Weekly review

The FTSE 100 ended the week down 123.06 points, closing at 7,427.31 on Friday.

Equity view

Software maker Micro Focus said it had agreed a £5.1bn takeover, including debt, by Canadian rival OpenText. The offering is £5.32 per share, a 98% premium on Micro Focus’s current share price, which has fallen 87% over the past three years.

JTC said on Friday that it has agreed to buy New York Private Trust Company (NYPTC), a non-deposit trust company headquartered in Delaware in the US, for an undisclosed sum. NYPTC offers a broad range of fiduciary services, including trust services, estate administration services and white label trust services to high net worth and ultra-high net worth individuals and families and corporate clients.

AIM-listed B2B media business Bonhill said on Friday that it has sold its Business Solutions & Governance (BSG) division to Stubben Edge Group for £723,000 in cash. The BSG division comprises brands, including SmallBusiness.co.uk, GrowthBusiness.co.uk, Information-Age.com, and DiversityQ which includes the 'Women in…' events series. In FY 2021, it reported audited revenues of around £2.4m and EBITDA of approximately £0.4m.

UK and Canada-focussed oil and gas company i3 Energy reported “strong” average second-quarter production in a trading update on Friday, of around 19,502 barrels of oil equivalent per day, although it downgraded its net operating income forecast for the year. The AIM-traded firm said that represented a 116% increase year-on-year, and an 8% increase over the first quarter, despite delays to drilling caused by expected seasonal wet weather conditions and maintenance shutdowns at third-party facilities.

Union Jack Oil announced on Friday that “material landmark” net revenues of $9m have been achieved from the Wressle development, on licences PEDL180 and PEDL182 in North Lincolnshire, on the western margin of the Humber Basin. The AIM-traded firm holds a 40% economic interest in the development, adding that the $9m net to Union Jack was achieved since the restart of production on 19 August last year.

Building materials distributor and DIY retailer Grafton posted a jump in first-half revenues but a decline in profits on Thursday as activity levels normalised following the pandemic boost. In the six months to 30 June, revenue rose 12.2% to £1.15bn, but adjusted pre-tax profit fell 3.6% to £143.4m and adjusted operating profit was down 4.4% at £151.1m.

AstraZeneca and MSD's Lynparza has been approved in Japan for the treatment of patients with BRCA-mutated (BRCAm), HER2-negative early breast cancer at high risk of recurrence, the companies said on Thursday. The approval by Japan’s Ministry of Health, Labour, and Welfare was based on results from the OlympiA Phase III trial.

PureTech Health reported total first-half revenue of $7.03m on Thursday, up from $5.84m year-on-year. The London-listed firm said its operating loss, however, widened to $101.19m for the six months ended 30 June, from $68.08m a year earlier.

Shell’s consumer business - Shell Energy Retail - has been ordered by regulator Ofgem to pay back £536,970 after it overcharged customers on its default tariffs. Shell will automatically issue £106,000 in refunds to affected customers, while those with prepayment meters will have the cash added as credit.

Energy services provider Hunting reported first-half revenue of $336.1m on Thursday, up from $277.2m in the second half of 2021, and $244.4m in the same period a year ago. The London-listed firm said its gross profit was $75.8m for the six months ended 30 June, rising from $44m year-on-year, while its swung to a profit from operations of $1.7m, from a $26.5m loss at the same time last year.

Flexible workspace provider IWG said on Wednesday that it has appointed Charlie Steel as chief financial officer, succeeding Glyn Hughes. Steel will join the board before the end of the year. Meanwhile, Hughes will remain with the business for a transitional period to ensure a smooth handover.

Premier Inn owner Whitbread has bought a prime freehold property on the Strand in central London, located just off Trafalgar Square, for over £200m. Subject to planning, 5 Strand will become the latest hub by Premier Inn hotel in the estate and is expected to open in 2027, the company said on Wednesday.

Infrastructure engineering company Costain said on Wednesday that its reported and adjusted group revenue was up 19.5% in its first half to £665.2m, reflecting primarily volume growth and inflation protection mechanisms within contracts. The London-listed firm reported a 21.7% improvement in adjusted operating profit year-on-year, to £14m for the six months ended 30 June, in line with management expectations and with growth across both divisions.

Allied Minds shares tumbled on Wednesday after the company - which invests in the tech and life sciences sectors - said it was planning to delist from the London Stock Exchange. The company announced in March that it was undertaking a formal strategic review aimed at creating and/or realising shareholder value.

BT Group said on Tuesday that the UK government will not be taking any action over French billionaire and Altice owner Patrick Drahi’s stake in the telecoms group. Drahi increased his stake in BT in December 2021 to 18% from 12.1% through Altice, making him the biggest shareholder. This prompted the UK government to review the investment on the grounds of national security.

Wood Group posted a decline in first-half operating profit on Tuesday as revenue dipped. In the six months to 30 June, operating profit before exceptional items fell 8.9% to $41m, with revenue down 0.4% to $2.6bn. The consulting division saw revenues rise 2% thanks to increased demand for the company’s energy solutions, while the operations segment saw revenues grow 18%, supported by an improved market for oil and gas.

Luxury handbag maker Mulberry said on Tuesday that non-executive chairman Godfrey Davis plans to step down on 30 September. Andrew Christopher Roberts, currently a non-executive director, will succeed Davis. Mulberry said he has a broad experience of international property markets, the branded luxury hospitality sector and global financial markets and is currently managing director of Como Holdings, a company ultimately owned by Mr Ong Beng Seng and Mrs Christina Ong, who also own Chalice Limited, a 56.2% shareholder in Mulberry.

Education resource and technology provider RM reported a 4% improvement in first-half revenue on Tuesday, to £100.3m, driven by growth in RM Resources and the return of UK school exams in RM Assessment. The London-listed firm said adjusted operating profit tumbled 42% in the six months ended 31 May, however, to £3.6m, which it put down to the “required turnaround” in the RM Technology division, impacts associated with its IT implementation programme, and increased freight costs in RM Resources.

Non-life specialist R&Q Insurance announced the appointment of Robert Legget as senior independent director on Monday, joining the board on 26 August. The AIM-traded firm said current senior independent director Alastair Campbell would remain an independent director, and would retire as previously planned on 31 January after nine years on the board.

Wizz Air said on Monday that chief financial officer Jourik Hooghe has decided to step down to pursue other opportunities. He will be succeeded by Ian Malin, who will join the airline on 1 October. Malin, who will be based in Budapest, will assume responsibilities for digital development, investor relations, financial planning and controlling, accounting and treasury as a member of the company's executive leadership team.

Vodafone on Monday said it had agreed to sell its Hungary business to 4iG and Corvinus, a Hungarian state holding company, for €1.8bn. It added that its shared services business - VOIS – was not included in the deal and it would continue to provide services to Vodafone's other operating companies.

Cineworld confirmed on Monday that it is considering filing for bankruptcy in the US as it looks to access near-term liquidity. Responding to press speculation, the company said: "The strategic options through which Cineworld may achieve its restructuring objectives include a possible voluntary Chapter 11 filing in the United States and associated ancillary proceedings in other jurisdictions as part of an orderly implementation process. Cineworld is in discussions with many of its major stakeholders including its secured lenders and their legal and financial advisers.

Economic news

Retail sales growth slowed to their lowest rate this year last week, according to fresh data on Friday, although it was still ahead on a year-on-year basis. According to the BDO High Street Sales Tracker, total like-for-like sales climbed 2.06% for the week ended 21 August, from a base of 22.01% in the equivalent seven days last year.

More misery was placed on hard-pressed British households on Friday when the energy regulator raised the maximum that suppliers can charge to £3,549 a year. Against a backdrop of runaway inflation and surging energy company profits, Ofgem gave the green light to an 80% increase on the current price cap of £1,971 for the average dual-fuel tariff.

UK retail sales unexpectedly rose in the year to August but retailers remained pessimistic, according to the latest Distributive Trades Survey from the Confederation of British Industry. The CBI’s reported sales balance jumped to +37 from -4 in July, coming in well ahead of consensus expectations for a decline to -8.

UK car manufacturing output rose 8.6% in July, making for the third consecutive month of growth, while commercial vehicle production was ahead 43.9% in that sector’s best July since 2016, according to a fresh batch of industry data on Thursday. The Society of Motor Manufacturers and Traders (SMMT) said car production rose for the third month in a row to 58,043 units.

An industry-proposed plan to protect UK households from eye-watering energy bills will need more than £100bn in funding over two years, paid off by taxes or energy customers in the long-term. Scottish Power chief executive Keith Anderson proposed capping energy bills at £2,000 per year for the typical customer in a meeting with business secretary Kwasi Kwarteng last week, the Financial Times reported on Wednesday.

UK factory output shrank for the first time in over a year over the three months to August, alongside a larger-than-expected decline in total order books, the results of a closely-followed survey revealed. The Confederation of British Industry's Industrial Trends survey revealed a drop in the output balance from +6% for the three months to July to -7% now - marking the first fall since February 2021.

The UK economy practically ground to a halt in August amid a slump in manufacturing activity, according to a survey released on Tuesday. The S&P Global/CIPS flash PMI composite output index, which measures activity in the manufacturing and services sectors, fell to an 18-month low of 50.9 from 52.1 in July. This is just above the 50.0 mark that separates contraction from expansion and marks the worst reading since the Covid lockdown in February 2021.

Economists at Citi raised their forecasts for the peak in UK inflation to 18% in the wake of the additional 25% rally in UK gas prices and 7% rise in electricity costs over the previous week. The new peak, which the broker expected would be reached in January, was based on the assumption of a £300 policy offset applied to household energy bills from next October through to 2023, Dow Jones Newswires reported.

International events

Equity strategists at Deutsche Bank downgraded their view on European equities to 'neutral' after the Euro Stoxx 50 moved slightly above their year-end 2022 target of 3,640. They also noted the risk of a larger energy price shock.

German consumer sentiment is expected to fall to a record low again in September amid worries about rising energy bills, according to a survey released on Friday. GfK’s headline advance consumer confidence index declined to -36.5 from a downwardly-revised -30.9 in August, coming in below consensus expectations of -31.8.

A top US central bank official said on Thursday that he wanted monetary policy to move into restrictive territory with the Fed funds rate above 3.4% and that interest rates would need to be kept at that level for a while. In remarks to broadcaster CNBC, the head of the Federal Reserve Bank of Philadelphia also said that the Federal Reserve must bring inflation under control, Dow Jones Newswires reported.

The US economy shrank by less than previously estimated over the three months to June, revised data showed. According to the Department of Commerce, gross domestic product shrank at a quarterly annualised pace of -0.6% in the second quarter (consensus:-0.5%).

Jobless claims in the US receded by more than expected once more last week. According to the US Department of Labor, in seasonally adjusted terms the number of initial unemployment claims dipped by 2,000 over the week ending on 13 August to reach 245,000.

An indicator of Germany’s business climate came in better than expected for August on Thursday, but was still down month-on-month. The headline Ifo business climate index fell to 88.5, from July’s reading of 88.7 - well above consensus expectations for 86.8, but still reaching its lowest level since June 2020.

The German economy grew a touch in the second quarter of the year, beating expectations of no growth, according to final figures released on Thursday by Destatis. In the three months to June, GDP ticked up 0.1% following a 0.8% increase in the first quarter. This was better than the initial estimate of zero growth and was supported mostly by government spending.

New orders for goods made to last at least three years undershot economists' forecasts in July, in part as an expected surge in civilian aircraft orders failed to materialise, even as those for defence aircraft nearly halved. According to a preliminary estimate from the Department of Commerce, durable goods orders were unchanged last month at $273.5bn (consensus: 0.6%).

Eurozone business activity continued to contract in August as growth in the services sector ground to a near-halt, according to a survey released on Tuesday. The S&P Global flash eurozone composite purchasing managers’ index - which measures activity in the manufacturing and services sectors - fell to an 18-month low of 49.2 in August from 49.9 in July. A reading below 50.0 indicates contraction, while a reading above signals expansion.

China's central bank on Monday cut benchmark loan rates as it tried to boost sluggish economic activity, held back by continuing Covid lockdowns and a weak property market. The one-year Loan Prime Rate, which serves as a benchmark for corporate loans, was lowered to 3.65% from 3.7%, the People's Bank of China (PBOC) said in a statement.

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