Weekly review
By Josh White
Date: Friday 29 Nov 2024
(Sharecast News) - The FTSE 100 ended the week up 25.22 points, or 0.31%, closing at 8,287.30 on Friday.
Equity view
AIM-listed investment banking group Peel Hunt swung to a first-half profit on the back of a big jump in revenues as the business capitalised on improving market conditions, though the outlook remains uncertain. Group revenues were up 26% year-on-year at £53.8m in the six months to 30 September, helped by the company executing two IPOs, collecting material M&A fees and generating increased trading revenues early on in the period.
UK engineer TI Fluid Systems has agreed to be taken over in a deal worth more than £1bn, it was announced on Friday. The FTSE 250 company said it had accepted a 200p per share offer from Canadian rival ABC Technologies, valuing it at £1.04bn. The firm, a specialist designer, manufacturer and supplier of fluid systems for cars, called the deal a "unique opportunity".
Exploration and development firm ECR Minerals said on Friday that it has entered into a collaboration agreement with James Cook University in Queensland to further explore the potential for rare earth elements within its Lolworth Project area. ECR stated that following approval of funding for the project by the Trailblazer Steering Committee, the collaboration will see JCU recruit post-doctoral researchers and PhD students to form a dedicated team. Under the terms of the collaboration agreement, all data generated through the collaboration will be shared with ECR, further strengthening its technical insights into the region.
McBride has successfully refinanced its banking facilities, it announced on Friday, securing a €200m revolving credit facility (RCF) with a four-year maturity and the option to extend by up to two years. The London-listed consumer products maker said the new financing structure also included a €75m uncommitted accordion feature, providing flexibility for future acquisitions or additional funding needs.
Energean called third-quarter trading "strong" on Thursday, with improved earnings and a jump in production, despite conflict in the Middle East. Updating on trading for the nine months to 30 September, the Mediterranean-focused oil and gas firm said group production was 156,000 barrels of oil equivalent a day, a 31% jump on the previous year.
Construction group Galliford Try reaffirmed its positive outlook and trading momentum on Thursday, ahead of its annual general meeting. The London-listed firm said that after its full-year results announcement in October, when it highlighted robust revenue and margin growth, it continued to trade in line with the board's expectations.
Protective packaging specialist Macfarlane Group said in an update on Thursday that its performance for 2024 was set to align with full-year expectations, despite market headwinds impacting revenue and pricing. The London-listed firm said that for the 10 months to 31 October, revenue was 4% lower year-on-year, driven by weaker volumes and reduced pricing across most sectors.
AEW UK REIT reported a robust half-year financial and operational performance on Thursday, driven by gains in property valuations and steady rental income from its diversified portfolio of 32 commercial properties across the UK. The London-listed real estate investment trust's net asset value (NAV) increased to £172.76m, or 109.05p per share, up from £162.75m and 102.73p per share at the end of March.
GSK's liquid meningitis vaccine Menveo has been approved by EU regulators, paving the way for a simpler vaccination process against invasive meningococcal disease (IMD). The European Commission's approval means Menveo is now licensed for active immunisation of children from 2 years of age, adolescents and adults to help protect against IMD - the leading cause of meningitis and septicaemia.
Pennon Group reported a statutory loss before tax of £38.8m for the first half on Wednesday, swinging from a profit of £3.2m year-on-year, as restructuring costs and investments weighed on the bottom line despite a 17.5% increase in underlying revenue to £527.2m. The FTSE 250 water utility said its statutory loss reflected £16m in costs associated with restoring water supplies to Brixham and £4m in restructuring expenses as it reshaped its operations for greater efficiency.
Luxury carmaker Aston Martin has announced it has raised £210m through share and private debt placings to support its growth and investment strategy and shore up its balance sheet, one day after announcing its second profit warning within two months. The company, officially known as Aston Martin Lagonda Global, announced plans for the equity issue on Tuesday as it guided to full-year adjusted EBITDA of £270m-280m, compared with previous guidance for profits "slightly below" the £305.9m earned last year.
Johnson Matthey posted a drop in sales and profits on Wednesday, weighed down by the "challenging" macroeconomic backdrop. Reported revenues at the chemicals and specialist technologies firm fell 14% in the six months to September to £5.6bn. Stripping out disposals, sales fell by 5%, or by 3% on a constant currency basis, to £1.2bn.
Electrical retailer AO World lifted full-year forecasts after a surge in interim earnings, despite what its chief executive called a "Morecambe and Wise" summer. The company said it now expected adjusted profit before tax of £39m - £44m, compared with the previous range of £36m - £41m. Interim profits for the six months to September 30 rose 30% to £17m despite a tough summer hit by lower pricing and weak demand for cooling products.
Food producer Cranswick backed its guidance for the full year on Tuesday as it reported a jump in interim profit and revenue amid "healthy" demand. In the 26 weeks to 28 September, adjusted pre-tax profit rose 17.4% to £95.8m on revenue of £1.3bn, up 6.1% on the same period a year earlier. Adjusted group operating profit was up 16.5% to £99.6m.
Food service giant Compass Group reported a robust full-year performance on Tuesday, with a 10.6% increase in revenue to $42.2bn. The FTSE 100 company said underlying operating profit rose 16.4% for the 12 months ended 30 September, to $2.998 billion, supported by a 30 basis point improvement in operating margin to 7.1%.
Testing laboratories company Intertek on Tuesday lifted annual guidance as it reported a 6.6% jump in like-for-like revenue for the four months to October 30. Sales for the period came in at £1.1bn. "In 2024, we are increasing our full year guidance and now expect our consumer products division to deliver high-single digit like-for-like revenue growth at constant currency," the company said in a trading statement.
Anglo American has agreed to sell its portfolio of steelmaking coal mines that it operates in Australia to Peabody Energy for $3.77bn in cash as part of its pivot to be a copper, premium iron ore and crop nutrients business. The deal follows the mining giant's sale of its interest in the Jellinbah coal mine in Queensland, Australia for $1.1bn earlier this month.
Rentokil Initial said on Monday that it has appointed Paul Edgecliffe-Johnson as chief financial officer with effect from 1 January 2025. He will succeed Stuart Ingall-Tombs, who is retiring and will step down from the board at the end of this year after 17 years with the company, most recently as CFO for four years.
Hotels group InterContinental has signed a new agreement with JPMorgan Chase Bank to launch new co-branded credit cards to its IHG One Rewards scheme members in the US. The co-branded credit cards, which generate ancillary fee streams for IHG in exchange for giving banks access to the loyalty programme and customer base, will be available immediately and run through to 2036 under the initial term.
AstraZeneca announced positive results from a phase three prostate cancer trial on Monday, reporting that its AKT inhibitor 'Truqap', or capivasertib, in combination with abiraterone and androgen deprivation therapy (ADT), significantly improved radiographic progression-free survival (rPFS) in patients with PTEN-deficient metastatic hormone-sensitive prostate cancer (mHSPC). The FTSE 100 pharmaceutical giant said it marked the first time an AKT inhibitor combination had shown clinical benefit in that subtype of prostate cancer.
Economic news
Mortgage approvals hit a two-year high in October, Bank of England data showed on Friday, as the UK housing market continued to regain ground. According to the BofE's latest Money and Credit report, net mortgage approvals for house purchase - a key indicator of future borrowing - rose to 68,303 in October, the highest level since August 2022.
Lower mortgage rates have supported a return to house price growth across every region of the UK, according to Zoopla, which has predicted a 2.5% increase in prices next year with buyer demand up by a quarter on last year. According to Zoopla's monthly house price index, the average house price in the UK in October was £267,200, slightly down on the month before but 1% higher than October 2023.
Retail footfall tumbled in November, industry data showed on Friday, hit by stormy weather, weak consumer confidence and tough comparatives. The latest Sensormatic footfall monitor from the British Retail Consortium showed total UK footfall fell 4.5% in November year-on-year.
UK car manufacturing output declined 15.3% in October, with just 77,484 vehicles produced, marking the eighth consecutive month of contraction, according to data released on Thursday by the Society of Motor Manufacturers and Traders (SMMT). Production for domestic sales fell 4.7%, while exports dropped 17.6%, with the EU - accounting for over half of export volumes - seeing a sharp 34.6% decline.
UK consumer confidence remained largely unchanged following the Budget, a survey showed on Thursday, weighed down by ongoing concerns about the strength of the economy. According to the latest consumer sentiment monitor from the British Retail Consortium, expectations for personal finances over the next three months improved slightly, ticking up to -3 in November from -4 in October.
The Rail, Maritime and Transport (RMT) union said it had settled its long running pay dispute with London Underground, calling the result a "substantial victory". Transport for London (TfL), which operates the capital's rail and bus network, had tabled an improved offer earlier this month, leading the RMT to suspend planned industrial action.
The Financial Conduct Authority said on Wednesday that it has fined András Sebők, former chief supply chain officer at Wizz Air, for trading company shares when he wasn't allowed and failing to disclose his trades. Sebők, who was fined £123,500, carried out the trades in his capacity as a person discharging managerial responsibility (PDMR) at Wizz Air.
The Competition and Markets Authority (CMA) published its findings on loyalty pricing in the UK grocery sector on Wednesday, concluding that such practices were not creating unfair disadvantages after a nearly year-long review. It found that loyalty schemes generally offer genuine savings for members without inflating regular prices.
UK retailer sentiment fell at the fastest pace in two years throughout November, according to the Confederation of British Industry. Retail sales volume declined to -18% in November, down from -6% in October, with retailers also saying they expect to see sales decline at a faster pace of -29% next month.
Shop prices in the UK continued to decline in November, it was reported on Tuesday, but the rate of deflation slowed, signaling a potential shift in inflationary trends. According to the latest BRC-NielsenIQ Shop Price Index, prices fell 0.6% year-on-year during the first week of November, a slight increase from October's 0.8% deflation and marginally above the three-month average of -0.7%.
International events
Euro area inflation picked up in November in annual terms, although some economists were expecting that it would soon head lower again. According to a preliminary estimate from Eurostat, in seasonally adjusted terms, prices fell by 0.3% month-on-month, as services prices fell by 0.9% whilst those for energy rose by 0.6%. Year-on-year, however, price growth accelerated from 2.0% in October to 2.3%, although that was as forecast by economists.
German retail sales fell more than expected in October, down 1.5% compared with the previous month, according to official data published on Friday. The figures compared with a 1% rise in October 2023 and expectations of a 0.3% decline, the Federal Statistics Office said.
French inflation picked up as expected in November as consumer price growth continued to rebound from a three-year low in September, according to preliminary estimates released on Friday by INSEE. The harmonised index of consumer prices registered a 1.7% rise compared with last November, up from 1.6% the month before, INSEE reported.
German inflation has risen to 2.2% for November, according to a flash estimate from the Federal statistics office. The figure compares with 2% in October and 1.6% in September. Core inflation, which excludes volatile items such as food and energy, is expected to be 3.0%.
France's borrowing costs briefly topped those of Greece on Thursday, as political tensions around controversial budget plans mounted. The country's 10-year bond yields hit parity with Greece's early on Thursday morning for the first time. They went on to touch 3.022% before easing back to 2.978%. Greece's yields reached 3.013% before falling to 2.987%.
Economic confidence in the eurozone edged higher in November, according to a survey released on Thursday by the European Commission, but remained below its long-term average. The Economic Sentiment Indicator for the single-currency region rose 0.1 points to 95.8, surprising economists who had predicted a fall to 95.1.
The Commerce Department revealed on Wednesday that the US economy expanded 2.8% in the three months ended 30 September, in line with preliminary estimates, on the back of solid strong consumer spending and increased exports. Q3's GDP reading was down from Q2's rate of 3% but still seemed to indicate that the US economy proved to be surprisingly durable throughout the period.
Americans lined up for unemployment benefits at a broadly flat pace in the week ended 23 November, according to the Labor Department. Initial jobless claims held steady at 213,000 last week, below expectations of a modest uptick to 216,000, extending the view that the US labour market remains at historically strong levels despite the Federal Reserve's aggressive tightening cycle of recent quarters and giving the central bank space to slow the pace at which it loosens monetary policy.
Consumer morale in Germany has fallen to a seven-month low with fears about a recession and unemployment weighing heavily on income expectations, according to a closely watched survey by the GfK Group and the Nuremberg Institute for Market Decisions (NIM). The forward-looking Consumer Climate Indicator for December fell to -23.3, down from a revised -18.4 in November, GfK and NIM said on Wednesday.
The Reserve Bank of New Zealand lowered its official cash rate (OCR) by 50 basis points to 4.25% on Wednesday, marking its second consecutive half-point cut. The move aligned with forecasts, with 22 of 23 economists surveyed by Bloomberg anticipating the decision. RBNZ governor Adrian Orr indicated that another 50-point reduction could occur in February, contingent on the economy evolving as projected.
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