Weekly review
By Josh White
Date: Friday 21 Feb 2025
(Sharecast News) - The FTSE 100 ended the week down 73.09 points, or 0.84%, closing at 8,659.37 on Friday.
Equity view
Asia-focused bank Standard Chartered said it would hand back $1.5bn to shareholders after a rise in annual earnings driven by its pursuit of wealthy customers, although it warned that global growth could be hit by protectionist trade policies amid threats of widespread tariffs by the new US government. Pre-tax profits for 2024 came in at $6bn, up from $5.1bn a year earlier and slightly below average estimates of $6.2bn. Unlike other banks reporting this week, StanChart also managed to lift its net interest margin - the difference between savings and lending rates - by 27 basis points to 1.94%.
Lloyds Banking Group kicked off a share buyback programme worth up to £1.7bn on Friday, following its announcement on 20 February. The FTSE 100 bank said the programme was intended to reduce the company's ordinary share capital, and would run until no later than 31 December. Morgan Stanley had been appointed to execute the buyback on behalf of Lloyds, with trading decisions made independently of the bank.
Healthcare services business Totally announced on Friday that chief executive Wendy Lawrence had agreed to step down from the role and leave the board, with immediate effect. Totally said it would initiate a formal search process to identify a new CEO as soon as possible but until such time, chief operating officer Prasad Godbole had been appointed to the role of interim CEO. Godbole will report directly to chairman Simon Stilwell.
Shares in Poolbeg Pharma were sliding on Friday, after Hookipa Pharma announced it had terminated discussions on a proposed all-share acquisition of Poolbeg, bringing an abrupt end to a deal that would have merged the two biotech companies. Poolbeg confirmed it was informed of Hookipa's decision on 20 February, marking the conclusion of talks that began in early January. The planned merger, first announced on 2 January, was intended to combine Poolbeg's rare disease focus with Hookipa's immunotherapeutics pipeline.
The chief financial officer of Wood Group has resigned with immediate effect following an incorrect description of his professional qualifications in various statements in the public domain. Wood Group said in a statement on Wednesday that an announcement on Arvind Balan's successor, and interim cover, will be made in due course. Balan said: "Regrettably, I made an honest oversight with respect to the description of my professional qualification as a chartered accountant instead of a certified practicing accountant.
Recruiter Hays reported a drop in first-half profit on Thursday amid "challenging" market conditions, as economic and political uncertainty weighed on client and candidate confidence. Hays said this drove lower placement volumes and a material lengthening of its 'time-to-hire'. In the six months to the end of December 2024, operating profit fell 56% to £25.5m, while pre-tax profit was 66% lower at £9.1m. Net fees declined 13% to £496m and the interim dividend was left unchanged at 0.95p per share.
Mining giant Rio Tinto posted its weakest earnings in half a decade overnight, principally due to weaker iron ore prices. Rio Tinto said underlying earnings had dropped from $11.76bn in FY23 to $10.87bn in FY24, missing analysts' estimates, while EBITDA of $23.3bn also fell short of the $23.6bn consensus estimate. On a per share basis, earnings of $6.70 were short of expectations of $6.80 but Rio Tinto's final dividend of $2.25 per share was in line with expectations.
Self-storage firm Safestore said on Thursday that it had delivered "improving like-for-like growth" across all markets during Q1, supported by growth from opened developments. Safestore said total revenues were up 2.6% at £56.7m in Q125, while closing occupancy increased 4.1% to 6.36m square feet and maximum lettable area grew 8.2% to 8.90m square feet. On a like-for-like basis, revenues were up 1.7% at £55.8m, closing occupancy was up 1.4%, and REVPAF improved 1.2%.
BAE Systems posted strong full-year growth on both its top and bottom lines. Sales at the defence engineer rose by 14% to reach £28.3bn over the 12 months ending on 31 December 2024. Underlying profit registered a similar percentage point gain to £3.02bn.
BP is reportedly considering a potential sale of its lubricants business. Bloomberg cited people familiar with the matter as saying that the oil major's unit - which operates under the Castrol brand - could be worth about $10 billion in a deal. It was understood that a sale of the business is one of the many options BP is considering to win back investor confidence after years of underperformance. The unit is also among the assets that activist investor Elliott Management has identified for potential disposals.
Cruise giant Carnival priced a $1bn private offering of 5.75% senior unsecured notes due 2030 overnight, it announced on Wednesday morning, as part of its ongoing effort to lower borrowing costs. The FTSE 250 company said it intended to use the proceeds, alongside existing cash, to redeem its existing $1bn 10.5% senior unsecured notes due 2030. It said the transaction would reduce its annual net interest expenses by about $45m, adding that the new notes would be governed by an indenture with investment grade-style covenants.
HSBC Holdings beat analysts' profit estimates and unveiled a fresh share buyback programme. Reported revenues fell by 11% during the fourth quarter to reach $11.6bn, with the lender citing the recycling of FX losses and other reserves related to the divestment of its Argentine unit as the causes of that. Reported profit before tax meanwhile was ahead by $1.3bn to $2.3bn or by $0.4bn to $0.6bn on an after tax basis.
Anglo American on Tuesday said it was selling its nickel business to Singapore's MMG for up to $500m. The unit comprises two ferronickel operations in Brazil and two greenfield growth projects. The purchase comprises $350m in cash at completion; the potential for up to $100m in a price-linked earnout and $50m linked to the final investment decision for the development projects.
BHP slashed its dividend and reported a sharp fall in half-year profits as lower iron ore prices caused by weaker demand from China offset higher copper earnings. Underlying attributable profit at the world's largest miner fell 23% to $5.08bn for the six months to December 31, missing estimates of $5.39bn. The interim dividend of 50 cents a share was its lowest in eight years, down 22 cents on last year's payout. Underlying operating earnings from iron ore fell 26% to $7.2bn, while copper profits surged 44% to $5bn on the back of higher prices.
Assura confirmed on Tuesday that it had rejected a £1.56bn takeover proposal from US private equity firm Kohlberg Kravis Roberts (KKR). The healthcare property investor and developer said it considered the 48p per share offer carefully and concluded that it "materially undervalued" the company and its prospects and therefore rejected it unanimously. No further proposal from KKR has been received, Assura said.
InterContinental Hotels Group (IHG) reported a full year of growth on Tuesday, alongside a fresh $900m share buyback programme and the acquisition of the Ruby lifestyle hotel brand. The FTSE 100 hotel giant, which operates a multitude of brands including Crowne Plaza and Holiday Inn, said revenue from reportable segments in 2024 rose 7% to $2.31bn, while operating profit increased 10% to $1.12bn. Adjusted earnings per share climbed 15% to 432.4 cents.
GSK said the US Food and Drug Administration has approved its Penmenvy drug to treat meningitis for use in individuals aged 10 - 25 years. The vaccine targets five major serogroups of Neisseria meningitidis (A, B, C, W, and Y) which commonly cause invasive meningococcal disease (IMD).
Anglo American Platinum is paying shareholders an extra £680m cash dividend ahead of its planned spinoff into a standalone unit by June this year, the company said on Monday. The payout is in addition to the final dividend of 3 rand per share ahead of its plan to demerge from parent company Anglo American.
MONY Group boosted its full-year profits, which allowed it to improve its shareholder returns. The owner of money-saving platforms said that its profit rose by 11% to £80.2m on an after tax basis, while the operating profit in EBITDA terms was ahead by 7% to £141.8m. Topline growth meanwhile was pegged at 2% to reach £439.2m.
Online marketplace operator Auction Technology said on Monday that it has successfully completed the refinancing of its senior term and revolving credit facilities. Auction Technology said it has entered into a new $200.0m RCF with a syndicate of five banks. It said the new facility has a four-year term, with a one-year extension option, and replaces previous facilities due to mature in 2026.
Economic news
UK lenders paid "advance commissions" to car dealers that may have encouraged them to push costlier loans on to consumers, the Guardian reported, citing legal filings linked to the motor finance scandal. Lenders are currently under investigation over motor financing and campaigners said millions of pounds in commission upfront to individual dealerships.
Private-sector activity growth in the UK eased slightly in February, according to the latest purchasing managers' index from S&P Global, driven by the sharpest contraction in manufacturing output in more than a year. The 'flash' reading of the UK composite PMI - which measures activity in both the services and manufacturing sectors combined - fell to 50.5 this month from 50.6 in January, meeting analysts' predictions. Growth unexpectedly picked up in the services sector, with the PMI rising to 51.1 from 50.9, ahead of the consensus forecast of 50.8.
Four major banks had reached an agreement with the Competition and Markets Authority to pay combined fines of more than £104.0m after the watchdog found that traders had shared sensitive information with one another between 2009 and 2013. The CMA announced that Citi would pay £17.2m, while HSBC was to be fined £23.4m, Morgan Stanley £29.7m and Royal Bank of Canada £34.2m. Deutsche Bank, however, received immunity after it informed authorities of its conduct.
January's monthly budget surplus was the biggest on record but missed expectations, according to figures released on Friday by the Office for National Statistics. Public finances recorded a £15.4bn surplus in January, up £800m on the previous year. This marked the highest figure for January since monthly records began in 1993. Nevertheless, the figure was below the £20.5bn forecast by the Office for Budget Responsibility and consensus forecasts of £18.8bn.
Retail sales bounced back more than expected last month, according to figures released on Friday by the Office for National Statistics. Retail sales grew 1.7% on the month following four consecutive months of falls and after a downwardly-revised 0.6% drop in December. Economists were expecting a smaller increase of 0.3%. The ONS said food store sales volumes grew strongly in January 2025, following falls in recent months.
Consumer confidence in the UK increased month-on-month in February, according to fresh survey data released on Friday, although concerns around the state of the economy put a dampener on optimism. The GfK consumer confidence index rose two points to -20 in February, marking a slight improvement compared to the prior month. While consumers remained cautiously optimistic about their financial situation, with an index measuring changes in personal finances over the past year improving three points to -7, they were increasingly uncertain about the economic outlook.
Manufacturing output volumes fell again in the quarter to February, but expectations turned positive, according to the latest industrial trends survey released on Thursday by the Confederation of British Industry. Output volumes fell at a broadly similar pace to January, with a net balance of -12 versus -13. Expectations improved, however, with manufacturers anticipating output volumes to rise in the three months to May and a balance of +8% compared to -19% in January. Output fell in 16 out of 17 sub-sectors, with the fall driven by the glass & ceramics, building materials and metal manufacturing sub-sectors.
Consumer confidence in the UK worsened this month, according to a survey from the British Retail Consortium (BRC) on Thursday, with views about the economic situation and personal finances taking a hit. The BRC Consumer Sentiment Monitor for February showed that 50% of people expect the state of the UK economy to worsen over the next three months, up from 48% in January and 42% in December.
Growth in average UK house prices accelerated in December, according to data released on Wednesday by the Office for National Statistics. House prices rose 4.6% to £268,000 in the 12 months to December 2024, up from 3.9% in November. The figures also showed that average private rents were ahead 8.7% in the 12 months to January 2025, down from 9% growth in December.
The annual rate of consumer price inflation rose to 3% in January from 2.5% the month before, versus expectations for a smaller uptick to 2.8%, according to figures released on Wednesday by the Office for National Statistics. On a monthly basis, CPI fell 0.1% last month, compared with a 0.6% fall in January 2024. The ONS said the largest upward contribution to the monthly and annual changes came from transport, and food and non-alcoholic beverages, while the largest downward contribution came from housing and household services.
International events
Business activity in the eurozone grew slightly in February on the back of weakening demand and the woes of the long-suffering manufacturing sector continued according to a flash survey result published on Friday. The flash eurozone composite PMI output index came in at 50.2, unchanged from January, just above the 50-point mark that indicates contraction. Overall demand in the single currency zone declined for a ninth straight month and at a faster pace with the composite new business index falling to 48.6 from 49.3 in January.
Americans lined up for unemployment benefits at an accelerated pace in the week ended 15 February, according to the Labor Department. Initial jobless claims rose by 5,000 to 219,000 last week, ahead of expectations for a reading of 215,000, while continuing claims were broadly in line with expectations at 1.869m. The four-week moving average, which aims to smooth out week-to-week volatility, decreased by 1,000 week-on-week to 215,250.
The pace of factory activity in the US mid-Atlantic region slowed in February, following a surge during the previous month. The Federal Reserve Bank of Philadelphia's regional manufacturing sector index slipped from a reading of 44.3 during the first month of the year to 18.1. Consensus had been for a reading of 20.0. A sub-index of new orders meanwhile fell back from 42.9 to 21.9.
Production in the eurozone construction sector remained stable in December, while rising by 0.4% in the wider European Union, according to preliminary data released by Eurostat on Thursday. That followed growth of 0.6% in the euro area and 0.8% in the EU in November. On an annual basis, construction output in December fell by 0.1% in the single currency bloc and by 0.8% in the EU compared with the same month in 2023.
Germany's producer prices rose 0.5% in January compared to the same month in 2024, according to fresh data released on Thursday by the Federal Statistical Office, Destatis. The annual increase was mainly driven by higher prices for non-durable consumer goods, capital goods, and durable consumer goods. However, producer prices edged down by 0.1% from December 2024. Energy prices declined both year-on-year and on the month, offsetting some of the overall price gains.
China's central bank held key interest rates unchanged on Thursday, in line with estimates amid trade tensions with the US. The People's Bank of China held the one-year loan prime rate (LPR) at 3.1%, and the five-year LPR at 3.6%. The rates affect lending from mortgages to business borrowing.
Construction starts on privately owned housing in the United States sank sharply in January, according to figures out on Wednesday from the Census Bureau. Housing starts came in at a seasonally adjusted annual rate of 1.37m, down 9.8% from the 10-month high of 1.52m registered in December after a 16% surge that month. This was below the 1.40m expected by analysts, and just under the 1.38m level seen in January 2024, as severe wintery weather and snowstorms curtailed construction activity.
US mortgage applications fell 6.6% in the week ended 14 February, according to the Mortgage Bankers Association of America. The decline reversed the two prior weeks' increases and marked the sharpest drop so far this year despite another week of softening in benchmark interest rates. Applications to refinance a mortgage sank by 7%, while applications to purchase a new home fell by 6%.
US and Russian officials ended their controversial meeting in Saudi Arabia on the future of a post-war Ukraine and pledged to explore closer economic and diplomatic ties. The talks in Riyadh - which excluded the Ukrainians or any representatives from Europe - wrapped up after five hours amid concerns that any settlement to end the three-year conflict after Russia's unprovoked invasion of its neighbour, would favour Moscow and leave neighbouring states at risk of Russian aggression.
The National Association of Housebuilders' housing market index fell to 42 in February, down from 47 in January for the lowest reading in the last five months. Concerns regarding tariffs, elevated mortgage rates and high housing costs weighed on the gauge. Current sales conditions fell four points to 46, while the component measuring sales expectations over the next six months sank 13 points to 46, and the gauge charting potential buyer traffic declined by three points to 29.
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