Weekly review
The FTSE 100 ended the week down 64.68 points, or 0.84%, closing at 7,624.93 on Friday.
Equity view
Oil industry services company Wood Group said full-year adjusted core earnings would be slightly ahead of expectations on the back of a strong order book. Adjusted earnings before interest, taxes, depreciation, and amortisation for 2023 was now forecast to come in at $420m to $425m, up 9%.
British high-end fashion group Burberry has delivered a significant profit warning on the back of the well-cited slowdown in luxury demand, which has rocked the industry over recent months. The company now expects adjusted operating profit for the financial year to 30 March 2024 to be between £410m and £460m, after saying just two months ago at its interim results that profits would be towards the low end of the consensus range at the time of £552m to £668m.
UK house builder Vistry on Friday said 2023 financial performance would be ahead of expectations, driven by strong forward sales. In a trading update, the builder of affordable homes, said forward sales were up 12.4% year on year at £4.5bn.
Metro Bank said on Friday that chief financial officer James Hopkinson has agreed to step down with immediate effect. He will leave the business in the first quarter after a period of handover.
Housebuilder Taylor Wimpey is set to deliver profits towards the top of guidance for the full year but said that the market remains "uncertain" despite a recent reduction in mortgage rates. In a pre-close trading update for the 2023 financial year, the group expects operating profit to be at the high end of the target range of £440m to £470m.
Self-storage firm Big Yellow was able to grow sales despite a decline in occupancy levels in a seasonally weaker trading period as it was able to increase average rents by 7%. Total revenue for the three months to 31 December was up 5% at £50.5m, slowing slightly from the 6% growth seen in the first half, with like-for-like sales growth easing to 4% from 5%.
Building materials group Grafton said on Thursday that full-year adjusted operating profit was set to be slightly ahead of the top end of analysts’ forecasts of £194m to £201m following a "resilient" performance. In an update for the period from 1 November to the end of December 2023, Grafton said it delivered the performance despite a continuation of the softer market conditions seen in September and October.
Shares in FTSE 250-listed Darktrace rose strongly on Thursday after the cyber security group increased both its sales and margin guidance for the full year following a strong first half. The company now expects sales for the year to 30 June rising by between 23.0% and 24.5% on last year's $545m, up from previous guidance for growth of between 22.0% and 23.5%.
Persimmon was able to beat guidance with new home completions in 2023 after a decent fourth quarter, with the housebuilder entering 2024 in a strong position with private forward sales ahead of last year. New home completions totalled 9,922 last year, down 33% on 2022 on the back of challenging market conditions with the whole industry being impacted heavily by rising mortgage rates. However, that was ahead of the 9,500 target given in November.
Research equipment maker Oxford Instruments said it had bought First Light Imaging, a French scientific camera specialist, for up to €18.7m (£16m). Based near Aix-en-Provence, and founded in 2011, First Light specialises in the design and manufacture of high-speed, low-noise scientific cameras for infrared and visible imaging, with applications in astronomy and life sciences.
Medtech giant Smith + Nephew has completed the acquisition of CartiHeal, the developer of novel sports medicine technology Agili-C, which targets cartilage regeneration in the knee. The deal, first announced in November, has seen S+N pay $180m upfront – financed by existing cash and debt facilities – with a further $150m dependent on future financial targets.
Greggs backed its full-year guidance on Wednesday as it posted a jump in fourth-quarter sales, with seasonal lines in high demand. Total sales for the full year rose 19.6% to £1.8bn, while like-for-like sales in company-managed stores were up 13.7% on 2022.
Infrastructure services group Hill & Smith said it had bought the business and assets of New Jersey-based Capital Steel for $6.25m (£5m), on a debt and cash free basis. Capital Steel, located in Trenton, is led by Robert Hickman who will stay with the company. It supplies structural steel products and services principally into the electrical transmission and distribution market in New York, New Jersey and Pennsylvania.
Student accommodation group Unite has held on to full-year guidance after a solid fourth quarter, with property values holding stable and reservations rising to a record high. The company said that rental income from the first term of the 2023/24 academic year has been offset by higher operating costs, resulting in adjusted earnings per share expected at the upper end of the 43-44p range.
GSK said it was buying Aiolos, a clinical-stage biopharmaceutical company focused on treatment of respiratory and inflammatory conditions, for up to $1.4bn (£1.1bn). The deal provides GSK with access to Aiolos' AIO-001, a drug ready to enter phase II clinical development for the treatment of adult patients with asthma, with potential for additional indications including chronic rhinosinusitis with nasal polyps.
Gold miner Centamin on Tuesday reported "encouraging" results from its maiden drill programme on its Eastern Desert Exploration (EDX) in Egypt. EDX, which comprises 3,000km2 of greenfield exploration tenements within Egypt's Nubian Shield, is a "highly prospective geological belt which has not been explored using modern exploration methods", Centamin said.
LondonMetric Property said it had bought a warehouse in Doncaster for £21.2m which will be let to fashion retailer Next for 13 years. The deal represented a net initial yield of 6.3%, the company said on Monday. Next will pay annual rent of £1.42m with fixed rental uplifts of 2.5%, increasing the purchase NIY to 7.1% within three years.
Online trading platform Plus500 said on Monday that full-year results would come in ahead of market expectations. The FTSE 250 fintech, updating on year-end trading, said revenues in the year to 31 December were expected to be around $725m, while earnings before interest, tax, depreciation and amortisation were $304m.
LXi REIT has finalised the sale of 66 Travelodge-branded hotels to the Travelodge group, it announced on Monday, for a total of £210m. The FTSE 250 company said the transaction aligned with the properties' latest book value as of 30 September.
Online trading platform CMC Markets lifted its full-year net operating income guidance on Monday as it hailed a strong performance in the third quarter. The company now expects FY24 net operating income of between £290m and £310m, up from previous guidance of £250m to £280m.
Economic news
The UK economy returned to growth in November, according to figures released on Friday by the Office for National Statistics. GDP grew by 0.3% following a 0.3% contraction in October. This was ahead of economists’ expectations of a 0.2% expansion.
The UK’s financial services sector contracted for the first time in nearly four years in December, an industry survey showed on Tuesday. According to the latest CBI Financial Services Survey, business volumes contracted sharply in the three months to December end, with a weighted balance of -23.
Retailers finished 2023 on the back foot, industry data showed on Tuesday, despite a modest uptick in demand in the week leading up to Christmas. According to the latest BRC-KPMG Retail Sales Monitor, UK total sales increased by just 1.7% in the five weeks to 30 December, compared to a 6.9% rise a year previously.
UK firms remain reluctant to hire new staff, an industry survey showed on Monday, as the weak economic outlook continued to weigh heavily. According to the latest UK Report on Jobs from KPMG and the Recruitment and Employment Confederation, recruitment intentions were subdued in December.
UK manufacturers are more bullish about the sector's prospects than they were 12 months ago, according to a survey out on Monday from Make UK and PwC. The survey, which featured responses from over 200 senior manufacturing executives, found that 44.4% of companies see a moderate to significant improvement in industry conditions in 2024, compared with just 20.5% that expect conditions to worsen.
International events
US producer prices unexpectedly fell for the third consecutive month in December which will likely ease some concerns of inflationary pressures after a stronger-than-expected reading of the consumer price index on Thursday. The producer price index, which measures changes in prices by domestic producers of goods and services across all sectors, registered a 0.1% decline last month, after a downwardly revised 0.1% decrease in November. Economists had pencilled in a small rebound of 0.1%.
America and Britain have launched strikes against targets connected to Houthi militants in Yemen in retaliation for attacks on commercial shipping in the Red Sea, US President Joe Biden said early Friday. In a statement, Biden said US military forces - together with the UK, with support from Australia, Bahrain, Canada, and the Netherlands - "successfully conducted strikes against a number of targets in Yemen used by Houthi rebels to endanger freedom of navigation in one of the world’s most vital waterways".
Consumer prices in China improved slightly but were still deflationary for the third consecutive month in December, as the recovery in the world’s second biggest economy continued to struggle. The consumer price index fell 0.3% year on year last month, better than expectations of a 0.4% decline and against a November decrease of 0.5%.
Americans filed claims for state benefits at a decelerated clip in the week ended 6 January, according to the Labor Department, hitting their lowest level since October. Initial jobless claims fell by 1,000 from the previous week's upwardly revised value to 202,000, well below consensus expectations for a reading of 210,000.
Shares in iRobot plunged overnight on Wednesday, after Amazon failed to provide solutions to address concerns raised by EU competition regulators regarding its $1.4bn acquisition of the US domestic robotics giant. The European Commission had set a deadline of Wednesday for Amazon to address its concerns over the proposed acquisition of iRobot, whose most popular product line is the ‘Roomba’ autonomous vacuum cleaners.
US consumer price inflation rose more than expected in December, according to figures released on Thursday by the Labor Department. Consumer prices rose by 3.4%, up from 3.1% in November and above economists’ expectations of a 3.2% increase. The jump was driven mainly by higher housing costs.
Mortgage application volume rose 9.9% in the week ended 5 January, according to the Mortgage Bankers Association, the biggest increase in a year. Applications to refinance a home loan surged 19% week-on-week and were 30% higher year-on-year, while applications for a mortgage to purchase a home rose 6% week-on-week but were 16% lower than at the same time a year ago.
Industrial output in France unexpectedly rebounded in November, according to data released on Wednesday by the National Institute of Statistics and Economic Studies (Insee). Industrial production increased by 0.5% in November after a 0.3% decline in October, ahead of expectations for no change.
America's trade deficit in goods widened to $90.3bn in November, up from a revised reading of $89.6bn a month earlier, according to an advance estimate from the Census Bureau. Exports declined by 3.6% month-on-month to $165.1bn, dragged down by a drop in sales of industrial supplies, vehicles, other goods, and foods, feeds, and beverages.
Optimism among small businesses in the United States was better than expected in December, according to a survey out on Tuesday from the NFIB Research Foundation, though inflation is still a concern for many. The NFIB Small Business Optimism Index increased 1.3 points in December to 91.9, up from 90.6 in November and well ahead of the 90.7 reading expected by economists.
The European Commission announced two calls for contributions on Tuesday, focusing on competition within virtual worlds and generative artificial intelligence (AI), particularly Microsoft’s investment in ChatGPT developer OpenAI. Interested stakeholders were asked to share their experiences and insights regarding competition levels in virtual worlds and generative AI, as well as how competition laws could help to ensure the emerging markets remained sustainable.
German industrial production registered an unexpected fall in November, making it the sixth straight month of declines as manufacturing in Europe's biggest economy continued to struggle. Production fell 0.7% on a monthly basis, well below consensus estimates of 0.2%. The annual decrease was 4.8%, the Federal Statistics Office said on Tuesday.
Oil stocks were hit as major producer Saudi Arabia cut prices across the board, sending benchmark crude sharply lower on Monday. Brent crude was down 3.91% to $75.68 a barrel, while West Texas Intermediate fell 4.46% to $70.52.
Consumer confidence in the eurozone was revised to a 22-month high in December, according to the final estimates of a survey released on Monday by the European Commission. The consumer confidence index was revised to -15.0 after the flash estimate of -15.1, the EC said, after a print of -16.9 in November.
Germany's trade balance jumped in November after a huge rise in monthly exports smashed economists' expectations. Germany exported a total of €131.2bn in goods during the month of November on a calendar and seasonally adjusted basis, up 3.7% from October.
Reporting by Sharecast.com staff and contributors.