Weekly review

The FTSE 100 ended the week up 105.02 points, or 1.4%, closing at 7,599.60 on Friday.

Equity view

British American Tobacco has appointed a chief people officer to its management board to improve the culture and collaboration within the tobacco company. Cora Koppe-Stahrenberg, formerly head of HR at Germany-listed healthcare giant Fresenius Medical Care, will join the company in this new role on 1 November.

Housebuilder Crest Nicholson said on Friday that it appointed William Floydd as group finance director designate effective 13 November. Floydd - a chartered accountant - will succeed Duncan Cooper, whose departure was announced in July.

Due to ongoing market volatility and risk aversion, emerging markets asset manager Ashmore Group saw an 8% drop in assets under management (AuM) in its fiscal first quarter. The company said in a trading update on Friday that AuM fell by $4.2bn to $51.7bn in the three months to 30 September due to a negative investment performance of $1.3bn and net outflows of $2.9bn.

St James’s Place shares plunged after the wealth manager confirmed it is reviewing its fees and charges structure for clients to comply with new consumer duty rules that took effect over the summer. The company had said in its half-year report in July that it was “building on the work it completed for the Consumer Duty”.

Budget airline easyJet hailed record fourth-quarter profit on Thursday amid strong demand, as it said it plans to resume dividend payments and announced a deal with Airbus to expand its fleet. The company expects pre-tax profit for the fourth quarter of between £650m and £670m, with passenger growth of 8% year-on-year.

London-listed veterinary pharmaceuticals group Dechra, which will soon be taken private after a buyout by Sweden’s EQT, said on Thursday it delivered a “resilient” performance in the year to 30 June. Dechra generated £761.5m in revenues for the year, up 5.5% on the year before, with underlying growth across all product categories.

Cybersecurity firm Darktrace reiterated its full-year guidance on Thursday as it reported a solid start to the new trading year amid an uplift in new business activity. Darktrace expects year-over-year constant currency annualised recurring revenue growth of 21% to 23%, implying net annual recurring revenue additions of $133.8m-$146.6m.

Mobico shares tumbled on Thursday after the transport operator - formerly National Express - cut its full-year earnings outlook and said it was looking to sell its North American school bus business and suspend its final dividend. In an update for the period from 1 July to the end of September, the company said it now expects FY2023 earnings before interest and tax of between £175m and £185m, down from guidance of between £200m and £215m given in July.

Gold producer Endeavour Mining has said that it’s about 70% of the way through planned drilling at its critical Côte d’Ivoire project for 2023, but results so far have been promising. With exploration assets across West Africa, the company said 123 km had been drilled at its Tanda-Iguela projects so far this year, with plans for an additional 55 km before the year is out, well ahead of the 70 km initially planned.

Recruitment firm PageGroup expects full-year profits to drop by at least a third due to ongoing challenging conditions across Asia, the UK and the US markets in the third quarter. Group operating profit for 2023, excluding one-off items, is expected to be between £125m and £130m, compared with the £196.1m made in 2022. That would represent a decline of 33-36%.

Defence technology company QinetiQ delivered “a strong second quarter”, resulting in improved organic revenue growth and operating profit margins in the first half. Qinetiq said on Wednesday that its global solutions unit “performed well”, with the former Avantus business in the US continuing to deliver revenue at double-digit margins. At the same time, its EMEA Services wing continued to trade strongly, with “impressive organic revenue growth” and an “improved profit margin”.

Shares in Travis Perkins fell sharply on Wednesday after the builders’ merchant warned that the slowdown in the construction sector would hit profits. The firm, which has also seen its margin affected by “significant” commodity product deflation, now expects full-year adjusted operating profits to come in between £175m and £195m, down from an earlier forecast for £240m.

On Tuesday, tool and equipment hire services firm Speedy Hire said that its full-year performance was set to align with expectations after a “satisfactory” first half, as it announced the acquisition of Green Power Hire Limited (GPH) for £20.2m. In an update for the half to 30 September, the company said revenue from its national customers grew 5% from last year. Softer revenues from regional customers offset this, but Speedy said it’s seen recent improvement in both areas.

Research and data analytics group YouGov saw annual profits surge as it reiterated its confidence in hitting market forecasts for the current year despite a “difficult trading environment”. The company said revenues rose 17% in the year to 31 July to £258m, with solid growth in its Data Products and Customer Research divisions, up 16% and 27%, respectively, offsetting weakness in Data Services, down 6% as “market softness continues to impact more discretionary spend”.

Electricals retailer Currys said on Tuesday that it has received interest from several potential buyers for its Greek business, Kotsovolos. Responding to speculation in local media, the company - which announced in June that it was kicking off a strategic review of the business - said the potential buyers had submitted non-binding offers currently being evaluated by the board and its advisers.

Supply chain group Wincanton said it still expects to meet profit forecasts this year despite first-half revenues dropping. Wincanton, which provides services such as storage, handling, e-fulfilment, fleet management and distribution, said that the top line would be lower than last year, “reflecting the strategic reorganisation of the group’s transport operations”.

GSK has entered into a new exclusive vaccine partnership in China that will extend the availability of its shingle vaccine Shingrix, which will see the UK-listed group generate £2.5bn over the next three years. The pharmaceutical giant is partnering with Chongqing Zhifei Biological Products (or Zhifei), China’s largest vaccine company, to promote Shingrix through the latter’s service network, which covers more than 30,000 vaccination points nationwide.

Thermal processing services group Bodycote has announced spending $145m on two specialist tech companies and opening a new facility to expand its reach in North America. The company said it is using existing credit facilities to buy Lake City HT, based in Indiana, which is a medical market hot isostatic pressing (HIP) and vacuum heat treatment business serving the orthopaedic implant and civil aerospace industries; and Stack Metallurgical Group, based in the Pacific Northwest, which provides HIP, treat treatment and metal finishing services to the civil aerospace, defence and energy markets.

UK real estate investment trust LXI REIT has said it is seeing “green shoots emerging” after a challenging macro environment led to another drop in valuations across its portfolio. The company, which typically invests in UK commercial property assets with extremely long leases – typically 20 to 30 years to the first break – said the portfolio was valued at £3.19bn at the end of its fiscal first half on 30 September, down from £3.36bn six months earlier.

Metro Bank announced a robust capital and debt restructuring package totalling £925m on Monday, after a week of market chatter and reports around its capital position. However, some current stakeholders will be taking a 40% haircut. It also confirmed it was looking at a sale of its residential mortgage portfolio.

Economic news

The governor of the Bank of England warned on Friday that future interest rate decisions would be “tight” despite inflation easing. Andrew Bailey acknowledged that there had been “solid progress” recently as higher interest rates curbed demand and price pressures eased.

According to figures released on Thursday by the Office for National Statistics, the UK economy returned to growth in August. GDP rose 0.2%, in line with consensus expectations, following a downwardly revised 0.6% contraction in July. This was revised from a 0.5% fall.

UK house prices continued to fall in September, an industry survey showed on Thursday, as higher interest rates and mortgage costs weighed on demand. According to the latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors, house prices remained on a “downward trajectory” in September with a net balance of -69%, compared to -68% a month earlier.

Vodafone’s planned merger with Three UK came under the Competition and Markets Authority (CMA) spotlight on Wednesday, as the regulator invited third-party feedback on the impact it could have on the competitive landscape. Vodafone UK is a subsidiary of the London-listed Vodafone Group, while Three UK operates under Hong Kong conglomerate CK Hutchison Holdings.

According to Sky News, the International Monetary Fund’s World Economic Outlook can be interpreted in more ways than one, with the first of which being to declare that the UK economy was “heading for the buffers”. The economy will grow by 0.6% in 2024, the slowest rate in the G7 group and considerably lower than the 1.2% growth expected in the euro area or the 1.5% forecast for the US.

A continuing hunt for deals meant the annual rise in UK grocery prices eased to a 14-month low in September, with budget retailers Aldi and Lidl continuing to take market share from some of the more prominent players. According to research firm Kantar, grocery price inflation fell to 11% during the four weeks to 1 October.

UK retail sales slowed dramatically in September, as milder weather affected seasonal clothing purchases and the cost-of-living crisis prevented consumers from taking on big-ticket items like furniture and electricals. According to the monthly Retail Sales Monitor, put together by the British Retail Consortium (BRC) and KPMG, sales rose at a year-on-year clip of 2.7% in September, down from the 4.1% jump seen in August.

International events

China’s economy appeared on the brink of deflation on Friday after official data showed inflation was flat in September. According to the National Bureau of Statistics, headline consumer price inflation eased 0.1 percentage points to 0.0% year-on-year in September. Most analysts were looking for inflation to tick up by 0.2%. CPI rose by 0.1% in August.

US inflation was unchanged from a month earlier in September, according to figures released on Thursday by the Bureau of Labour Statistics. The consumer price index rose 3.7% on the year, in line with August versus expectations of 3.6% growth.

Companies in the US continued to hold onto staff during the preceding week. According to the Department of Labor, in seasonally adjusted terms, the number of initial unemployment claims was unchanged during the week ending on 7 October at 209,000.

Wholesale prices in the States rose more quickly than expected last month amid widespread gains. According to the US Department of Labor, in seasonally adjusted terms, so-called final demand prices increased by 0.5% month-on-month in September (consensus: 0.3%).

German inflation eased in September to the lowest level since the start of the Ukraine war, official data showed on Wednesday. According to Destatis, the country’s Federal Statistical Office, the annual consumer price index was 4.5%, confirming earlier estimates. It rose 0.3% on the previous month, also in line with expectations.

According to data released on Monday, eurozone investor sentiment deteriorated less than expected in October. The Sentix investor sentiment index fell to -21.9 from -21.5 in September, coming ahead of consensus expectations for a reading of -24.0.

German industrial production fell in August for the fourth month in a row, according to data released on Monday by Destatis. Factory orders declined by 0.2% on the month following a 0.6% fall in July, versus expectations for a 0.1% dip.