Weekly review

The FTSE 100 ended the week down 23.78 points, or 0.31%, closing at 7,682.50 on Friday.

Equity view

Engineering firm Smiths Group has sold a third of its stake in US-listed IV therapy specialist ICU Medical for £70m. Smiths, which sold the Smiths Medical division to ICU back in January 2022 for $2.7bn, received $500m-worth of ICU shares as part of the deal. However, the Nasdaq stock has dropped more than 50% since the disposal.

Specialist engineer IMI on Friday reported a 12% jump in full-year profits and forecast higher earnings this year driven by a strong order book. Pre-tax profit for the year to December 31 came in at £387m compared with £346m a year ago. The company now expects adjusted earnings of 120 – 126p a share.

ITV said on Friday that it has sold its entire 50% stake in streaming service BritBox International to its joint venture partner BBC Studios for £255m in cash. The broadcaster said net proceeds of around £235m will be returned to shareholders through a share buyback which it expects to launch imminently after the full-year results on 7 March.

UK educational publisher Pearson said it expected 2024 earnings to be in line with expectations after reporting a rise in annual profits driven by strong demand for its English language courses and extending its share buyback by £200m. Pre-tax profit rose to £493m from £323m, although sales fell to £3.67bn from £3.8bn. Operating profit jumped by 31% to £573m on an underlying basis.

Consumer health firm Haleon on Thursday posted flat annual earnings and said it expected to grow revenue this year on higher demand. The maker of Panadol pain relief, spun out of pharma giant GSK in 2022, posted pre-tax profits of £1.62bn for 2023, up 0.6%. It now expects revenue to rise 4% - 6% this year.

Weir Group managed to deliver an 18% increase in adjusted profits in 2023 after beefing up margins more than expected as it pointed to further growth across the board this year. The Glasgow-based engineering group said full-year adjusted pre-tax profit totalled £411m last year, up from £348m in 2022, with the adjusted operating margin rising 140 basis points to 17.4%, ahead of the 17.0% target.

Ocado said on Thursday that it swung back to an underlying profit in 2023 as its joint venture with M&S returned to profit. In the 53 weeks to 3 December 2023, group adjusted earnings before interest, tax, depreciation and amortisation came in at £51.6m, versus a loss of £74.1m a year earlier as Ocado Retail - its joint venture with Marks & Spencer - returned to a positive adjusted EBITDA of £10.4m from a £4m loss.

Profits at Howden Joinery fell more than expected last year as a weaker DIY and housing market hit the bottom line. The company on Thursday reported pre-tax profit for the year to December 30 of £327.6m, down 19%.

Vodafone has confirmed media speculation that it intends to sell its Italian operations to Swiss telecoms group Swisscom for an enterprise value of €8bn. The UK-listed telecoms firm said it had been engaged in talks with several parties to explore market consolidation in Italy, but it was now in "exclusive discussions" with Swisscom.

Takeaway group Just Eat delivered adjusted profits ahead of its own forecasts for 2023 and predicted a 39% jump in earnings this year as gross transaction value (GTV) excluding North America returned to growth. Adjusted EBITDA came in at €324m for the 12 months to 31 December, up from just €19m in 2022, and above the €320m guidance given last month.

Drax Group announced provisional agreements secured through the recent T-4 capacity market auctions on Wednesday, as it also faced fresh scrutiny over its sourcing practices. The company said it had secured agreements totalling 462 MW of capacity from existing pumped storage and hydro assets, along with 240MW for the refurbishment of Cruachan Power Station units three and four.

Shares in auto and bike parts retailer Halfords plummeted on Wednesday after the company delivered a surprise profit warning with just one month to go before the end of its financial year and said there would be no profit growth next year. Underlying pre-tax profit is now expected to fall in the range of £35-40m for the year ending 29 March, under previous guidance of £48-53m, as a result of a "further material weakening" in three of its four core markets – namely Cycling, Retail Motoring and Consumer Tyres.

Student accommodation provider Unite Group has delivered a confident outlook and upgraded guidance after seeing record adjusted earnings for 2023, though reported profits dropped by more than two thirds as a result of big losses related to changes in property valuations. Adjusted earnings were up 13% year-on-year at £184.3m, helped by 99.8% occupancy and 7.4% rental growth for the 2023/24 academic year. Adjusted earnings per share improved 8% to 44.3p.

British speciality chemicals maker Croda International on Tuesday warned of lower operating margins this year after posting a slump in 2023 profits due to customers destocking and a weak macroeconomic environment. Pre-tax profit for the year to December 31 fell 69.7% to £236.3m. The company, which supplies the consumer and life sciences industries, said it expected group adjusted operating margin to be two to three percentage points lower and adjusted profit before tax to be between £260m and £300m in full year 2024.

Mining group Endeavour has announced that wet commissioning activities are now underway at the Sabodala-Massawa Expansion project in Senegal, with first gold expected in early May. The company said that the expansion, known as BIOX Expansion, is on budget with construction now 91% complete, including more than 3m man-hours and no lost time to injuries. Construction activities at the asset began in April 2022.

On the Beach said on Tuesday that it has signed a long-term distribution agreement with Ryanair, despite the latter having recently branded the online travel agent a "pirate" and accused it of marking up prices. OTB said the agreement "represents a transformational shift" in its relationship with its most significant low-cost carrier.

European regulators have given the green light to AstraZeneca's blood-disorder drug Voydeya, the biopharma giant announced on Monday. The Committee for Medicinal Products for Human Use of the European Medicines Agency said Voydeya, whose generic name is danicopan, has been recommended for marketing authorisation as an add-on to ravulizumab or eculizumab for the treatment of adult patients with paroxysmal nocturnal haemoglobinuria (PNH), a rare and severe blood disorder which destroys red blood cells and can lead to blood clots and organ damage.

Hammerson said on Monday that it has agreed the sale of Aberdeen shopping centre Union Square to an affiliate of Lone Star Real Estate Fund VI for £111m in cash. Completion of the sale of the 52,000m centre is expected to occur in the first quarter of this year.

GSK announced encouraging headline outcomes from its trial of gepotidacin, an oral antibiotic aiming to address uncomplicated urogenital gonorrhoea in adolescents and adults, on Monday. The FTSE 100 pharmaceuticals giant said the ‘EAGLE-1’ phase three trial met its primary efficacy endpoint by demonstrating non-inferiority of gepotidacin when compared to the combination therapy of intramuscular ceftriaxone plus oral azithromycin, which is the current main treatment regimen.

American oil group Kosmos Energy reported that fourth-quarter revenues fell by a tenth as falling prices outweighed an increase in production, but the company swung to a profit and painted a bullish outlook for the coming year. Total revenues were $507.8m in the three months to 31 December, down 9.9% from the $563.7m reported a year earlier, as the average sales price per barrel of oil equivalents slipped to $75.64 from $81.70.

Economic news

The downturn in the UK manufacturing sector continued in February amid disruption from the Red Sea crisis, according to a survey released on Friday. The S&P Global manufacturing purchasing managers’ index ticked up to 47.5 from 47.0 in January. It came in above the flash estimate of 47.1 but still below the 50.0 mark that separates contraction from expansion for the 19th month in a row.

Annual house prices in the UK returned to growth in February for the first time in more than a year following a dip in borrowing costs, according to figures released by Nationwide on Friday. House prices rose by 1.2% on the year following a 0.2% decline in January.

Retail footfall plunged last month, industry data showed on Friday, as the unusually wet weather kept shoppers at home. According to the latest BRC-Sensormatic IQ Footfall Monitor, footfall slumped 6.2% in February, compared to a 2.8% decline a month earlier.

Mortgage approvals pushed higher in January, official data showed on Thursday, hitting the highest level since the government's disastrous mini budget in 2022. According to the Bank of England’s latest Money and Credit report, net mortgage approvals rose to 55,200 last month from December’s upwardly-revised 51,500.

The UK service sector continued to falter in February, an industry survey showed on Wednesday, as weak demand weighed heavily. The latest service sector survey from the Confederation of British Industry displayed a mixed picture across the sector. Business and professional services firms thought the general business situation had improved slightly, with the net balance rising to 4 from -14 in the previous quarter.

EasyJet is expected to make its way back into the FTSE 100 in the latest reshuffle due to be announced after the market close on Wednesday. Endeavour Mining is set to be demoted to the FTSE 250, along with Tullow Oil, whose shares have fallen 35% year-to-date. HS2 contractor Kier Group is expected to be promoted to the FTSE 250 from the FTSE Small Cap, while IT professional services provider FDM Group is set to be ejected from the FTSE 250.

The Financial Conduct Authority (FCA) announced plans to expedite and improve the transparency of its enforcement cases on Tuesday, in a bid to increase the deterrent effect of its actions. It said it would prioritise a focussed portfolio of cases aligned with its strategic objectives going forward, adding that cases deemed unfeasible in delivering outcomes would be promptly closed.

Shop price inflation in the UK fell to its lowest level in 23 months in February, according to the British Retail Consortium-NielsenIQ Shop Price Index released on Tuesday. The annual rate of price growth slowed to 2.5% this month, down from 2.9% in January, as easing supply-chain pressures fed through to food prices.

International events

Consumer prices in the eurozone rose by more than expected in February, according to data out on Friday from Eurostat, but core inflation continued its downward trend, falling to its lowest in nearly two years. The year-on-year change in the harmonised index of consumer prices was 2.6% last month, down from 2.8% in January but above the 2.5% change expected by economists.

Eurozone manufacturing activity slowed slightly in February, but signs continued that contraction in the sector was easing, according to flash estimates from a survey published on Friday. The Hamburg Commercial Bank manufacturing purchasing managers index (PMI) fell to 46.5 from January's 46.6). The PMI output index was unchanged at 46.6. A mark above 50 indicates expansion.

Two separate readings of manufacturing activity in China showed little change in February, but still managed to come in ahead of economists' expectations. The 'official' manufacturing purchasing managers' index (PMI) from the National Bureau of Statistics of China came in at 49.1 last month, down just 10 basis points from 49.2 in January. While this still showed a contraction in activity – indicated by any reading below 50 – it was slightly above the consensus forecast of 49.0.

Unemployment claims in the US moved higher during the preceding weeks, especially those not being filed for the first time. According to the Department of Labor, in seasonally adjusted terms the number of initial unemployment claims increased by 13,000 over the week ending on 24 February to reach 215,000.

German inflation fell again this month to its lowest level since June 2021, with the February headline rate hitting 2.5% on an annualised basis, compared with 2.9% in January, according to flash estimates released on Thursday. The figure was driven by a plunge in food inflation, to 0.9% from January's figure of 3.8%, although energy inflation crept up by 0.4 percentage points to -2.4%.

The Bank of England has appointed OECD chief economist Clare Lombardelli a deputy governor, it was announced on Thursday. Lombardelli will replace Ben Broadbent on 1 July, when his latest five-year term ends.

German retail sales fell unexpectedly in January, down 0.4% against expectations of a 0.5% rise, according to official data published on Thursday. On a yearly basis the fall was 1.4%. The month-on-month decline compared with December’s 1.6% fall.

The American economy expanded at a slightly slower than expected pace at the end of 2023. According to the US Department of Commerce, gross domestic product grew at a quarterly annualised pace of 3.2% over the three months to December.

Confidence in the eurozone worsened unexpectedly this month, highlighting the single-currency bloc's struggle to emerge from the impact of the Covid pandemic and war in Ukraine, according to a survey of consumers and managers published on Wednesday. The eurozone sentiment indicator, which measures both business and consumer confidence, fell to 95.4, against expectations of a slight rise and against a downwardly-revised 96.1 in January.

US house price inflation picked up at the end of 2023, pushing prices further into record territory. In non-seasonally adjusted terms, the S&P CoreLogic Case-Shiller US National Home Price Index accelerated to a year-on-year pace of 5.5% in December, after rising by 5.0% during the month before.

Durable goods orders shrank rapidly at the start of 2024, but mainly due to a more than halving in those for defence aircraft and parts. According to the Department of Commerce, in seasonally adjusted terms durable goods orders dropped at a month-on-month pace of 6.1% in January to reach $276.65bn (consensus: -4.5%).

German consumer sentiment was tipped to stabilise at a low level next month as consumers expressed concerns about Europe's biggest economy, according to a widely-watched survey published on Tuesday. The consumer sentiment index published jointly by GfK and the Nuremberg Institute for Market Decisions (NIM) rose slightly heading into March, to -29.0 from a revised -29.6 the month before, and in line with expectations.

Reporting by Sharecast.com staff and contributors.