Weekly review

The FTSE 100 ended the week up 173.16 points, or 2.32%, closing at 7,635.09 on Friday.

Equity view

Paragon Banking, the FTSE 250-listed mortgages, savings accounts and business finance provider, has delivered a confident outlook for the current financial year as it reiterated guidance following a solid first quarter. New lending across the business for the quarter to 31 December was significantly down at £610.7m, from £861.7m the year before, though the bulk of that decrease comes from buy-to-let lending which was expected.

Superdry has reported a substantial reduction in group sales in the first half and said that there was no let up in the "challenging" trading conditions over Christmas as it painted a gloomy outlook for the full financial year. The fashion retailer also announced that its chief financial officer of three and a half years, Shaun Wills, has decided to step down from the board and will leave the company at the end of March.

Shares in Wickes gained on Friday after the DIY and trade home improvement retailer said 2023 profits would be at the top end of market forecasts following a solid end to the financial year. Adjusted pre-tax profit for last year is expected to be at the upper end of the market consensus range of £44.9m to £48.3m, though down from £75.4m in 2022.

Infrastructure investor 3i Infrastructure reported total income and non-income cash of £49m at the end of its third quarter on Friday, slightly ahead of expectations. The FTSE 250 company said it was on track to deliver its 2024 financial year dividend target of 11.9p per share, representing a 6.7% increase from 2023, which was expected to be fully covered by net income.

Consumer health group Haleon, the company behind Sensodyne toothpaste, Panadol and Advil painkillers, has announced it is selling the ChapStick lip balm brand for $430m. The sale, to Suave Brands Company, a portfolio company of Yellow Wood Partners, will also see Haleon receive a "passive minority interest" in the purchasing entity.

Hotel owner and developer PPHE on Thursday lifted full-year guidance as trading momentum towards the end of the year and into 2024 remained positive. The company, which counts the Radisson Brands and art’hotel chains among its stable, said 2023 core earnings would now be £127m, compared with previous expectations of £120m and revenue of at least £413m, up from prior guidance of £400m.

Industrial parts distributor RS Group reported a 10% fall in third-quarter like-for-like sales on weaker-than-expected markets and slower unwinding of customer surplus inventory particularly in electronics and associated products. The company, formerly known as Electrocomponents, said its Americas' performance reflected higher exposure to automation and control and electronic products and small industrial manufacturers than the rest of the Group.

UK car parts and bike retailer Halfords on Thursday reported weaker-than-expected third-quarter sales, driven by a poor Christmas as customers reined in discretionary spending amid the cost-of-living crisis. December like-for-like (LFL) sales slumped more than 15%, although the start of the fourth quarter returned to growth, the company said in a trading update.

Asset manager Abrdn announced it is cutting 500 roles across the group as part of a new cost-cutting initiative to save £150m by the end of 2025, as it reported net outflows of over £12m in the second half. The new transformation programme is "designed to restore our core Investments business to an acceptable level of profitability and allow for incremental reinvestment into growth areas".

Pub chain Wetherspoons held annual guidance as it reported a rise in first-half underlying sales. Like-for-like sales in the 25 weeks to January 21 rose 10.1% on an annual basis. Bar sales increased by 11.8%, food by 7.9% and slot/fruit machines 10.4%. Hotel room sales were up 3.1%, the company said on Wednesday.

Mining giant Rio Tinto said it had agreed to buy electricity from the Upper Calliope solar farm in the state of Queensland to power its Gladstone aluminium operations for 25 years. The Anglo-Australian miner signed the deal with developer European Energy to buy all power generated from the 1.1 gigawatt farm. It is looking to halve its direct emissions by the end of the decade.

TI Fluid Systems said on Wednesday that full-year results were set to be "slightly ahead" of expectations after a continued strong performance in the fourth quarter. In an update for the year to the end of December 2023, the company said margin expansion was driven by commercial performance and cost reduction actions. These were partially offset by inflation, volatility in customer demand and adverse currency movements, it said.

Premier Foods, the food manufacturer behind brands like Mr Kipling, Bisto and Ambrosia, said it is on track to hit profit forecasts this year after a solid third quarter with double-digit sales growth across the group. Sales in the three months to 30 December were up 14.4% over last year, as group market share rose 121 basis points, helped by lower promotional price points introduced in the quarter.

Vistry Group announced on Tuesday that its Countryside Partnerships subsidiary has been chosen as the preferred developer by the Greater London Authority (GLA) and the Mayor's Office for Policing and Crime (MOPAC) to undertake a significant housing project in Colindale, Barnet. The FTSE 250 housebuilder said the development would form part of a £276m gross development value (GDV) initiative, and aimed to create 739 new mixed-tenure homes.

Great Portland Estates said in an update on Tuesday that during the nine months to 31 December, it signed leases totalling £16.1m, exceeding the estimated rental value (ERV) from last March by 10.4%. The FTSE 250 company said the leases included 12 new agreements and renewals, with a combined annual rent of £5m, of which £4.1m was GPE's share.

Pub operator Marston's said in an update on Tuesday that total retail sales in both its managed and franchised pubs rose 8.8% year-on-year in the 16 weeks to 20 January. The London-listed company, which was holding its annual general meeting, attributed the growth to robust sales in both the beverage and food categories.

Private equity group HgCapital on Monday said it had offloaded its stake in oil pricing data publisher Argus Media, allowing chief executive Adrian Binks to take a majority stake in the firm. The deal values HgCapital's investment in Argus £52m. Existing minority shareholder General Atlantic – another private equity outfit – will also buy part of Hg’s stake.

Oxford Nanopore Technologies has appointed Nick Keher, a finance veteran in the life sciences sector, as its new chief financial officer, the DNA/RNA sequencing tech firm announced on Monday. The appointment, effective immediately, will see Tim Cowper move into the chief operating officer (COO), having assumed both roles unofficially for the past five years.

Alphawave IP Group reported record quarterly bookings of $128.7m in its fourth quarter on Monday, marking a 36% increase compared to the same period in the prior year. The London-listed silicon chip technology and intellectual property specialist, which trades as Alphawave Semi, said about 90% of the bookings came from advanced nodes, specifically 7nm and below.

S4 Capital said on Monday that trading in the fourth quarter was in line with the expectations outlined in November and that client caution on marketing spend was expected to persist. As a result, the group now expects a like-for-like net revenue decline of around 4% for the full year 2023, and an operational EBITDA margin of between 10% and 11%.

Economic news

UK consumer confidence continued to improve in January to its best level in two years, according to a long-running survey published on Friday. The GfK’s consumer confidence index increased three points to -19 in January, with shoppers more optimistic about their personal finance situation.

UK retail sales fell in January at the fastest pace in three years, according to the latest Distributive Trades Survey from the Confederation of British Industry. The CBI’s retail sales balance fell from -32 in December to -50 - the worst level since December 2021 when the UK was in lockdown.

The government cannot prove biomass power plants meet sustainability rules and should review its monitoring arrangements, the National Audit Office said on Wednesday. Biomass-fuelled power plants supplied around 11% of the UK’s electricity in 2022.

Output has fallen across the manufacturing sector, a closely-watched survey suggested on Wednesday, weighing heavily on sentiment. According to the latest Industrial Trends Survey from the Confederation of British Industry, output volumes fell in the three months to January, with the weighted balance sliding to -10 from 0 in December.

Activity in the UK services sector picked up in January, but the Red Sea crisis hit manufacturing supply chains, according to a survey released on Wednesday. The S&P Global flash composite purchasing managers’ index - which measures activity in both sectors - rose to 52.5 in January from 52.1 the month before, hitting a seven-month high. Economists were expecting a reading of 52.2.

The UK government borrowed much less than expected last month, according to data released on Tuesday by the Office for National Statistics. Public sector borrowing, excluding banks, rose £7.8bn in December, which was below the £14.1bn economists were expecting.

A quicker-than-expected drop in inflation is expected to support UK growth in 2024 and beyond, according to EY Item Club, which has upgraded its economic projections for the next two years. According to the EY ITEM Club’s new Winter Forecast released on Monday, the UK’s "prolonged period of economic stagnation" should begin to ease this year as slowing inflation, interest rate cuts and tax reductions give the economy momentum in 2024 and 2025.

International events

Americans continued to splash out at a steady clip at the end of 2023, while price pressures continued to recede. According to the U.S. Department of Commerce, in seasonally adjusted terms personal consumption expenditures grew at a month-on-month pace of 0.3% in December (consensus: 0.4%).

Germany’s economic gloom deepened on Friday as a widely-watched survey showed an unexpected fall in consumer confidence as inflation deterred people from major purchases. The consumer sentiment index dropped to -29.7 in February, from a downwardly-revised -25.4 in January and well below the consensus -24.5, said the GfK institute and Nuremberg Institute for Market Decisions (NIM).

Initial claims for unemployment benefits in the US rose more than expected last week, according to data released on Thursday by the Department of Labor, though the long-term trend remains pointing downwards. First-time jobless claims totalled 214,000 in the week to 19 January, up 25,000 from a revised 189,000 the week before, which was upped by 2,000. The consensus estimate was 200,000.

Rate-setters in Frankfurt stayed put on policy at their latest policy meeting, but reiterated their determination to return inflation to 2.0% in a timely fashion. In their policy statement, they said that: "Based on its current assessment, the Governing Council considers that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal.

US GDP expanded more than anticipated in the last three months of 2023, complicating the picture for interest rates as the Federal Reserve has to contend with stronger-than-expected economic growth amid a potential loosening of monetary policy. The economy grew at a year-on-year rate of 3.3% in the fourth quarter, according to preliminary estimates released by the Bureau of Economic Analysis on Thursday.

German business sentiment deteriorated further in January, according to a survey released on Thursday by the Ifo Institute. The business climate index fell to 85.2 from 86.3 in December, coming in well below consensus expectations of 86.7.

China’s central bank is to cut the amount of cash lenders must hold, it was confirmed on Wednesday, the latest move designed to bolster the country’s ailing economy. Pan Gongsheng, governor of the People’s Bank of China, said the reserve requirement ratio would be trimmed for all banks from 5 February, by 50 basis points to 10%.

A leading economic think tank has trimmed its growth forecasts for Germany, it was confirmed on Wednesday, in response to government plans to cut spending. The Institute for Economic Research (Ifo) said it expects GDP to grow by 0.7% this year, down from a previous forecast, made in December, for growth of 0.9%.

Business activity in the eurozone fell at the slowest rate for six months in January, according to provisional survey data released on Wednesday, albeit with downturns persisting in both manufacturing and service sectors amid further falls in new business. The flash eurozone composite purchasing managers index came in at 47.9 compared with 47.6 in December. A mark below 50 indicates contraction.

Beijing is considering a possible rescue package to help bolster China's struggling stock markets, it was reported on Tuesday. According to Bloomberg, citing unnamed sources familiar with the matter, Chinese authorities are considering using around Y2trn (£220bn) to buy stocks in order to stabilise markets.

The Bank of Japan kept interest rates in negative territory as expected on Tuesday, but reduced its forecasts for inflation this year on the back of falling oil prices. The central bank left its short-term interest rate at -0.1%, as widely predicted by economists, and said it would keep purchasing a Japanese government bonds to keep 10-year yields at around 0% with an upper bound of 1%.

Reporting by Sharecast.com staff and contributors.