Weekly review

The FTSE 100 ended the week 49.48 points higher, closing Friday’s session at 7,550.37.

Equity view

HICL Infrastructure said it had bought a minority equity stake in Cross London Trains (XLT) from funds managed by Equitix Investment Management for an undisclosed sum. XLT is a public private partnership that owns the recently delivered fleet of rolling stock operating on the Thameslink passenger rail route which covers the North-South London commuter rail corridor and serves both Luton and Gatwick airports.

Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) is reportedly in talks with Vodafone to buy the residual 21% stake it owns in Indus Towers, India’s largest mobile tower installation company. According to the Economic Times, both sides have had management meetings and a formal due diligence is expected to start as the stake sale process has been revived in recent weeks.

Apax Global Alpha said total adjusted net asset value fell to €1.4bn from €1.5bn in the 2021 fiscal year, with adjusted NAV per share decreasing to €2.83 (£2.44) from €3.02 (£2.54) in the six months to June 30. Weak public equity markets affected the valuation of the Apax Funds' publicly listed holdings, the company said.

Just Eat Takeaway has agreed to sell its 33% stake in Brazil’s iFood joint venture to Prosus for up to €1.8bn in cash. The consideration will comprise €1.5bn in cash on closing and a deferred consideration, contingent on the performance of the online food delivery sector over the next twelve months, of up to €300m.

Telecommunications infrastructure company Helios Towers backed its guidance for the year and posted a jump in first-half earnings on Thursday as it hailed strong organic tenancy growth. In the six months to 30 June, adjusted EBITDA rose 19% to $136.1m, with revenue 25% higher at $265.4m. Helios said revenue was driven by acquisitions in Senegal, Madagascar and Malawi and strong organic tenancy growth, with tenancies up 20% at 20,549.

Building materials company Marshalls held full year guidance as it posted interim profits, but noted that the tough economic backdrop would hit consumer confidence at its landscaping division. The company said adjusted core earnings rose 14% to £64.2m in the six months to June 30. It expects full year numbers to be in line with expectations as building products and its new Marley roofing acquisition offset weaker trading in landscaping, which is exposed to discretionary spending.

Online electricals retailer AO World said on Thursday that it swung to a full-year loss amid higher costs and falling sales. The company swung to a pre-tax loss of £37.2m from a profit of £20.2m a year earlier, with total group revenue down 6% to £1.6bn against strong comparators a year earlier when it benefited from the pandemic. Within that, UK revenues declined 5% to £1.04bn and German revenues slumped 16% to £189m.

Furniture retailer Made.com confirmed on Thursday that it is considering a potential equity capital raise. Responding to recent press speculation, the company said: "As indicated in the Q2 trading update, MADE is considering all options to allow it to strengthen its balance sheet.

Construction firm Balfour Beatty upgraded full year guidance after interim profits more than doubled and new orders rose 10%. The company posted a pre-tax profit of £83m, up from £35m a year earlier and now expects annual earnings to be ahead of previous expectations. Profit from operations rose to £82m from £40m.

Online trading platform Plus500 posted a rise in interim profit on Wednesday as it announced a $60.2m share buyback programme. In the six months to 30 June, pre-tax profit rose to $312.6m from $188.7m in the same period a year earlier, with revenues up 48% at $511.4m. Earnings before interest, tax, depreciation and amortisation pushed up 63% to $305.3m.

The US Food and Drug administration has accepted a new drug application for GlaxoSmithKline’s treatment for myelofibrosis patients with anaemia, the company said on Wednesday. The application for the drug, known as Momelotinib, is based on the results from key phase III trials, which met all primary and key secondary endpoints, GSK added.

Hochschild Mining reported first-half revenue of $347.8m on Wednesday, down from $394.8m year-on-year, as adjusted EBITDA fell to $130.5m from $198.5m. The London-listed firm said its pre-exceptional profit before tax totalled $15.3m for the six months ended 30 June, down from $97.8m, while basic earnings per share slid to one cent from eight cents.

UK software company Sage Group said it had bought Lockstep, a provider of cloud native technology that automates accounting workflows between companies, for an undisclosed sum. Headquartered in Seattle, Washington (US) and employing more than 130 staff colleagues, Lockstep develops products and services that streamline accounting processes, “allowing customers to save time, eliminate human error and improve cash flows”, Sage said on Tuesday.

Pipe maker Genuit reported a fall in interim profits but maintained full-year guidance as revenues rose during the period due to a strong UK housing market. The company, formerly known as Polypipe, said pre-tax profit in the six months to June 30 fell 2.7% to £33m on revenues up 7.6% to £318m. The dividend was lifted 2.5% to 4.1p a share.

Watches of Switzerland reiterated its full-year guidance on Tuesday as it reported a jump in first-quarter revenue. Group revenue rose 31% from the first quarter a year earlier to £391m, with UK and Europe revenue up 8% at £239m, while the US saw a 100% jump to £152m.

Pharmaceutical company AstraZeneca said its Lynparza prostate cancer treatment application had been granted priority review in the US. The supplemental new drug application is for Lynparza in combination with other drugs to treat adult patients with metastatic castration-resistant prostate cancer (mCRPC).

Insurer Phoenix Group said on Monday that it had delivered a record first-half performance, leading the group to up its interim dividend. Phoenix stated it had recorded "strong" cash generation of £950.0m in the six months ended 30 June, up from £872.0m a year earlier, and said it was now confident of hitting the top-end of its full-year guidance of £1.3bn-£1.4bn.

Joules said on Monday that it has appointed Jonathon Brown as its new chief executive officer. Brown succeeds Nick Jones, whose departure was announced in May. He will initially join the group as CEO designate on 7 September and will become CEO on 30 September following a short handover period from Jones.

Technology company Seeing Machines said on Monday that full-year revenues were in line with expectations and that the group's cash position had bested forecasts. Seeing Machines said full-year reported revenues were expected to be AUD $54.2m (£31.67m), representing a 15% year-on-year increase, with annualised recurring revenues growing 20% to AUD $20.7m (£12.1m).

RS Group - formerly Electrocomponents - surged on Monday after The Times reported over the weekend that it could be the subject of a takeover bid. The Times pointed to speculation of a possible £15 a share bid, which is a significant premium to the present share price and above the £12.35 high it hit last November before worries about a recession kicked in.

Economic news

Britain's public sector borrowed more than expected last month amid increased costs for servicing its debt and rising social assistance payments. According to the Office for National Statistics, the country's public sector net borrowing increased by £4.9bn in July (consensus: £3.2bn).

The Financial Conduct Authority warned buy-now-pay-later firms that its products needed to comply with financial promotion rules on Friday, even though some agreements were “unregulated”. So-called buy-now-pay-later (BNPL) offers have exploded in recent years, with the concept being the bread-and-butter for companies such as Klarna, Clearpay and Laybuy, more traditional payment provider PayPal getting in on it, and banks starting to dip their toes in the sector.

UK consumer confidence fell to a fresh record low in August amid surging inflation, according to a survey released on Friday. GfK’s consumer sentiment index dipped three points from July to -44.0 – the lowest level since records began in 1974.

UK retail sales unexpectedly rose in July, boosted by online shopping, according to figures released on Friday by the Office for National Statistics. Retail sales were up 0.3% following a 0.2% fall in June, and versus expectations for a 0.2% decline. On the year, however, retail sales were 3.4% lower, compared to expectations for a 3.3% drop.

UK inflation hit a fresh 40-year high in July and surpassed analysts’ expectations as food and energy prices jumped, according to data released on Wednesday by the Office for National Statistics. Consumer price inflation rose to 10.1% from 9.4% in June. This marked the highest rate since February 1982 and was above analysts’ expectations of 9.8%.

The Competition and Markets Authority closed its leasehold case against Barratt Developments on Tuesday, citing a lack of evidence. As part of its wider probe into the residential leasehold sector, the competition watchdog was looking into alleged mis-selling by the FTSE 100 housebuilder.

UK real wages fell at the sharpest rate on record between April and June, according to figures released on Tuesday by the Office for National Statistics. Average total pay including bonuses rose 5.1% between April and June, with regular pay excluding bonuses up 4.7%. However, adjusted for inflation, total pay fell 2.5% and regular pay was down by a record 3%.

The average price of property coming to market in the UK has dropped for the first time this year, according to fresh industry data released on Monday, albeit at seasonally-normal rate. Property marketing platform Rightmove said its house price index showed asking prices falling 1.3% this month, or £4,795, to £365,173.

International events

Revised data confirmed a modest rise in the cost of living in the euro area last month. According to Eurostat, in seasonally adjusted terms, the annual rate of increase in the headline Consumer Price Index picked up from 8.6% in June to 8.9% for July.

Manufacturing activity in the US mid-Atlantic region improved in August, the results of a closely-followed survey revealed. The Federal Reserve Bank of Philadelphia's manufacturing sector index printed at 6.2 (consensus: -5.0), which was up from a reading of -12.3 in the month before.

A top European Central Bank official said that the outlook for inflation in the single currency area had not improved. The remarks from Isabel Schnabel, a member of the ECB's Governing Council and who also heads its market operations, appeared to signal that she would support a 50 basis point interest rate hike when policymakers next met.

Unemployment claims data for the preceding week came in a tad better than expected. According to the US Department of Labor, initial jobless claims for the week ending on 13 August dipped by 2,000 to 250,000.

Americans spent at a slightly lower than expected pace last month, although the details of the report were stronger. According to the Department of Commerce, total US retail sales volumes were flat in July (consensus: 0.2%) at $682.8bn, following a 0.8% jump during the month before.

The euro area's economy expanded at a slightly slower pace than previously estimated over the three months to June, alongside steady growth in employment. According to Eurostat, gross domestic product within the single-currency bloc expanded at a quarter-on-quarter pace of 0.6% in the second quarter after the 0.5% gain recorded during the first quarter.

US industrial production rose a bit more quickly than expected last month. According to the Department of Commerce, total industrial output grew at a month-on-month pace of 0.6% in July.

Homebuilders in the US broke ground on far fewer homes than anticipated last month. According to the Department of Commerce, in seasonally adjusted terms, the annualised rate of housing starts in July fell at a month-on-month pace of 9.6% to reach 1.446m (consensus: 1.54m).

German investor sentiment deteriorated slightly in August, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim. The headline ZEW investor expectations index fell to -55.3 from -53.8 in July, hitting its worst level since October 2008.

The Federal Reserve Bank of New York's regional manufacturing index surprised economists, registering its second-largest ever monthly fall - larger even than that in March 2020. The headline index fell from a reading of 11.1 for July to -31.3 (consensus: 5.0).

Japan’s economy recovered beyond pre-Covid levels in the second quarter, with GDP expanding at 2.2% year-on-year, although that was below consensus expectations for 2.6% growth. The world’s third-largest economy’s size stood at JPY 542.1trn (£3.36trn) at the end of the quarter, taking it above where it was at the end of 2019, while the first quarter data was revised to an expansion from a contraction.

China's central bank on Monday unexpectedly cut a major interest rate in an attempt to bolster an economy that is struggling to grow amid repeated Covid lockdowns and a property downturn. The People’s Bank of China on Monday trimmed its medium-term lending rate by 10 basis points to 2.75%. Analysts had forecast no change.

Reporting by Josh White, Michele Maatouk, Frank Prenesti, Iain Gilbert and Alexander Bueso at Sharecast.com.