Weekly review

The FTSE 100 ended the week down 113.5 points, or 1.49%, closing at 7,494.58 on Friday.

Equity view

UK pub chain JD Wetherspoon swung to a full-year profit after sales rose by over a tenth, though underlying growth has eased somewhat in the first quarter of the new financial year. The company reported a pre-tax profit of £42.6m for the 12 months ended 30 July, compared with a loss of £30.4m a year earlier, with diluted earnings per share coming in at 26.4p, up from -19.6p.

Investment trust Octopus Renewables has agreed to sell its Krzecin and Kuslin onshore wind farms in Poland to an affiliate of Orlen. Octopus Renewables said on Friday that it would receive net proceeds, following the repayment of asset-level debt and termination of hedging arrangements, of between PLN 470.0 and PLN 490.0 (£88.0m and £92.0m), representing a 14% to 19% premium over the holding value of the Krzecin and Kuslin wind farms on 30 June 2023.

Banknote printer De La Rue said on Friday that the first-half adjusted operating profit was set to be "marginally ahead" of previous guidance, as it backed its expectations for the year. In an update for the year to the end of September, De La Rue also expects net debt to be better than previous guidance, in the low £80m range.

Petra Diamonds achieved lower prices from its second tender of diamonds this fiscal year as it rushed to offload gems ahead of a two-month ban on diamond imports to India. Petra said it had brought forward Tender 2 after a recently announced moratorium by major producers to curb supply to the Indian market, hoping to bring some "much-needed stability and support to the market and in turn prices".

Tobacco giant Imperial Brands on Thursday announced a new bumper share buyback and said it was on track to hit forecasts this year. The company said it will buy back £1.1bn in shares between 6 October 2023 and the end of September 2024, representing 8% of its share capital and a 10% increase on last year's buyback.

National Grid said on Thursday that it continues to perform in line with its expectations, and underlying earnings per share are set to have a greater weighting in the second half. In a brief pre-close update for the half-year to 30 September, the company expects HY24 operating profit weightings across the group "to be more reflective of historic periods than HY23".

Anglo American said on Thursday it saw a substantial fall in diamond revenues from the latest sales cycle at subsidiary De Beers, as it beefed up marketing spend to try and allure customers over the critical holiday season. Just $200m was raised from rough diamond sales during its eighth sales cycle, 2023, generated from global Sightholder sales and auctions.

Ukraine-focused iron ore miner Ferrexpo reported a big jump in output during its third quarter despite ongoing challenging conditions in the war-torn country. Ferrexpo, the third largest exporter of iron ore pellets in the world, said it was able to operate between one and two of its four pelletising lines during the quarter, driving total iron ore pellet production to 1.25m tonnes, up 17% on the second quarter.

Spirent Communications cut its near-term outlook on Wednesday as it pointed to an "extremely challenged" telecommunications market and the fact its largest customers are delaying expenditure and technology investments. Spirent said the uptick in demand in the second quarter dissipated over the summer months, and the expected rebound in September did not materialise.

Tesco has hiked its retail profit and cash flow targets after a solid first half, with sales rising on the back of easing inflation. Group sales excluding fuel were up 8.9% year-on-year to £30.7bn in the six months to 26 August, with inflation falling across the half and volume and sales mix trends ahead of expectations.

QinetiQ said on Wednesday that it has been awarded a five-year $127m contract in the US from the Office of the Secretary of Defense Strategic Capabilities Office (SCO). The defence technology firm will provide secure, technologically advanced services and products, enabling SCO to deploy new and enhanced capabilities to support strategic operations.

Automotive retailer Vertu Motors has reported record revenues, year-on-year profit and dividend growth for the six months ended 31 August. Vertu said interim revenues had grown 21% to £2.42bn, aided by acquisitions and growth in the core group, while adjusted pre-tax profits rose 11% to £31.5m. Basic adjusted earnings per share increased to 6.89p from 6.50p a year earlier, and the dividend per share came in at 0.85p, up from 0.70p.

High street bakery chain Greggs said it expects to hit targets this year after a solid third quarter, with inflation beginning to ease. However, the company lowered its guidance for net new site openings, saying it now expects its portfolio to grow by between 135 and 145 this year, down from an earlier forecast of 150.

Low-cost airline Wizz Air saw passenger numbers rise by over a fifth last month, driven by increasing capacity on fuller planes. Load factor, a key metric for airlines that measures the percentage of filled seats to spare seats, rose to 92.4% in September, up from 87.1% a year earlier. The rolling 12-month load factor improved to 90.9% from 84.6% the year before.

Global pharmaceutical company AstraZeneca has agreed to settle litigation on product liability related to two of its widely-used heartburn drugs, Nexium and Prilosec, it announced on Tuesday. The settlement encompassed multiple lawsuits under deliberation in the US District Court for the District of New Jersey and in both the Delaware and New Jersey Superior Courts.

Freight, courier and logistics specialist DX Group reported a strong year of financial growth in its final results on Tuesday, with revenue rising 10% to £471.2m. The AIM-traded company said that upward trajectory was mirrored in a 20% EBITDA hike over the 12 months ended 31 July, reaching £60.2m.

South West-focused water and wastewater group Pennon said it had traded in line with expectations in its first half ended 30 September, as it submitted plans to Ofwat to invest £2.8bn in water quality and resilience. The investment for South West Water relates to the K8 period between 2025 and 2030 and will create 2,000 jobs along with 1,000 apprenticeships and graduates.

Identity protection and insurance group CPP published a statement on Monday to distance itself from founder and former chairman Hamish Ogston, who is at the centre of a sex worker immigration scandal. Ogston, a well-known philanthropist and one of Britain's wealthiest men who founded CPP as a card protection business in 1980, has allegedly been involved in human trafficking, breaking immigration laws and prostitution, according to a Sunday Times investigation.

Power control components manufacturer XP Power saw its stock price tumble on Monday after it warned on profits, saying that trading over the third quarter had been below internal expectations. XP Power said weaker end-market demand had resulted in some customers deferring shipments into 2024, while "economic uncertainty" in China had also reduced demand.

Investment bank Peel Hunt said on Monday that revenues had increased during the six months ended 30 September. Peel Hunt said group revenue for the period was expected to be approximately £42.4m, up around 3.2% year-on-year, despite operating in what it called a "prolonged period of adverse market conditions".

Economic news

According to Halifax, annual house prices fell again in September as high borrowing costs continued to dent the market. House prices declined by 4.7% on the year, following a 4.5% drop in August.

Retail footfall eased in September, industry research showed on Friday, as the unseasonably warm weather put off shoppers. According to the latest BRC-Sensormatic IQ Monitor, total UK footfall decreased by 2.9% year-on-year in the five weeks to 30 September, further adding to August’s 1.9% decline.

UK car registrations grew year-on-year in September but failed to meet the average seen before the Covid-19 pandemic laid waste to the automotive industry. Private new car registrations hit 122,900 in September, 5.8% above 2022’s figure of 116,300 but well and truly short of the 2015-2019 average of 196,300. Total registrations, including business and fleet vehicles, came to 272,600, a 21% increase on the prior year, but remained well below the pre-pandemic average of 408,000.

The UK construction sector contracted sharply in September, a closely-watched survey showed on Thursday, as new orders tumbled at the fastest rate for over three years. The latest S&P Global CIPS UK construction purchasing managers’ index was 45.0, a steep decline from August’s 50.8 and the first time it has fallen below the neutral 50.0 level since June. It was also well below consensus expectations of 50.0.

The troubled HS2 rail project has been scrapped, Rishi Sunak confirmed on Wednesday, ending weeks of speculation about its future. Addressing the Conservative Party conference in Manchester, the prime minister used his keynote speech to announce his decision to scrap phase 2, the Birmingham to Manchester leg.

The UK’s services sector suffered its worst performance in eight months in September amid subdued demand and cutbacks to non-essential spending, according to a survey released on Wednesday. The headline seasonally adjusted S&P Global/CIPS services PMI business activity index fell to 49.3 from 49.5 in August, coming in below the 50.0 mark separating contraction from expansion for the second month.

A monthly measure for shop-price inflation fell to its lowest level in a year in September, with food prices falling for the first time in over two years. The British Retail Consortium and Nielsen’s shop price index (SPI), which measures price changes of 500 of the most commonly bought items in the UK, eased to an annual rate of 6.2% last month, down 70 basis points on August.

The UK manufacturing sector continued to shrink in September - albeit at a slower pace - as rising interest rates and the cost-of-living crisis took their toll. The S&P Global/CIPS purchasing managers’ index printed at 44.3, up slightly from August’s 39-month low of 43.0 and above the flash estimate of 44.2, but still among the weakest readings seen in the last 14 years.

Annual house prices fell again in September as high interest rates continued to dent affordability, according to a survey released by Nationwide on Monday. Annual house prices were down 5.3% in September, in line with the decline seen in August, which was the weakest since July 2009.

International events

Hiring in the US sprang back in September, easily outpacing all forecasts. According to the Department of Labor, non-farm payrolls surged by 336,000 last month.

German factory orders jumped in August as tech orders surged, only partially offsetting heavy falls the previous month as the country’s deteriorating industrial sector continues to experience challenging conditions. According to Germany’s Federal Statistical Office, Destatis, factor orders were up 3.9% over the month in seasonally and calendar-adjusted terms after a revised 11.3% drop in July (changed from the initial estimate of -11.7%).

Unemployment claims in the US remained at low levels during the latest week. Nevertheless, some economists anticipated a move higher over the next month or so, given the rebound in layoff announcements in August.

The HCOB Eurozone construction purchasing managers’ index pointed to a further marked deterioration at the end of the third quarter. New business sales dropped to their lowest level in over three years. The headline construction PMI, which measures overall activity across the single-currency region’s construction sector, rose slightly to 43.6 in September from 43.4 in August.

German exports fell more than expected in August, adding to expectations of a recession in the third quarter, according to figures released on Thursday by Destatis. Exports fell 1.2% from July to €127.9bn, versus expectations for a 0.4% decline. Meanwhile, imports dipped 0.4% to €111.4bn, compared to expectations for a 0.5% increase.

The survey results revealed that firms in the US slowed their pace of hiring last month to the least since January 2021. According to consultancy ADP, private sector companies took on 89,000 staff in September, dragged lower by an outright drop of 83,000 positions at large establishments or those employing over 500 people.

The Eurozone economy continued to falter last month, data showed on Wednesday, as demand for goods and services fell sharply. The final HCOB composite PMI output index was 47.2 in September. That was an improvement on August’s 46.7, a 33-month low, but it remains below the neutral 50 mark for the fourth consecutive month.

According to Eurostat, retail sales in the eurozone sank more than expected in August, as fuel sales dropped sharply. The seasonally adjusted volume of retail trade was down 1.2% during the month, after a 0.1% decline in July, revised up from the 0.2% drop initially reported.

The Reserve Bank of Australia kept its key interest rate on hold on Tuesday for the fourth month. Rates were held at an 11-year high of 4.1%, as widely expected, but new Governor Michele Bullock warned some further tightening might be needed.

Activity levels in America’s factory sector continued to shrink last month, albeit slower than in August, the results of a closely followed survey revealed. The Institute for Supply Management’s manufacturing sector Purchasing Managers’ Index increased from a reading of 47.6 in August to 49.0 in September.

Unemployment rates in the euro area and the European Union (EU) declined in August, according to fresh data published by Eurostat on Monday. The eurozone experienced a decrease in its unemployment rate to 6.4%, a drop from 6.5% in July 2023 and 6.7% in August last year.