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Weekly review

By Josh White

Date: Friday 31 Mar 2023

(Sharecast News) - The FTSE 100 ended the week up 3.06%, or 226.29 points, closing at 7,631.74 on Friday.
Equity view

Rio Tinto has agreed to sell a majority stake in its La Granja copper project in Peru to Canada's First Quantum Minerals for $105m. The deal gives First Quantum a 55% stake in La Granja, one of the world's largest untapped deposits, which will also commit to a further investment of up to $546m to complete a feasibility study.

Aerospace company Rolls-Royce Holdings revealed on Friday that Helen McCabe will join its board as chief financial officer later in the year. Rolls-Royce stated McCabe, who was previously the CFO of oil giant BP Downstream's fuels and refining businesses in Europe and Southern Africa, will succeed Panos Kakoullis, who will remain in the role until at least 31 August.

Pub chain Marston's said on Friday that it has successfully secured an amendment and extension of its bank and private placement debt facilities to the end of January 2025. The revised £340m debt facilities consist of a £300m revolving credit facility, with the continued support of all its existing and two new banks, together with a restatement of its current £40m private placement.

Investment firm 3i Infrastructure said on Friday that its portfolio was "performing strongly" and that it was confident in its ability to continue to generate "attractive" further investment opportunities. 3i Infrastructure said it had seen strong performances from portfolio companies TCR, Tampnet, Infinis, Valorem, Attero, ESVAGT, and Ionisos - all of which continued to benefit from "positive underlying growth trends" and recent contract wins.

Ascential reported record revenues on Thursday, as it pushed ahead with plans to break up the business, but saw losses widen as costs mounted. The specialist information and analytics firm reported revenues of £524.4m in the year to 31 December, ahead 50% or by 30% on an organic basis.

QinetiQ Group on Thursday said it had won a $92.6m contract from the US army to develop digital night vision technology (DNVT). With QinetiQ support, the army will continue to evolve capabilities via DNVT through development, integration, experimentation, and laboratory and platform test and evaluation including, using digital imaging, display, processing, and network architecture technologies to support military operations, the company said

SSE lifted its full-year earnings per share guidance again on Thursday as it hailed a strong performance from its flexible generation plant. The energy company now expects adjusted EPS of more than 160p per share for the full-year 2022/23, up from previous guidance of more than 150p. SSE had already lifted its guidance in January from at least 120p a share to at least 150p.

Warehouse REIT has sold two distribution estates for nearly £30m, the property investor said on Thursday. Updating on trading, the FTSE 250 firm - a specialist in urban and "last-mile" industrial warehouse assets - said it had sold 12 Exeter Way in Theale and Temple House in Harlow for a combined £29.5m.

Chemring said it had won a £43m order for the delivery of critical components used in the Next Generation Light Anti-Tank Weapon system (NLAW). The award follows the £229m contract that was placed on SAAB by the UK Ministry of Defence in December 2022.

RHI Magnesita on Wednesday said it had bought German firm Dalmia GSB Refractories for €13m in cash. Bochum-based DGSB supplies monolithic lances and other precast products to European steel customers for use in the desulphurisation and homogenisation of molten steel. It is currently a subsidiary of the Dalmia Bharat Group.

Investment trust Octopus Renewables said on Wednesday that it had seen "solid growth" for a second year running, with double-digit net asset value total returns and a "significant" increase in its full-year dividend target. Octopus Renewables stated net asset values rose 12.3% to 109.44p per share, while net asset values grew from £578.0m to £618.0m and gross asset values surged from £738.0m to £1.07bn.

Next posted a better-than-expected jump in full-year profit on Wednesday as it said selling price inflation was set to be more benign than previously thought, but warned the year ahead will be "difficult" and that it continues to expect a decline in profit. In the year to January 2023, pre-tax profit rose 5.7% to £870.4m, coming in ahead of company guidance of £860m. Total trading sales were up 8.4% to £5.1bn, with full price sales ahead 6.9%.

Halma said it had bought FirePro, a manufacturer of aerosol-based fire suppression systems, for €150m (£132m) on a cash- and debt-free basis. FirePro's unaudited revenue for the 12 months to December 31 was €23.3m, with return on sales more than double Halma's target range of 18-22%. The Cyprus-based company, will operate as a standalone company within Halma's Safety sector and continue to be led by its current management team.

Ocado Retail reported a rise in first-quarter revenues on Tuesday despite a fall in basket sizes, and said it remained on track to return to sales growth and profitability. The online grocer - a 50:50 joint venture between Ocado Group and Marks & Spencer Group - said retail revenues rose 3.4% in the 13 weeks to 26 February to £583.7m, with average orders per week ahead 3.6% year-on-year at 381,000.

Ivan Menezes, Diageo's long-standing chief executive, is to retire after ten years at the helm, the drinks giant said on Tuesday. The blue chip said Menezes would step down from the board at the end of June, and will be replaced by chief operating officer Debra Crew.

LondonMetric Property said it had sold five properties in two transactions for £34.8m at a 4% discount to September 30 book value. Four of the assets have been sold as a portfolio for £25.5m and the fifth for £9.3m. The sales crystallise an ungeared IRR of 11% and a 28% profit on cost, the company said.

UK care home investor Target Healthcare REIT on Monday reported a rise in contractual rent for the half year of 2.9% to £57.1m, including like‑for-like rental growth of 1.8%. Underlying profits, measured by adjusted EPRA earnings, increased by 37% to £18.7m.

Sirius Real Estate said on Monday that it has appointed Chris Bowman as its new chief financial officer. Bowman brings nearly 25 years' accounting, finance and capital markets experience, it said. Most recently, he led the UK investment banking arm of Berenberg.

Standard Chartered has agreed to sell its Jordanian business to Arab Jordan Investment Bank (AJIB). The bank had already announced last year that it was planning to exit Angola, Cameroon, Gambia, Jordan, Lebanon, Sierra Leone and Zimbabwe.

Events business Hyve Group said in an update on Monday that it was expecting to generate. The London-listed group said it delivered a "strong performance" across its key performance indicators in the period since 1 October, including like-for-like customer spend.

Economic news

The UK government's decision to sell failed energy firm Bulb to Octopus Energy was upheld by the High Court on Friday, after challenges were brought by Centrica's British Gas, E.ON, and Scottish Power. The companies argued that Octopus Energy received special treatment, and that there were flaws in the subsidy process that gave Octopus state support for buying Bulb out of administration.

The UK economy grew a touch in the final quarter of last year, according to figures released on Friday by the Office for National Statistics, meaning a recession was avoided in the second half. The GDP figure was revised up from an initial estimate of zero growth to 0.1% growth, following an upwardly-revised 0.1% contraction in the third quarter. The initial estimate had shown a 0.2% contraction in Q3.

UK business confidence rose in March to its best level since May 2022, while pricing expectations cooled, according to the latest Lloyds Bank Business Barometer. The barometer rose 11 points to 32%, with overall economic optimism higher, while pricing expectations eased to a six-month low.

UK house prices fell in March at the fastest annual pace since July 2009, according to figures released on Friday by Nationwide. House prices were down 3.1% on the year following a 1.1% decline in February.

The UK's private sector has shrunk for the eighth time in a row, a survey showed on Thursday, as services continued to falter. The latest CBI monthly service sector survey showed that activity across the private sector as a whole fell in the three months to March, with a weighted balance of -4 compared to February's -6. It is the eighth rolling quarter in which activity has fallen, although the decline was the mildest since July.

UK car production jumped last month, industry data showed on Thursday, as supply chain shortages eased and demand for electric vehicles strengthened. According to the Society for Motor Manufacturers and Traders, UK car production rose 13.1% year-on-year to 69,707 units. The trade body said volumes had been "buoyed" by improvement in supply chains, particularly around semiconductors.

The Bank of England said on Wednesday that UK banks are "resilient and strong enough to support households and businesses", but also that there is an "urgent need" to increase resilience in market-based finance. In the aftermath of the collapse of Silicon Valley Bank in the US and the acquisition of Credit Suisse by UBS, the BoE said the regulations in place for UK banks mean that they have "significant" financial resources to absorb shocks.

Mortgage approvals rose in February for the first time since last summer, official data showed on Wednesday, as the UK housing market started to shake off last autumn's mini budget. According to the Bank of England's latest Money and Credit report, net mortgage lending to individuals decreased to £700m last month from £2bn in January. That is the lowest level since July 2021, or since April 2016 if the pandemic is excluded.

Bank of England governor Andrew Bailey has insisted that the UK banking sector remains in good health, despite being in a period of "heightened tension". Banking stocks around the world have tumbled in recent weeks, hit hard by the shock collapse of US lender Silicon Valley Bank and long-standing issues at Credit Suisse, which culminated in it being acquired by rival UBS Group in a state-brokered rescue deal. SVB's UK arm was acquired two weeks ago by HSBC for £1.

Grocery inflation has rocketed to 17.5%, industry research showed on Tuesday, adding more than £800 a year to average household food bills. According to the latest data from retail consultancy Kantar, grocery price inflation reached a fresh high of 17.5% in the four weeks to 19 March, meaning households are now facing an £837 hike in annual food bills if they do not change shopping behaviours.

International events

US inflation fell in February, according to data released on Friday by the Commerce Department. The price deflator for personal consumption expenditures rose 0.3% on the month, following a 0.6% increase in January. This was below expectations of 0.5%.

Americans were less confident in March than during the prior month amid worries about a possible recession, the results of a closely followed survey revealed. The University of Michigan's consumer confidence index dipped from a reading of 67.0 for the month of February to 62.0 in March.

Eurozone inflation eased more than expected in March as energy prices fell, but underlying inflation edged up, according to a flash estimate released on Friday by Eurostat. Annual consumer price inflation slowed to 6.9% from 8.5% in February, coming in below expectations of 7.1%.

German retail sales fell unexpectedly in February by 1.3% in real terms compared to the previous month, according to official data released on Friday. On an annual basis retail sales are down 7.1% and 1.6% below pre-Covid pandemic February 2020.

The latest official PMIs out of China on Friday indicated that the country's economic recovery continued in March. According to the National Bureau of Statistics, the manufacturing purchasing managers' index fell to 51.9 in March from 52.6 in February, coming in above consensus expectations for decline to 51.6.

The US economy grew a touch less than previously estimated in the fourth quarter, according to data released on Thursday by the government. GDP grew at an annual pace of 2.6%, down from a previous estimate of 2.7% and from 3.2% growth in the third quarter.

Americans lined up for unemployment benefits at an accelerated pace in the seven days ended 25 March, according to the Labor Department. Initial jobless claims rose by 7,000 week-on-week to 198,000, slightly above expectations for a reading of 196,00 but remaining at a historically low level and still pointing to a stubbornly tight labour market.

German headline inflation recorded only a minor decline in March, in line with consensus expectations. According to the Federal Statistical Office, German CPI dropped to 7.3%, down from 7.8% seen in February, as declines in energy inflation pushed the headline reading lower.

Spanish inflation fell significantly in March as energy prices declined, according to data released on Thursday by the country's National Statistics Institute. Headline inflation eased to 3.3% year-on-year from 6% in February. This was below consensus expectations of 3.8% and marked the lowest annual rate since August 2021.

Economic sentiment in the eurozone deteriorated slightly in March, according to data released on Thursday. The European Commission's Economic Sentiment indicator edged down to 99.3 from 99.7 a month earlier. Economists were expecting an uptick to 99.8.

Reporting by Sharecast.com staff and contributors.


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