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Weekly review

By Josh White

Date: Friday 08 Dec 2023

(Sharecast News) - The FTSE 100 ended the week up 25.12 points, or 0.33%, closing at 7,554.47 on Friday.
Stocks to watch

Paddy Power owner Flutter on Friday confirmed it was working towards a listing on the New York Stock Exchange on 29 January, 2024. The company said it wanted to keep listings in the US and London "to minimise regulatory complexities". It will shut down its secondary listing on Euronext Dublin on 29 January.

Online trading platform IG Group said on Friday that it has appointed Breon Corcoran as its new chief executive officer. Corcoran, currently non-executive chair of Auction Technology, will join the company on 29 January 2024.

UK housebuilder Berkeley Group has decided not to invest in any new developments due to the adverse planning and regulatory environment and instead focus on "financial strength" following a rise in profits in the first half. Pre-tax profit in the six months to 31 October increased by 4.6% to £298m, as operating margins held steady at 19.5% and net operating costs declined £10mm to £79.7m.

Professional business services firm Christie Group warned on Friday that full-year results were set to miss market expectations due to transaction delays. The company said several transactions expected to be exchanged in the last few weeks of this year will not reach that stage until early 2024.

Mining giant BHP Group has announced a significant executive leadership team reshuffle, with four people stepping into new roles, including its chief financial officer (CFO). The changes, which will take place in March 2024, "ensure that we continue to build organisational capacity, with the right mix of skills, experience and perspectives to deliver BHP's strategy and pursue our growth agenda," said chief executive Mike Henry.

Packaging manufacturer DS Smith said on Thursday that chief executive Miles Roberts would be retiring by the end of next November as it also unveiled a fall in interim profit. "The macro-economic environment has remained challenging with overall market demand continuing to be weak, leading to a decline in like-for-like box volumes of 4.7% compared to H1 FY22/23," Smith said in a statement.

Smart Metering Systems said on Thursday that it has agreed to be bought by US private equity firm KKR for about £1.3bn. Under the terms of the deal, KKR will pay 955p per share in cash, representing a premium of 40.4% to the closing share price on Wednesday.

Energean announced its entry into a new venture offshore Morocco on Thursday by farming into Chariot's acreage. The FTSE 250 company said the move included the acquisition of 45% of the Lixus licence, with the option to increase its stake to 55% following drilling results and 37.5% of the Rissana licence.

Anglo-Australian mining giant Rio Tinto said it expected to start production from the Simandou iron ore joint venture in Guinea in 2025. Rio owns two of four Simandou mining blocks as part of its Simfer joint venture with China's Chalco Iron Ore Holdings and the government of Guinea. The company holds a 53% stake, with CIOH holding the balance.

Tobacco and nicotine giant British American Tobacco (BAT) has scaled back its expectations for organic growth this year and announced a massive £25bn impairment charge. As BAT continues to reshift its focus away from traditional tobacco products, and combined with macroeconomic pressures impacting its US combustibles brands, chief executive Tadeu Marroco said the company will "take an accounting non-cash adjusting impairment charge of around £25bn [... which] mainly relates to some of our acquired US combustibles brands, as we now assess their carrying value and useful economic lives over an estimated period of 30 years".

Australian miner Woodside Energy has signed a deal with energy company Mexico Pacific to buy 1.3 million tonnes of liquefied natural gas (LNG) annually for two decades. Under the terms of the agreement, Woodside will buy the LNG from Mexico Pacific's Saguaro Energia LNG project, located in Sonora, Mexico, on a free-on-board basis with pricing linked to US gas indices.

Smith & Nephew has announced that non-executive director Rick Medlock has decided to step down after three years at the medical technology group. Medlock, who joined in April 2020 and later became the audit committee chair, will not submit himself for re-election at the company's next annual general meeting.

FTSE 250-listed engineering and manufacturing group Senior has won a contract with United Arab Emirates-based Strata Manufacturing worth $12m. The deal, for the supply of Boeing 787 vertical fin detail parts, has a seven-year term, with work being undertaken at a Senior Aerospace Thailand (SAT) facility in Chonburi. SAT is Boeing-approved for manufacture, treatments, and assembly.

Power station group Drax has scaled back its leverage expectations after a strong performance in the second half and said it should meet analysts' profit forecasts with its full-year results. The company now expected net debt-to-adjusted EBITDA - excluding the government's windfall tax on renewable and low-carbon generators, the Electricity Generator Levy (EGL) - to be "around 1x" at the end of 2023.

International food and beverage travel outlet operator SSP Group reinstated its dividend on Tuesday as it reported a near doubling of annual core profits, driven by the continued resurgence in passenger numbers and workers returning to work in offices. The company, hit hard by restrictions during the Covid-19 pandemic, posted underlying core earnings of £280m, up 97%. Revenue jumped 37% to £3bn, while a final dividend of 2.5p a share was declared.

Shares in discoverIE rose strongly on Tuesday after the industrial electronics group lifted its interim dividend and delivered a 7% increase in first-half underlying profits on the back of better-than-expected margins. The company reported an underlying pre-tax profit of £25.1m for the six months to 30 September, up from £23.5m the year before, as the underlying operating margin increased to 12.9% from 11.5%.

Capita is selling its 75% stake in Fera Science Limited, the joint venture set up eight years ago with the government specialising in environmental testing, research, and advisory and assurance services. The business process services group will receive cash proceeds of £62m from Bridgepoint Group, strengthening the balance sheet and supporting investment.

Mike Ashley's Frasers Group has increased its stake in the online fast fashion retailer Boohoo Group, it announced on Monday. As of 1 December, the company was interested in 218,387,739 Boohoo shares, representing 17.22% of the total shares.

William Hill owner 888 Holdings has reportedly rejected Playtech's £700m takeover approach. The Sunday Times cited City sources as saying that Playtech made a written indicative approach to acquire 888 at 156p a share in July, only for it to be rejected as undervaluing the company.

ITM Power said in an update on Monday that from 1 April to the end of October, it achieved revenue of £7.5m, making for a promising trajectory towards its full-year guidance range of £10m to £18m. The AIM-traded firm said that in terms of its adjusted EBITDA loss, it recorded a range between £22m and £23.5m for the first half, in line with the lower end of its full-year guidance range of £45m to £55m.

Economic news

Nationwide Building Society has told 470 of its staff that they are at risk of redundancy, it emerged on Friday. The decision, coming just before Christmas, was part of a broader restructuring spearheaded by its ex-TSB chief executive officer, Debbie Crosbie.

The Competition and Markets Authority initiated a public consultation on Friday to gather opinions on the partnership between Microsoft and OpenAI. In its announcement, the CMA said it was seeking feedback from the involved parties and interested third parties to assess whether the partnership constituted a relevant merger situation and the potential consequences it could have on competition in the UK.

An industry survey showed that recruitment fell sharply in November on Friday, as economic uncertainty saw employers cut back on hiring. According to the latest UK Jobs Report from KMPG and the Recruitment and Employment Confederation, placements of both permanent and temporary candidates declined last month.

The Financial Conduct Authority (FCA) has declared that certain banks and building societies still need to hold cash despite the UK's continuing shift to digital payments. The new rules will ensure that the three million consumers who rely on cash can still access physical payment methods.

UK house prices rose for the second month in a row in November, boosted by a shortage of properties, according to figures released by Halifax on Thursday. House prices rose 0.5% on the month following a 1.2% jump in October and after six consecutive declines, leaving the price of a home at £283,615.

The Bank of England warned on Wednesday that the risk environment remained "challenging", with both businesses and households yet to feel the full impact of higher interest rates. Publishing its latest Financial Stability Report, the BoE's Financial Policy Committee said subdued economic activity and increased geopolitical tensions made for a "challenging" outlook.

Coventry Building Society, one of Britain's most prominent building societies, is looking at a takeover of the Co-operative Bank, it was reported on Wednesday. The proposed merger, reported by Sky News, would effectively remutualise the Co-Op and create a financial service giant with assets nearing £90bn.

Activity in the UK construction sector declined for the third consecutive month in November because of another sharp drop in residential housebuilding. The S&P Global and Chartered Institute of Procurement & Supply (CIPS) UK construction purchasing managers' index (PMI) fell to 45.5 last month from 45.6 in October. This was the third straight reading below the critical 50-point level which separates growth from contraction.

The UK services sector returned to growth in November, according to a survey released on Tuesday. The S&P Global/CIPS purchasing managers' index rose to 50.9 from 49.5 in October, above the flash estimate of 50.5, marking the highest reading since July.UK grocery sales are expected to top £13bn in December for the first time on the back of rising prices and Christmas celebrations, according to market research agency Kantar. The prediction comes after sales increased 6.3% over the four weeks to 26 November to £11.7bn.

International events

US consumer sentiment improved in December as worries about inflation receded, according to a survey released on Friday by the University of Michigan. The preliminary consumer sentiment index ticked up to 69.4 from 61.3 in November and 59.8 in December 2022.

The US economy added more jobs than expected in November, according to data released on Friday by the Bureau of Labor Statistics. Non-farm payrolls rose by 199,000 following an unrevised 150,000 jump in October. Analysts were expecting a 180,000 increase.

The final estimate of Germany's consumer price index (CPI) confirmed that inflation fell to its lowest in 29 months in November. In line with the provisional estimates released last week, CPI rose 3.2% year-on-year last month, down from 3.8% in October, after prices fell by 0.4% during the month, according to Germany's federal statistics office, Destatis.

Americans lined up for unemployment benefits at a moderately higher clip in the week ended 2 December, as the nation's labour market continued to show signs of slowing down amid easing demand. Initial jobless claims rose 1,000 to a seasonally adjusted 220,000, according to the Labor Department. Economists had forecast a slightly bigger rise to 222,000.

Europe's economy stalled in the third quarter, official data showed on Thursday, leaving it at risk of recession. According to Eurostat, the statistical office of the European Union, GDP decreased by 0.1% in the eurozone compared to the second quarter, when it inched up 0.1%.

German industrial production unexpectedly fell by 0.4% in October compared to the previous month, according to official data published on Thursday. The office said the fall compared with expectations of a 0.2% rise and was mainly due to a 0.6% decline in mechanical engineering sector output.

Private sector employment in the US rose less than expected in November, according to figures released on Wednesday by ADP. Employment increased by 103,000 from October, versus expectations for a 130,000 increase. Meanwhile, October's jump was revised to 106,000 from 113,000.

The eurozone's construction sector continued to struggle in November, a closely-watched survey showed on Wednesday, as demand faltered. The latest HCOB eurozone construction PMI total activity index was 43.4, nudging up from October's 10-month low of 42.7.

German factory orders unexpectedly slumped in October, according to figures released on Wednesday by Destatis. Orders fell by 3.7% on the month following an upwardly-revised 0.7% increase in September, weaker than expectations for a 0.2% jump.

Labour demand in the States eased a bit in October, the results of a closely followed survey revealed. According to the US Department of Labor's JOLTS survey, the number of job openings in the US decreased from 9.35 million in September to 8.73 million in October.

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