Level 2

Weekly review

By Josh White

Date: Friday 29 Sep 2023

(Sharecast News) - The FTSE 100 ended the week down 75.83 points, or 0.99%, closing at 7,608.08 on Friday.
Equity view

Specialist media firm Future held annual earnings guidance on Friday despite volatile markets but warned that trading conditions remain mixed. Audience numbers stabilised in the second half, and the group had positive month-on-month momentum in the final quarter, Future said in a trading update for the year to 30 September 2023.

Rathbones chief financial officer Jennifer Mathias is stepping down at the end of the year to become group chief of staff to support the integration of Investec Wealth & Investment Limited (IW&I), the company said on Friday. The board said it had appointed Iain Hooley as Mathias's successor, subject to regulatory approval. Hooley was finance director of IW&I UK for over a decade and was appointed CEO of IW&I UK in February this year, and these responsibilities will continue during the integration period.

Aston Martin announced on Friday that Yew Tree Consortium, led by chair Lawrence Stroll, has raised its stake in the business by a further 3.27%. The investment takes Yew Tree's holding in the company to 26.23%.

Infrastructure investment group 3i Infrastructure (3iN) said that its portfolio continues to deliver strong earnings growth, as first-half income exceeded expectations. The company said in a trading update that total income and non-income cash during the six months since 31 March totalled £103m, up 5% year-on-year.

Pub and restaurant chain Mitchells & Butlers said it expected full-year earnings to be at the top of expectations after a substantial rise in sales and easing cost headwinds. The company said strong trading had continued through the fourth quarter, bringing year-to-date like-for-like sales growth to 9.1%, with total sales growth now of 10.5%.

HICL Infrastructure said it had sold a portfolio of five assets to John Laing for £204m. The portfolio is made up of HICL's entire equity interest in four UK public/private partnership projects: Queens Hospital in Romford, Oxford John Radcliffe Hospital, Priority Schools North East Batch and South Ayrshire Schools, in addition to half of its investment in the Hornsea II OFTO2.

Self-storage group Safestore has announced that its chief financial officer, Andy Jones, will retire after over 10 years with the company. An external search for his replacement will begin soon, but Jones will continue in his role until a successor is found.

Drinks giant Diageo said on Thursday it remained well-positioned to deliver on its guidance despite ongoing cost pressures and macroeconomic uncertainty. Addressing shareholders before her first annual general meeting, new chief executive Debra Crew said expectations for the current year were unchanged.

Gambling company Flutter Entertainment said it had bought a 51% stake in Serbia's MaxBet for €141m (£123m), with an option to acquire the remaining 49% in 2029 based on performance. MaxBet is the number 2 Serbian operator with an estimated 20% online share. It has more than 400 retail outlets across four markets and 95,000 online average monthly players, Flutter said on Wednesday.

Biotherapeutics company PureTech Health, which develops medicines to treat serious diseases, has appointed the boss of Arix Bioscience as its new chief portfolio officer. Robert Lyne, who has a decade of experience in international life science deals and portfolio management, governance, and executive team leadership experience, will join the company in January 2024.

Property developer Land Securities reported a rise in lettings over the first five months of the financial year as demand for office space held up despite rising interest rates. The company on Wednesday said occupancy in its central London portfolio increased by 100 basis points to 96.9%, with £17m of lettings signed or in solicitors' hands.

Specialist insurer Hiscox said it had signed a deal to sell DirectAsia, its business operations in Singapore and Thailand, to Ignite Thailand Holdings for an undisclosed sum. DirectAsia was founded in Singapore in 2010 and launched in Thailand in 2013. Its primary business is motor, operating through several distribution channels. In 2022, it had gross written premiums of $52.5m.

Engineering group Smiths hailed a 20% rise in annual operating profit, driven by volume growth and higher prices, which offset the impact of inflation. The company on Tuesday said profit for the year to 31 July came in at £501m as revenue jumped 18.3% to £3bn.

Fast fashion giant Asos has revealed that operating profits for the full year will come in at the bottom end of expectations, and free cash flow will be significantly lower than guidance. In a detailed fourth-quarter trading update, the online retailer said that adjusted like-for-like sales were down 15% in the three months to 3 September, slightly worse than the 14% decline seen in the third quarter.

Personal care consumer goods maker PZ Cussons on Tuesday held annual guidance despite a fall in full-year profits as cost inflation and issues at its Nigerian operation continued to weigh. The maker of Imperial Leather soap said pre-tax profit fell 4.2% to £61.8m as revenue rose 10% to £656.3m. Earnings were hit by a £16.5m impairment at the Sanctuary Spa brand and increased investment in its transformation plans.

Real estate giant British Land said it has seen "continued momentum" in the second quarter, with leasing income growth continuing to outpace estimated rental value (ERV). British Land, whose flagship investments include Broadgate Circle in Central London and the Meadowhall shopping centre in Sheffield, achieved 1.2m square feet of leasing across its £13bn portfolio in the five months to 31 August, some 13.1% ahead of ERV.

British insurer Aviva on Monday said it had bought AIG's UK protection business for £460m. AIG Life UK provides a full suite of individual and group protection products, with 1.3 million individual protection customers and 1.4 million group protection members, Aviva said.

Shares in Alphawave IP Group dropped on Monday after the digital infrastructure company swung to a loss in the first half despite a trebling in revenues as margins shrunk significantly and overheads jumped. Despite the company assuring shareholders that the outlook for the full year remains unchanged, shares were down 7.2% at 136.42p by 0824 BST.

GSK announced on Monday that its vaccine, Arexvy, has received approval from Japan's Ministry of Health, Labour and Welfare (MHLW) for preventing respiratory syncytial virus (RSV) disease in adults aged 60 and over. The FTSE 100 pharmaceutical giant said it was the first approval of an RSV vaccine for older adults in Japan.

HgCapital Trust has agreed to sell Silverfin, a leading cloud platform designed for accountants, to cloud software specialist Visma, it announced on Monday. The FTSE 250 firm said that while specific terms of this deal were confidential, completion was still contingent on fulfilling closing conditions.

Economic news

Annual house sales fell sharply in August, provisional government data showed on Friday. According to HM Revenue and Customs, the seasonally-adjusted estimate of UK residential transactions was 87,010 last month. That was a 1% uptick on July 2023 and the third consecutive month to show a month-on-month increase.

High street sales pushed higher last week, industry research showed on Friday, as delayed autumn spending finally looked to have got underway. According to the latest BDO High Street Sales Tracker, total like-for-like sales rose by 5.51% in the week ending 24 September. That compares to a 1.33% uplift in the same week a year previously, which included a bank holiday to mark the funeral of Queen Elizabeth II.

Official data showed that mortgage approvals fell to a six-month low in August as higher interest rates weighed on lending. According to the latest Money and Credit report from the Bank of England, net mortgage approvals for house purchases - an indicator of future borrowing - fell to 45,400 from 49,500 in July. Analysts had been expecting a smaller drop, to around 47,400.

According to figures released on Friday by the Office for National Statistics, the UK economy grew more than initially estimated in the first quarter. GDP rose by 0.3% between January and March, up from the 0.1% growth previously estimated. This means GDP is estimated to be 1.8% above pre-pandemic 2019 levels.

UK car production fell in August, industry data showed on Thursday, putting the brakes on six months of growth. According to the Society of Motor Manufacturers and Traders, car production fell 9.7% to 45,052 units last month. Within that, production for the home market was down 25.2%, while export output eased 5.5%.

According to fresh market research on Thursday, house prices in the UK have fallen annually for the first time since June 2012. According to Zoopla's House Price Index for September, prices dropped by 0.5% over the last year.

Water and wastewater companies in England and Wales will be required to return £114m to their customers next year due to significant underperformance, it was announced on Tuesday. Water industry regulator Ofwat's decision resulted from companies' failure to meet the stringent targets set for 2020 to 2025, intended to promote improved outcomes for consumers and the environment.

International events

The cost of living in the single currency bloc eased sharply in September. According to Eurostat, the Eurozone Consumer Price Index rose by 0.3% month-on-month in seasonally adjusted terms.

The jobless rate in Germany held steady in September, but the number of people in unemployment rose less than expected. According to stats from the Federal Labour Office, the German unemployment rate was unchanged at 5.7% this month, in line with analysts' forecasts.

French inflation unexpectedly slowed in September, official data showed on Friday, as food prices started to moderate. According to the National Institute of Statistics and Economic Studies (INSEE), the harmonised index of consumer prices rose 5.6% year-on-year, compared to a 5.7% rise in August. Most analysts had been looking for a 5.9% increase.

German retail sales recorded an unexpected 1.2% fall in August month-on-month, well below forecasts of a 0.5% rise, official data released on Friday showed. On an annualised basis, retail sales fell by 2.3%. Food sales were down by 1.2% month-on-month, while non-food retail sales slid by 0.7% as online sales plunged by 8.7%.

Jobless insurance claims numbers in the US were little changed during the past week, possibly reflecting companies' continued efforts to retain workers. According to the Department of Labor, in seasonally adjusted terms, the number of initial unemployment claims increased by 2,000 to 204,000 over the week ending on 23 September.

According to provisional figures from the country's federal statistical office on Thursday, Germany's inflation rate looked set to decrease to 4.5% in September, marking the lowest level seen since the onset of the war in Ukraine. The rate reflected a decrease from August, when it peaked at 6.1%, with the decline bringing the rate closer to February 2022's level of 4.3%.

A group of leading economists warned on Thursday that Germany's economy is on course to contract this year. Publishing their Joint Economic Forecast, Germany's five economic institutes said GDP would likely contract by 0.6% in 2023 after higher interest rates and inflation dampened growth.

Economic sentiment in the eurozone deteriorated again in September, according to a survey released on Thursday. The Sentix economic sentiment indicator fell to 93.3 from an upwardly revised 93.6 in August. Still, this was above consensus expectations for a reading of 92.5.

German consumer confidence weakened more than expected this month, data from market research company GfK revealed on Wednesday, as elevated interest rates cause people to hide money in savings accounts. The closely watched monthly gauge of forward-looking consumer confidence fell to -26.5 for October, down 0.9 points from a revised -25.6 in September.

New home selling activity in the US slowed last month, even as the supply of available houses increased. According to the Department of Commerce, in seasonally adjusted terms, the annual rate of new home sales dropped by 8.7% over August to reach 675,000 (consensus: 700,000).

A government shutdown would be "credit negative" for the US economy, warned Moody's Investors Service in a report late Monday. The agency, which still rates the US as 'Aaa stable' - the highest rating of creditworthiness it can give - said that the longer the shutdown persists, the more damaging it would be on the broader economy and wider financial markets.

German business morale declined for the tenth consecutive month in September, adding to the data showing Europe's biggest economy was struggling to shake off high inflation, according to the Ifo Institute's monthly survey. Its business climate index fell to 85.7 from 85.8 in August but above forecasts of 85.2.

Reporting by Sharecast.com.


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