Weekly review
By Josh White
Date: Friday 24 Jan 2025
(Sharecast News) - The FTSE 100 ended the week down 2.87 points, or 0.03%, closing at 8,502.35 on Friday.
Equity view
The rate of sales decline at Burberry eased significantly in the luxury fashion brand's third quarter as recent actions to turn the business around started to bear fruit. Retail revenues were down just 7% year-on-year in the three months to 28 December at £659m, following a 22% sales slump in the first half. Comparable store sales fell by just 4% in the third quarter, compared with a 20% drop in the first half.
Rolls-Royce said on Friday that it has been awarded the biggest UK Ministry of Defence (MoD) contract in its history. The Unity contract, which is worth around £9bn, stretches over eight years and brings together all elements of research and technology, design, manufacture and in-service support of the nuclear reactors that power the Royal Navy's fleet of submarines.
Specialist buy-to-let mortgage lender Paragon Bank held annual guidance and said first-quarter margins had been running above expectations. Buy-to-let lending totalled £432.2m in the quarter, up from £336.3m last year, while commercial lending advances fell to £254.2m from £274.4m previously, Paragon said in a trading update covering the three months to December.
Arts, crafts, books and stationery retailer The Works trimmed losses in the first half on the back of cost savings and actions taken to grow product margins, as the company reiterated profit guidance for the full year. The company reported an adjusted EBITDA loss of £2.8m for the six months to 3 November, compared with a £8.5m loss the year before, helped by a 220-basis point margin improvement.
Precision instruments supplier Spectris said it expects to beat market expectations with its 2024 results. In a brief trading update on Thursday, the company said its fourth-quarter performance was in line with expectations, but strong "operational execution" meant that adjusted operating profit for the year will be above the upper end of analysts' forecasts, which range from £183.3m to £201m. Spectris had said in October that it was targeting an adjusted operating profit or around £200m.
Capricorn Energy said it had received $50m from Woodside Energy after satisfying all terms and conditions under the sale and purchase agreement relating to the disposal of its production sharing contract (PSC) interests in Senegal. The company said it was still committed to returning any available proceeds of the cash to shareholders but added that the "precise amount and timing" of distribution remained subject to any disputed tax obligations.
Online trading platform IG Group reported a jump in interim profit on Thursday in "more supportive market conditions" and said it was extending its share buyback programme. In the six months to 30 November 2024, adjusted pre-tax profit rose 30% on the same period a year earlier to £266.8m, on total revenue of £522.5m, up 11%. Net trading revenue grew 12% to £451.7m, driven by higher revenue per client.
Casual-dining hospitality group SSP has announced that its deputy chief executive and long-standing chief financial officer is to leave the company after two decades. The company, which owns brands like Millie's, Upper Crust and Camden Food Co across retail and travel locations worldwide, said in a statement on Thursday that Jonathan Davies has given his notice to retire.
Budget airline easyJet said it was on track to hit targets this financial year after an in-line performance over its first quarter, as losses halved year-on-year. The company reported a headline loss before tax of £61m for the three months to 31 December, compared with a loss of £126m a year earlier, as group revenues rose 13% to £2.04bn. easyJet said it was seeing strong demand heading into a traditionally busy Easter period, while bookings continue to build for summer.
UK pub chain Wetherspoons said increases in the minimum wage and employer national insurance contributions would cost £60m as it reported a 5.1% jump in like-for-like sales in the 25 weeks to January 19. Bar sales increased by 4.5%, food by 5.6% and slot/fruit machines by 11.7%. Hotel room sales fell 6.5%.
London-focused property group Great Portland Estates said it saw "strong leasing success" over the third quarter ended 31 December, with new leasing deals secured well ahead of estimated rental value (ERV). Some 15 new leases and renewals were signed in the third quarter, generating £9m of rent per annum, with Great Portland's share being £6.7m. On average, market lettings were 16.3% ahead of ERV as of March 2024.
Shares in Trainline were sliding on Wednesday morning, even after the UK government committed to a competitive private sector ticket retail market in the rail industry on Wednesday, as part of an update from the Department for Transport (DfT) regarding future online rail ticket retailing. The DfT confirmed its plans to establish Great British Railways (GBR) as the central online ticket retailer for the rail network once legislation was passed.
Premier Foods reported a 3.1% increase in group sales in a third quarter update on Tuesday, with branded sales rising by 4.6%, driven by volume-led growth and market share gains. It said grocery branded sales grew by 3.5%, while 'sweet treats' saw an 8.9% increase and international sales surged by 29%, supported by strong performance in new categories such as Ambrosia porridge pots. The company said it now expected full-year trading profit to be at the upper end of its previous guidance.
Cranswick backed its full-year expectations on Tuesday as it reported strong third-quarter revenue growth and announced the acquisition of UK pig genetics business JSR Genetics. In an update for the 13 weeks to 28 December, the food producer said revenue growth was again underpinned by "excellent" volume growth across its core UK food business, as customers and the UK consumer "continue to appreciate the affordability, value for money and versatility of our core pork and poultry categories".
Elementis said on Tuesday that full-year operating profit was set to be ahead of market expectations following a strong fourth-quarter performance. For the three months to the end of December 2024, the specialty chemicals company hailed continued revenue growth and double-digit profit growth across Coatings and Personal care compared with the same period a year earlier.
Tritax Big Box announced the £70m acquisition of a 74-acre site within the Slough Availability Zone at Heathrow on Tuesday, to develop a major data centre project with a total potential capacity of 147 megawatts. The FTSE 250 real estate investment trust said it had also secured a 50% stake in a joint venture with an unnamed European renewable energy provider, enabling accelerated power delivery through pre-existing grid connections.
European regulators have expanded the usage of GSK's Jemperli drug for endometrial cancer, the pharmaceutical firm announced on Monday. The European Commission said that, when used alongside chemotherapy, Jemperli (otherwise known as dostarlimab) can now be used to treat people with mismatch repair proficient (MMRp)/microsatellite stable (MSS) tumours, which represent approximately 75% of patients diagnosed with endometrial cancer.
Wood Group on Monday said it had won a contract to provide long-term maintenance for Esso's onshore and offshore assets in Australia's Gippsland Basin. The company will provide maintenance services and shutdown support to optimise operational performance of offshore assets in the Bass Strait along with the Longford and Long Island Point facilities in the state of Victoria where Esso has a joint venture with Woodside Energy. No financial details were disclosed.
Private rented sector investor PRS Reit has hailed a "continued strong portfolio performance" in its second quarter with estimated rental value (ERV) from completed homes rising over the three months to 31 December. PRS Reit, which is currently in active sale discussions regarding a sale of the company, said it was talking to "a number of interested parties" but continues to explore all options focusing on maximising value for shareholders.
AstraZeneca announced on Monday that it has secured approval from the US Food and Drug Administration, alongside Daiichi Sankyo, for 'Datroway', or datopotamab deruxtecan, a treatment for adult patients with previously treated, unresectable or metastatic hormone receptor-positive, HER2-negative breast cancer. The FTSE 100 pharmaceuticals giant said the approval was based on results from the TROPION-Breast01 phase three trial, which demonstrated a 37% reduction in the risk of disease progression or death compared to chemotherapy.
Economic news
UK business activity continued to grow in January, but employment in the private sector fell for the fourth month in a row, according to a survey released on Friday. The S&P Global flash UK PMI composite output index rose to 50.9 from 50.4 in December. A reading above 50.0 indicates expansion, while a reading below signals contraction.
Consumer confidence fell sharply as the new year got underway, a long-running survey showed on Friday. The latest consumer confidence index from GfK came in at -22, a five-point drop on December and three points lower than January 2023. Within that, expectations for personal finances in the coming year dropped back into negative territory, losing three points to -2.
Consumer sentiment has weakened to fresh lows, a closely-watched survey suggested on Thursday, as the new year got off to a sluggish start. According to the latest consumer sentiment monitor from the British Retail Consortium, expectations for the next three months have softened across a number of areas.
The UK government borrowed more than expected in December, according to figures released on Wednesday by the Office for National Statistics. The government borrowed £17.8bn, up £10.1bn on December 2023. It was above the £14.6bn expected by the Office for Budget Responsibility and consensus expectations of £14.2bn.
UK unemployment ticked higher as vacancies shrank in the autumn, official data showed on Tuesday. However, wage growth picked up during the same period, adding to the pressures facing the Bank of England's interest rate-setting committee. According to the Office for National Statistics, payrolled employees eased 0.1%, or by 32,000, between October and November. The ONS added that its early estimate for December was for a further 0.2% decline on the month, by 47,000.
The average price of a property coming to market in January rose by 1.7% to £366,189 - the largest increase in prices at the start of the year since 2020, according to Rightmove. A record number of early-bird new sellers came to market since Boxing Day, the property portal said. This meant that buyers had the highest level of choice at the start of a year since 2015, which has also contributed to an encouraging start to 2025 buyer activity.
International events
Home sales in the US grew more quickly than anticipated at the end of 2024. According to the National Association of Realtors, in seasonally adjusted terms existing home sales in the States grew at a month-on-month pace of 2.2% in December to reach an annual rate of 4.24m (consensus: 4.19m). That marked the fastest clip since February 2024.
Private sector activity in the eurozone has expanded for the first time in five months, according to flash estimates out on Friday, as service-sector growth continued and the manufacturing downturn eased slightly. The initial reading of the composite purchasing managers' index (PMI) was 50.2 for January, up from 49.6 in December, according to S&P Global and the Hamburg Commercial Bank (HCOB).
Japan's central bank on Friday lifted interest rates to their highest level in 17 years following a rise in inflation, and indicated more moves could be on the way. In a widely flagged move, the Bank of Japan (BoJ) increased its short-term policy rate to "around 0.5%". Data released beforehand showed headline Japanese inflation hit 3.6% in December, or 3% adjusted for food prices, up from 2.7% in November - the fastest pace in 16 months.
Claims for unemployment benefits in the United States rose to their highest in six weeks with new claims in California at a two-year high as wildfires spread across the north-west LA area. Initial weekly jobless claims totalled 223,000 in the week ended 17 January, up 6,000 from the previous week's total of 217,000. The consensus forecast was for a smaller rise to 220,000.
Norway's central bank kept interest rates unchanged on Thursday at a 17-year high of 4.5%, as it said rates will likely be cut in March. Norges Bank said in a statement: "Since the December 2024 Monetary Policy Report, underlying consumer price inflation and unemployment have been broadly as projected. Overall consumer price inflation has been lower than expected.
New car sales in the EU were firmly higher in December, compared with a year earlier, as a surge in registrations in Spain made up for more tepid growth in France and big declines in Germany and Italy. According to the European Automobile Manufacturers Association on Tuesday, a total of 910,505 new cars were registered across the economic union last month, up 5.1% on December 2023.
Investor sentiment in Germany fell more than expected this month as economic expectations worsened following two straight years of recession, according to the Centre for European Economic Research in Mannheim, otherwise known as ZEW. The headline ZEW Indicator of Economic Sentiment, which measures confidence among institutional investors, fell to just 10.3 in January, down from 15.7 in December and firmly below the consensus forecast of 15.4.
Donald Trump plans to conduct an investigation into China's compliance with the trade deal inked with the US in 2020. The incoming president is expected to sign a memo to that effect upon entering the White House on Monday but, for now at least, the new administration will stop short of announcing new tariffs. In the same memo, Trump will also put Canada and Mexico on notice before the review of the updated Nafta deal scheduled for 2026, the Wall Street Journal reported.
The European Commission has filed a complaint with the World Trade Organisation against China over its "unfair and illegal trade practices" in setting worldwide royalty rates for EU standard essential patents without the patent owner's consent. It added that the practice "pressures innovative European high-tech companies into lowering their rates on a worldwide basis, thus giving Chinese manufacturers cheaper access to those European technologies unfairly".
China's central bank kept key lending rates unchanged for the third month in a row on Monday. The People's Bank of China (PBoC) held the one-year loan prime rate at 3.1% for corporate and most household loans, and the five-year rate at 3.6% for mortgages. In October 2024, the PBoCs slashed lending benchmarks in an attempt to boost the country's flagging economy.
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