survey showed. Significantly, many of the survey's respondents referenced the impact of high costs and prices during the month. The Institute for Supply Management's services sector Purchasing Managers' Index fell from a reading of 53.8 for May to 48.8 in June.
Private sector employment in the US rose less than expected in June, according to figures released on Wednesday by ADP. Employment increased by 150,000 from May, versus expectations for a 165,000 jump. May's gain was revised to 157,000 from 152,000. Small businesses with fewer than 50 employees added 5,000 jobs, while medium businesses with between 50 and 499 employees added 88,000. Large businesses with more than 500 employees created an additional 58,000 jobs.
Americans lined up for unemployment benefits at an accelerated clip in the week ended 29 June, according to the Department of Labor. Initial jobless claims rose by 4,000 last week to a reading of 238,000 from the previous week's upwardly revised level of 234,000 to remain near the ten-month high of 243,000 earlier in June.
Growth in the Eurozone softened in June, a closely-watched survey showed on Wednesday, as a resurgent services sector failed to offset the slump in manufacturing. The final HCOB Eurozone services PMI business activity index was 52.8, revised up from the flash reading of 52.6.
Growth in China's services sector eased to an eight-month low in June, according to data released on Wednesday. The Caixin services purchasing managers' index fell to 51.2 from 54.0 in May, missing expectations for a reading of 53.4 . However, it remained above the 50.0 mark that separates contraction from expansion.
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