Weekly review

The FTSE 100 ended the week down 37.23 points, closing Friday’s session at 7,151.21.

Equity view

Luxury fashion house Burberry said on Friday that first-quarter same-store sales increased just 1% year-on-year as sales were impacted by lockdowns across mainland China. Burberry stated retail revenues for the 13 weeks ended 2 July came to £505.0m, up 5% at reported currency and unchanged at constant exchange rates. Excluding mainland China, comparable store sales grew 16%, while comparable store sales across Europe, the Middle East, India, and Africa grew 47% year-on-year.

Sales, marketing, and support services group DCC said on Friday that it delivered "strong growth" in the "seasonally less significant" first quarter of its new trading year. DCC stated group operating profit was in line with expectations and well ahead of the prior year, driven by strong growth in DCC Energy.

Luxury car maker Aston Martin has announced a £653m equity capital raise to "meaningfully" de-leverage the balance sheet, in a move that will result in Saudi Arabia’s sovereign wealth fund becoming its second-biggest shareholder. The company will place 23.3m shares at 33p each with Saudi Public Investment Fund (PIF) to raise £78m in exchange for a 16.7% stake. This will make PIF the car maker’s second-largest shareholder after chairman Lawrence Stroll. There will also be a rights issue to raise £575m.

Independent investment manager Ninety One revealed on Friday that assets under management had slipped during the three months ended 30 June. Ninety One said assets under management were £134.9bn at the end of the quarter, down from £139.0bn at the same time a year earlier and £143.9m at the end of the twelve weeks ended 31 March.

Fever-Tree shares tumbled on Friday as the tonic maker downgraded its full-year profit guidance amid higher costs and highlighted an "exceptionally challenging" environment. The group said the impact of logistics and cost headwinds has significantly worsened in recent months, and it now expects gross margins of around 37% and an EBITDA margin of circa 14% for the first half.

Infrastructure investor HICL Infrastructure has raised £160.0m through the issue of 94.67m new ordinary shares, with strong support from both existing and new investors. HICL said on Friday that total applications had exceeded gross proceeds accepted and stated a scaling back exercise has since taken place. HICL added that it will issue 91.70m new ordinary shares pursuant to the issue and 2.97m new ordinary shares pursuant to the retail offer by PrimaryBid.

Mining giant Rio Tinto warned on Friday that both Covid 19-related labour shortages across Western Australia and rising inflation were set to weigh on its second-half underlying earnings performance. Rio Tinto posted a miss across the board with its second-quarter output update, with Pilbara iron ore shipments up 4.7% year-on-year at 79.9 megatonnes, narrowly missing estimates of 80 megatonnes.

Water supply company Severn Trent said on Thursday that it had made "a good start" to the year operationally, with the group now expecting to receive at least £50.0m in outcome delivery incentive outperformance payments in 2023. Severn Trent added that as expected, it has also seen an increase in operating costs, particularly energy and chemicals, but also noted that it had benefited from its "decade of investment" into renewable energy generation and generated 145-gigawatt hours of energy in the first quarter - over 50% of its total consumption.

Mining giant Anglo American has partnered with Japan's Nippon Steel to accelerate a transition to lower carbon steelmaking. Anglo American said on Thursday that the project will also focus on studying the use of its iron ore in a "more carbon-efficient" direct reduction iron steelmaking method, which it estimates will generate "significantly lower emissions" than the standard routes of blast furnaces and basic oxygen furnaces.

Barratt Developments said annual profits were on track to beat forecasts, after buoyant demand for new homes helped sales return to pre-pandemic levels. Updating on trading ahead of publishing full-year numbers, the house builder said it had seen “strong” demand across the country, with total completions returning to pre-pandemic levels. A total of 17,908 homes were completed in the year, compared to 17,243 a year previously and 17,856 in 2019.

Drugmaker Dechra Pharmaceuticals has launched a private placement of €50.0m seven-year and €100.0m ten-year new senior unsecured notes. Dechra said on Thursday that the issue has "similar covenants" to its existing facilities, while the weighted average coupon of the fixed rate notes will equate to 3.8%.

Global information services giant Experian reiterated its annual targets on Thursday following a strong start to the year. Updating on first quarter trading, the credit data specialist said total revenue growth was 7% at actual exchange rates in the three months to 30 June, or 9% at constant exchange rates. Organic revenue growth was 8%.

Property developer Countryside Partnerships revealed on Wednesday that chairman John Martin had decided to resign from all his roles at the company with immediate effect. Countryside said senior independent director Douglas Hurt will take over as chairman, while Amanda Burton will replace Hurt, effective immediately.

Shipping services group Clarkson said on Wednesday that it now expects to report unaudited underlying pre-tax profits of no less than £42.0m for the six months ended 30 June. Clarkson added that its first-half performance had been "strong" across all divisions, with its broking unit performing "particularly well".

Technology services firm Computacenter has acquired US value-added reseller Business IT Source for an undisclosed sum. Computacenter said on Wednesday that BITS' existing leadership team will stay on to run the business as a separate operating unit within the firm's US division as part of an effort to maximise the growth opportunity.

JD Wetherspoon said in an update on Wednesday that like-for-like sales in the first 11 weeks of its fourth quarter were 0.4% below the same pre-pandemic period in 2019 - an improvement compared to the prior quarter, when sales were down 4%. The FTSE 250 pub operator said sales of spirits were up 4.4%, cocktails up 18.6%, food up 2.1%, hotel rooms up 8.4%, and fruit machines ahead 16.6%, while draught ales, lagers and ciders - historically the largest contributors to pub sales - were 8% below 2019.

Landscaping products manufacturer Marshalls delivered group revenues of £348.0m in the six months ended 30 June, up 17% year-on-year. Marshalls said on Tuesday that its interim revenue growth was partly due to benefits stemming from its recent acquisition of Marley, which it said "traded strongly" in the first two full months of its ownership.

Infrastructure group Balfour Beatty has sold its 67% interest in Aspire at Discovery Park, the on-campus student accommodation at Purdue University in West Lafayette, Indiana. Balfour Beatty said on Tuesday that Purdue Research Foundation will purchase the property for $150.0m, with the transaction expected to complete in August.

Building materials distributor Grafton said on Tuesday that it had delivered a "good trading performance" in the first half of the year and stated it was now in a "very strong" financial position. Grafton stated total revenues were up 13.9% in constant currency, while average daily like-for-like revenue growth of 3.4% was complemented by "a significant contribution" from acquisitions in Finland, the UK, Ireland, and the Netherlands.

United Utilities has agreed to sell its portfolio of renewable energy assets in a £100m deal, it was confirmed on Tuesday. The blue chip utility is selling its dedicated renewable energy unit, United Utilities Renewable Energy, to SDCL Energy Efficiency Income Trust, a listed trust managed by investment firm Sustainable Development Capital.

Pizza delivery chain Domino's Pizza Group has tapped Edward Jamieson to take over as chief financial officer, succeeding current interim CFO David Surdeau. Domino's said on Monday that Jamieson, who previously served as Just Eat's UK & Ireland regional finance director, was expected to join both the group and its board of directors in October. Surdeau will stay on until November in order to ensure an orderly handover of responsibilities.

Transport operator Go-Ahead said on Monday that it expects to report a "good" performance for the year to 2 July as passenger demand recovers. In the regional bus division, there has continued to be a steady recovery in passenger demand, with commercial volumes across the business now more than 85% of pre-pandemic levels, it said.

Galliford Try has agreed to buy Coventry-based MCS Controls Systems, a systems integrator to the industrial and utilities sectors, for £1. Founded in 1976, MCS is a systems integrator and manufacturer of motor control centres for a wide range of industrial market sectors, with its main area of operations being the water and wastewater treatment sector.

Joules confirmed on Monday that it has appointed KPMG debt advisory to help improve profitability, sending shares in the fashion retailer tumbling. Responding to a press report over the weekend, Joules said that as set out in its May trading update, it continues to focus on improving profitability, cash generation and liquidity headroom.

Economic news

Heathrow Airport’s ability to properly handle its current chaos was issued a fresh challenge on Friday, after ministers and top civil servants demanded it produce a plan to resolve its acute staffing shortage. Chief executive officer John Holland-Kaye was given a deadline of midday to show the airport had enough people to run security screening, and to assist disabled passengers, in a letter from both the Department for Transport and the Civil Aviation Authority, cited by the Telegraph.

Long-haul operator Emirates has hit back at Heathrow’s demands for schedule cuts, slamming the airport’s management and handling of the current travel crisis. The Dubai-based carrier, which has six daily departures from the airport and also operates at Gatwick and Stansted, said it was “highly regrettable” that Heathrow gave it 36 hours to comply with capacity cuts, describing the figure as being “plucked from thin air”.

House prices continued to grow in June, a closely-watched survey showed on Thursday, but at a slower pace than previously seen. According to the latest Royal Institution of Chartered Surveyors Residential Market Survey, a net balance of 65% of respondents reported an increase in house prices. That remains well above the long-run average of 13%, although it is down on both April’s high of 78% and May’s 73%.

UK imports continue to grow faster than exports, official data showed on Wednesday, pushing the trade deficit wider. According to the Office for National Statistics, imports of goods rose by £20.2bn or 14.6% in the three months to May 2022, while exports increased by £10.7bn or 12.6%.

The UK economy grew faster-than-expected in May, official data showed on Wednesday. According to the Office for National Statistics, GDP grew by 0.5% in May, following a decline of 0.2% in April, which was revised up from an earlier estimate for a 0.3% fall. Analysts had forecast a rise of just 0.1% for May.

Retail sales fell in June, industry research showed on Tuesday, as surging inflation and the cost-of-living crisis caused shoppers to cut spending. According to the latest BRC-KPMG Retail Sales Monitor, total sales fell 1.0% last month, compared to an increase of 10.4% in June 2021. On a like-for-like basis, UK retail sales were down 1.3% on June 2021, when they had jumped 6.7%.

Electricity generators will be spared from the government's tax net, a spokesman for the Prime Minister said. When asked whether the windfall tax on oil and gas producers' profits would be expanded to include electricity generators, the spokesman told Reuters: "We would not seek to make any new policies or major fiscal decisions. So there's no plans to do that.

Around 1,500 Post Office workers walked off the job on Monday, in the first 24-hour strike over pay at the state-owned company. Members of the Communication Workers Union (CWU) at Crown post offices were taking part in the action on Monday, after the company offered a 3% pay rise for the 2023 financial year, a £500 lump sum, and no pay rise for the 2022 period.

International events

Passenger car registrations continued their downward trend in the European Union in June, according to fresh data on Friday, as supply chain issues continue to limit vehicle output. According to the European Automobile Manufacturers’ Association (ACEA), registrations fell 15.4% to 886,510 units, making for the lowest June on record in volume terms since 1996.

Growth in China’s economy slowed sharply in the second quarter as the country’s zero Covid strategy took its toll, according to figures released on Friday by the National Bureau of Statistics. Real GDP grew by 0.4% year-on-year in the second quarter, hitting a two-year low and down from 4.8% in the previous quarter. Analysts had been expecting 1.2% growth.

US producer prices increased to 140.43 points in June, according to the Bureau of Labor Statistics, up from 138.89 points in May. The producer price index for final demand increased a seasonally adjusted 1.1% in June following advances of 0.9% in May and 0.4% in April.

Americans filed new unemployment claims at an accelerated clip in the week ended 9 July, according to the Labor Department. Initial claims for unemployment benefits increased by 9,000 week-on-week to 244,000, ahead of market expectations for a reading of 235,000 for the highest print since November 2021.

Brussels has lifted its forecasts for inflation across the European Union, and trimmed its growth outlook, as the fallout from Russia’s invasion of Ukraine continues to weigh heavily. Publishing its summer economic forecasts, the European Commission now expects inflation to reach 7.6% in the Eurozone – up from 6.1% – and 8.3% in the wider bloc this year, before easing to 4.0% in the Eurozone and 4.6% in the EU in 2023.

US inflation surged to 9.1% in June, ahead of expectations for a print of 8.8% to the highest level seen since November 1981. According to the Bureau of Labor Statistics, June's reading, up from 8.6% in May, comes as energy prices rose 41.6% last month, the most since April 1980.

A closely-followed gauge of small businesses' optimism in the US plumbed its lowest level since January 2013 in June, dragged lower by a fall in expectations for short-term business conditions and sales. Nevertheless, the survey findings also revealed continued tightness in the jobs market.

German investor expectations slid in July amid worries about energy supply, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim. The headline ZEW investor expectations index slumped to -53.8 from -28.0 in June, coming in well below expectations for a reading of -38.3.

Reporting by staff and contributors at Sharecast.com.