Weekly review
By Josh White
Date: Friday 26 Apr 2024
(Sharecast News) - The FTSE 100 ended the week up 243.98 points, or 3.09%, closing at 8,139.83 on Friday.
Equity view
Anglo American on Friday rejected an "opportunistic" £31bn bid from rival miner BHP, saying it significantly undervalued the company. BHP's offer would create the world's biggest copper miner as companies compete for commodities to supply the growing electric car and battery market. The metal represents 30% of Anglo's production.
First-quarter profits fell at NatWest Group, the banking group confirmed on Friday, although the decline was less than expected. The blue chip lender said pre-tax profits in three months to March end came in at £1.3bn, down on the £1.8bn reported a year previously but marginally higher than analyst forecasts for £1.2bn.
Pearson reported an in-line performance for the first quarter and reiterated its full-year guidance. Underlying sales excluding Online Programme Management and Strategic Review were said to have rise by 3% during the period. CEO Omar Abbosh said the year had started well and was unfolding as anticipated.
Aerospace and defence components manufacturer Senior said on Friday that trading over the first quarter has been in line with expectations with strong growth in commercial aerospace, as it held on to guidance for the full year. Group revenues in the first three months of 2024 were up 7% on last year on a constant currency basis, with the aerospace division contributing 12% growth, making up for a 2% fall in the Flexonics unit.
Consumer products giant Unilever maintained its full-year guidance after a solid first quarter, which saw all five business divisions contributing to underlying sales growth. Turnover was up 1.4% at €15bn in the first three months of the year, with underlying sales rising 4.4%, as strong growth in the Beauty & Wellbeing (+7.4%) and Personal Care (+4.8%) made up for a more subdued showing in Home Care (+3.1%), Nutrition (+3.7%) and Ice Cream (+2.3%).
WH Smith said Thursday it was on track to deliver on expectations for the year after a "good" first half. In the six months to 29 February, headline group profit before tax and non-underlying items ticked up to £46m from £45m in the same period a year earlier, with total group revenue up 8% to £926m.
UK advertising agency WPP on Thursday said revenues fell 1.4% as it lost a healthcare client and spending by technology companies was cut back. Revenue fell to £3.4bn for the first three months of the year. Guidance for flat to 1% growth this year, with a margin improvement of 20-40 basis points, was reiterated.
Building products manufacturer Ibstock said Thursday that first quarter sales volumes were lower than expected as activity in residential markets remained subdued. Ibstock said trading conditions "remained challenging", with weaker end market demand in part reflecting the exceptionally wet weather across the UK during the early months of the year.
International distribution and services group Bunzl said first quarter revenue fell 2.4% on a constant currency basis, driven by lower volumes in its US foodservice redistribution business, American retail customers clearing inventory and deflation. Adjusted operating profit for the first three months of the year was in line with expectations and the group held its profit guidance for the year. At actual exchange rates, group revenue fell 5.9%.
Croda backed its full-year profit guidance on Wednesday despite a decline in first-quarter sales, as it hailed an "encouraging" start to the year for the consumer care business. In an update for the three months to the end of March, the speciality chemicals company said group sales fell 10% at constant currency versus a strong prior year comparator, to £409m. On a reported basis, sales were down 14%.
The chief financial officer of consumer health company Haleon is to step down after three years and will be replaced by Tate & Lyle's CFO Dawn Allen. The company, known for brands like Sensodyne, Centrum and Panadol, announced on Wednesday that Tobias Hestler has decided to leave "to better balance work demands with the management of a long-term health condition".
UK insurer Aviva said it aimed to deliver £100m of health operating profit by 2026. The company released a brief statement ahead of an investor briefing on its health business, adding that the UK health market is experiencing "strong and sustained growth, which is set to continue".
JD Sports Fashion on Tuesday said it was buying US sports fashion retailer Hibbett for $1.08bn (£878m). Headquartered in Birmingham, Alabama, Nasdaq-listed Hibbett has 1,169 stores in 36 states across the US trading under the Hibbett and City Gear fascias. JD Sports said it would pay $87.50 a share in cash for Hibbett stock.
UK housebuilder Taylor Wimpey said it has made a solid start to the year with the market continuing to stabilise, with good levels of visitors to selling sites. At the group's annual general meeting on Tuesday, chief executive Jennie Daly is expected to report the company has seen "continued market stability supported by good mortgage availability and sustained customer confidence".
THG posted a jump in first-quarter revenue on Tuesday as it hailed a "standout" performance in the beauty business. Group revenue rose 4.5% to £455.4m, with revenue from THG Beauty up 11.1% at £267.6m. This followed targeted changes to geographic strategy through the year, as the company focused on more profitable customers and territories closest to its global distribution hubs.
Anglo American reported relatively flat group production in the first quarter on Tuesday as rising copper production was offset by sliding diamond output. The FTSE 100 mining giant said copper production was ahead 11% year-on-year, which it attributed to higher throughput at Quellaveco. Despite planned lower grades, that growth was further bolstered by improved grades and throughput at Collahuasi and El Soldado.
Global professional services business JTC said it had bought JP Morgan Chase subsidiary First Republic Trust Company of Delaware for $21m. FRTC-DE is a provider of trust administration services to high-net-worth individuals and is headquartered in Wilmington, Delaware. The company has approximately $9bn of assets under administration by market value, JTC said on Monday.
Mobico Group reported a fall in profit in its 2023 results on Monday, below the expectations it set at the start of the financial year, despite continued revenue growth. The FTSE 250 company, formerly known as National Express Group, reported 12.2% rise in revenue, which it put down to sustained efforts in pricing adjustments and boosting passenger volumes across its operations.
Net zero energy services provider eEnergy clinched a deal with Spire Healthcare Group for the provision of photovoltaic systems across 38 sites. The £5.2m contract followed the successful installation of a first trial site and the resulting revenues would be recognised during the 2024 fiscal year.
Models and collectibles group Hornby said in an update on Monday that its underlying losses before tax had weakened in the second half of its financial year, as sales remained broadly stable and its margins took a hit. The AIM-traded firm said group sales were down 8% year-on-year in its fourth quarter, due to the earlier timing of Easter, delivery delays in the Red Sea, and the consequent postponement of high-value container movements from March to April.
Economic news
UK consumer confidence edged higher in April, a long-running survey showed on Friday, as falling inflation helped boost sentiment. The latest GfK Consumer Confidence Index rose two points to -19, after March's score of -21 was unchanged on February. In April 2023, the index was -30.
The UK retail sector was hit by a surprise slump in sales in April, a closely-watched industry survey showed on Thursday. According to the latest Distributive Trades Survey from the Confederation of British Industry, the retail sales volumes gauge tumbled to -44 from 2 in March.
Labour promised to renationalise the UK's railway network within five years of taking office on Thursday, in a bid to address the system's challenges without compensating its existing private operators. The Labour Party said it would create a publicly owned entity, Great British Railways, to take over passenger rail contracts currently held by private companies as they expire.
Sentiment across the UK manufacturing sector improved in April, an industry survey showed on Wednesday, as output steadied. According to the latest Industrial Trends Survey from the Confederation of British Industry, output volumes were broadly unchanged in the three months to April, in contrast to the falls seen so far this year. The weighted balance was 3, versus -10 in January.
The Bank of England's chief economist, Huw Pill, said on Tuesday that rate cuts were still "some way off". In a speech at the London campus of the University of Chicago Booth School of Business, Pill warned there are greater risks associated with easing too early should inflation persist rather than easing too late if it abates.
The Bank of England's first interest rate cut of the current cycle remains some way off, its chief economist said. In remarks prepared for a speech in London, Huw Pill said that he continued to believe that the time for a first cut "remained some way off".
Britain's private sector saw robust expansion in April, according to fresh data on Tuesday, marking the sixth consecutive month of growth. The S&P Global flash UK PMI composite output index rose to 54.0, reaching its highest level since May 2023, driven primarily by a surge in service sector output.
UK households collectively saved £1.3bn on supermarket deals over the last four weeks, equating to £46 per household, according to fresh industry data released on Tuesday. The saving came amid a decline in grocery price inflation, which according to Kantar Worldpanel, had fallen to 3.2% during the same period, marking the 14th consecutive monthly drop.
UK government borrowing overshot forecasts in March, producing a budget deficit that was £6.6bn higher than expected, official data revealed on Tuesday, damaging plans for a pre-election tax cut by Finance Minister Jeremy Hunt. Public sector net borrowing, excluding state-controlled banks, came in at £12bn in March, the Office for National Statistics said. This was above expectations of around £10bn.
The average asking price of a UK home rose at its fastest annual pace in a year in April, with "top-of-the-ladder" homes seeing the biggest growth in activity, according to a survey released on Monday by property website Rightmove. Asking prices increased 1.7% on the year following a 0.8% jump in March. On the month, growth slowed to 1.1% in April from 1.5% a month earlier.
International events
Economic activity in the US slowed by more than anticipated at the turn of the year, while price pressures picked up. According to the Department of Commerce, in seasonally adjusted terms, gross domestic product grew at a quarterly annualised pace of 1.6%.
Turkey's central bank left interest rates on hold on Thursday at 50% as it said it was keeping a close eye on inflation. The decision to stand pat came a month after the Central Bank of the Republic of Türkiye surprised markets by hiking its key rate to 50% from 45%.
German consumer sentiment has continued to strengthen, a closely-watched survey showed on Thursday. The latest GfK Consumer Climate Indicator rose to -24.2 heading into May, the highest reading in two years and above forecasts for -25.9.
Orders in the US for goods made to last more than three years rose by slightly more than expected last month. Yet the details of the report were noticeably weaker. According to the US Department of Commerce, in seasonally adjusted terms durable goods orders grew at a month-on-month pace of 2.6% in March (consensus: 2.5%).
US mortgage applications fell by 2.7% week-on-week in the seven days ended 19 April, trimming the 3.3% increase from halfway through the month to mark the sharpest weekly decline since early February, according to the Mortgage Bankers Association of America. Last week's decline in mortgage applications came as mortgage rates jumped 11 basis points to 7.24%, the highest level seen since November, amid hotter-than-expected economic data and stubborn inflation led to sharp selling pressure for US Treasuries.
German business sentiment improved in April, according to a survey released Wednesday by the Ifo Institute. The business climate index rose to 89.4 from 87.9 in March, above consensus expectations of 88.8. The current situation index ticked up to 88.9 from 88.1, while the expectations index printed at 89.9 in April versus 87.7.
New home sales in the United States bounced back strongly in March after a sharp downwards revision to numbers the month before. New privately-owned home sales jumped by 8.8% to a seasonally-adjusted annualised rate of 693,000 last month, according to the US Census Bureau.
Tesla is set to trim around 400 positions at its German gigafactory near Berlin, it emerged on Tuesday, accounting for 3% of the factory's total workforce. The company said the move aimed to be executed through voluntary measures, steering clear of compulsory layoffs.
Eurozone business activity grew at the fastest pace for nearly a year in April, according to preliminary data released on Tuesday. The HCOB flash composite purchasing managers' index rose to 51.4 from 50.3 in March, hitting an 11-month high. This was above the 50.0 mark that separates contraction from expansion and ahead of consensus expectations for a reading of 50.7.
China left benchmark lending rates unchanged in line with market expectations. The one-year loan prime rate (LPR) was kept at 3.45% and the five-year - which influences the pricing of mortgages - unchanged at 3.95%.
Reporting by Sharecast.com staff and contributors.
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