Weekly review

The FTSE 100 ended the week up 104.6 points, or 1.27%, closing at 8,358.25 on Friday.

Equity view

British American Tobacco has announced that it is nearing a potential settlement regarding outstanding tobacco litigation in Canada after a five-year-long legal process involving its subsidiary Imperial Tobacco Canada Limited (ITCAN). Back in 2019, ITCAN obtained creditor protection under the Canadian Companies' Creditors Arrangement Act or CCAA, and has been negotiating a possible settlement in a confidential court supervised mediation process.

Promotional merchandise manufacturer 4imprint has appointed a chief financial officer designate to replace current CFO David Seekings who will retire from his role next year. Michelle Brukwicki, a certified public accountant in the US who is currently the CFO of TDS Telecom, has more than 25 years of financial and accounting experience at publicly listed companies, 4imprint said.

Gambling and gaming company Evoke has registered its first quarter of year-on-year growth for the first time since early 2022, helped by double-digit growth online in its core markets. The group, formerly known as 888 Holdings, reported revenues of £417m in the third quarter ended 30 September, up 3% on last year despite customer-friendly sports results during September, which impacted revenue by £17m.

Future said on Friday that chief executive Jon Steinberg plans to step down from the board later next year to relocate back to the US with his family, sending shares in the media group tumbling. Steinberg’s notice period is 12 months and the board will now launch a search for his successor.

Gambling and gaming group Entain boosted its full-year outlook on Thursday, after third-quarter numbers came in ahead of expectations. The owner of Ladbrokes, Coral and SportingBet, among others, said total net gaming revenues in the three months to 30 September had jumped 8%, or by 10% on a constant currency basis.

Paper and packaging group Mondi said on Thursday that underlying core profit fell in the third quarter in "muted" trade, mainly due to more planned maintenance shuts. In an update for the three months to 30 September, the company said that as expected, underlying earnings before interest, tax, depreciation and amortisation declined to €223m from €351m in the second quarter.

St James’s Place reported a jump in funds under management on Thursday, boosted by an improving macroeconomic environment. The London-listed wealth manager said FUM reached a record £184.4bn in the three quarters to September end, up from £158.6bn a year previously. It was also an improvement on the second quarter, when FUM reached £181.9bn.

Chemring reported a strong trading performance for the year-to-date on Thursday, with its full-year outlook remaining in line with analyst expectations despite foreign exchange headwinds. The FTSE 250 company said it had secured significant orders, with an order intake of £638m as at 30 September, up from £604m a year earlier, and an order book standing at £1.1bn, compared to £869m at the same time last year.

Copper mining giant Antofagasta reported a 15% increase in third-quarter production as it maintained expectations for full-year output to hit the lower end of guidance. Copper production totalled 179,000 tonnes in the three months to 30 September, up 15.3% on the second quarter. That takes year-to-date output to 463,700, down 1.2% on the year before.

GSK announced on Wednesday that the US Food and Drug Administration (FDA) has accepted its new drug application (NDA) for gepotidacin, a first-in-class oral antibiotic, under priority review. The FTSE 100 pharmaceuticals giant said gepotidacin was being developed to treat uncomplicated urinary tract infections (uUTIs) in female adults and adolescents, potentially becoming the first new oral antibiotic class for the condition in over 20 years. It said the FDA was expected to make its decision by 26 March next year.

Anglo-Australian miner Rio Tinto left its annual iron ore forecasts unchanged on Wednesday, after third quarter production edged higher. The blue chip said iron ore production at its vast Pilbara mine in Western Australia rose 1% in the last three months, to 84.1m tonnes, while shipments increased 1% at 84.5m tonnes.

Healthcare facilities investor Primary Health Properties reported an additional £2.7m in rental income in a third quarter update on Wednesday - a slight decrease compared to £3.3 million for the same period in 2023. The FTSE 250 company said rental income growth was driven by 241 rent reviews, representing a 7.9% increase in passing rent.

UK housebuilder Bellway on Tuesday reported a slump in annual profits, reflecting weaker demand due to higher mortgage rates, but said its forward order book had increased as economic conditions eased. The company said pre-tax profit for the year to July 31 fell 62% to £183.7m as completions slumped by a third to 7,654 homes.

Fintech money transfer platform Wise on Tuesday reported a 17% jump in second-quarter income after a strong rise in customer numbers. The company, which is targeting major banks by charging low fees for currency transfers, said underlying income grew to £337m, bringing growth in the first half to 19%. Wise said it continued to expect underlying income growth of 15-20%.

QinetiQ Group said in a trading update on Tuesday that it remained on track to meet its full-year expectations after its second quarter. The FTSE 250 defence technology firm said it expected to deliver high single-digit organic revenue growth and maintain stable margins, with cash conversion at around 80%. It said its £100m share buyback programme was also progressing as planned, with £62m in shares already repurchased by the end of the quarter.

Electronic components manufacturer DiscoverIE said on Tuesday that first-half earnings were in line with internal expectations and noted that it "remains on-track" to meet guidance for the financial year. DiscoverIE said its strategy and focus on operational improvements had enabled continued margin development and robust earnings performance through the economic cycle.

EasyJet has announced that it is appointing the chief financial officer European freight operator Lineas as the new head of its finance function, as current CFO Kenton Jarvis gets ready to move into the chief executive role early next year. Jan De Raeymaeker, who prior to Lineas was the CFO of Brussels Airlines between 2012 and 2018, will join the board on 20 January.

LondonMetric Property said it had settled a number of deals that have added £8.5m in annual rent in the financial year to date. The company on Monday said it had settled 139 rent reviews since the end of March, with hikes delivering £5.7m of extra rent. It also signed 27 lettings over the same period, adding an extra £2.8m.

PageGroup reported a 13.5% drop in group gross profit for the third quarter on Monday, reflecting ongoing challenges across global recruitment markets. The FTSE 250 recruiter said in a trading update that gross profit fell to £201.4m, with the company highlighting softening conditions in key regions, especially Europe and Asia Pacific.

Retailer Frasers Group revealed on Monday that Ger Wright will stand down from her role as managing director of Sport on 30 November but will remain on its board as a non-executive director.

Economic news

Begbies Traynor's latest ‘Red Flag Alert’ report, released on Friday, revealed a record number of UK businesses experiencing 'significant' financial distress, with 632,756 companies affected in the third quarter. The AIM-traded business advisory specialist said that represented a 5.1% increase from the second quarter, and a 32.3% rise compared to the third quarter of 2023. It highlighted rising distress across 21 of the 22 sectors monitored, with utilities up 19.3%, food and drug retailers up 10.4%, financial services up 9.94%, and bars and restaurants up 8.7%, all seeing particularly sharp increases.

UK retail sales ticked higher in September, beating expectations, as consumers splashed out on technology, official data showed on Friday. According to the Office for National Statistics, month-on-month sales volumes rose 0.3%. Growth was slower than the 1% improvement seen in August, but was comfortably ahead of forecasts for a 0.3% decline. Volumes were also at their highest index levels since July 2022.

House price inflation in the UK accelerated in August, according to data from the Office for National Statistics on Wednesday, as buyer confidence returned to the market following the first cut in interest rates in four years. Average house prices increased by 2.8% year-on-year to £293,000, rising sharply from the 1.8% annual growth seen in July. Prices across England were up 2.3% at £310,000, increased by 3.5% in Wales to £223,000 and jumped 5.4% in Scotland to £200,000.

Supermarket sales sparked in September, industry data showed on Wednesday, as shoppers stocked up on Halloween treats and early Christmas bargains. According to research company NIQ, total till sales rose 4.7% in the four weeks to 5 October, up on the previous month’s 4% rise. Within that, general merchandise edged ahead 0.2% - the first growth for 12 months – while fast moving consumer goods (FMCG) volume growth was 1.4%.

UK inflation dropped sharply in September to its lowest level in two and a half years, according to data from the Office for National Statistics on Wednesday, likely ramping up the pressure on the Bank of England to get more aggressive with monetary easing. The annual change in the consumer price index (CPI) slowed to just 1.7% last month, down from 2.2% in August. This was well below the 1.9% expected by economists and the first time below the 2% mark since April 2021. Over the month, CPI was little changed in September compared with 0.3% gain the month before.

Ofwat is set to appoint LEK Consulting as an independent monitor of Thames Water, the UK’s largest water utility, as it faced mounting financial and operational challenges, according to fresh reports on Tuesday. The appointment, according to Sky News, came after Thames Water lost two investment-grade credit ratings in August, raising concerns over its ability to continue operating under its current licence. Sky said the downgrades intensified fears of nationalisation, as Thames Water struggled to secure new investment from private backers.

UK earnings growth fell to its lowest level for more than two years, in another sign that the jobs market was weakening as businesses cut the number of workers on payrolls, according to data published on Tuesday, raising the expectations of a rate cut from the Bank of England next month. Average regular earnings growth came in at 4.9% in the three months to August, down from 5.1% in the previous quarter and the lowest since June 2022, the Office for National Statistics said. Vacancies declined to 34,000 to 841,000 in the quarter to September while workers on UK payrolls also fell by 35,000 between July and August.

International events

Construction output in the eurozone inched higher in August but remained well below last year's levels, according to figures from Eurostat on Friday. Production in construction increased by just 0.1% across the single-currency region during the month, following a 0.5% fall in July. Building construction bounced back 0.9% after a 1.1% fall previously, while specialised construction activities rose 0.3% after declining 0.7% the month before.

China’s faltering economic growth slowed in the last quarter, official data released on Friday showed, although the slowdown was not as steep as feared. According to the National Bureau of Statistics, GDP grew by 4.6% in the three months to September end, down on the second quarter’s 4.7% rise. It also remains below Beijing’s full-year target of around 5%. However, the reading did narrowly beat forecasts, for growth of 4.5%.

Industrial production in the US retreated in September, falling more than expected, according to data from the Federal Reserve on Thursday. Industrial production fell by 0.3% during the month after a 0.3% gain in August. The consensus estimate was for a fall of just 0.2%. The Fed said that strikes at a "major producer of civilian aircraft" – ie Boeing – had a 0.3% negative impact on overall production, as the production of aerospace equipment sank 8.3%.

The Philadelphia Federal Reserve's manufacturing index surged to 10.3 in October, a marked increase when compared to the previous month's reading of 1.7 and significantly ahead of expectations for a print of 3. Current general activity, new orders, and shipments all grew in October, with new orders and shipments returning to positive levels. Future growth expectations for the next six months also improved, hinting at widespread optimism.

US retail sales rose more than expected in September, according to fresh data released on Thursday, driven by a broad-based increase across several sectors. According to the Commerce Department, the value of retail purchases grew by 0.4%, following a modest 0.1% increase in August. Excluding sales at auto dealerships and gasoline stations, retail sales advanced by an even stronger 0.7%.

Turkey’s central bank said on Thursday that it was keeping interest rates steady at 50%, as widely expected. It said in a statement: “In September, the underlying trend of inflation posted a slight increase. Indicators for the third quarter suggest that domestic demand continues to slow down, approaching disinflationary levels.”

Americans lined up for unemployment benefits at a decelerated pace in the week ended 12 October, according to the Labor Department, down from a 14-month high in the previous week. US initial jobless claims fell to 241,000, well below market expectations for a reading of 260,000, principally due to disruptions caused by Hurricanes Helene and Milton. Elsewhere, outstanding claims increased by 9,000 to 1.86m, while the four-week moving average, which aims to strip out week-to-week volatility, rose by 4,750 to 236,250.

The European Central Bank cut interest rates on Thursday for the third time this year, as expected. The Bank cut its benchmark deposit rate to 3.25% from 3.5%. It said: “The decision to lower the deposit facility rate - the rate through which the Governing Council steers the monetary policy stance = is based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.”

Eurozone inflation figures for September were revised lower on Thursday, falling further below the European Central Bank's target of 2% to levels not seen since April 2021. The annual rate of consumer price inflation came in at just 1.7% last month, Eurostat announced. This was down from the flash reading of 1.8% released two weeks ago and well below the 2.2% rate registered in August. Across the eurozone, services inflation eased to 3.9% from 4.1% the month before, while energy prices tumbled 6.1% after a 3.0% decline the previous month.

The cost in the US of goods purchased overseas undershot economists' forecasts last month as the fuel prices plummeted. According to the US Department of Labor, in seasonally adjusted terms the country's import price index dropped at a month-on-month pace of 0.4%. Economists had pencilled in a dip of 0.1%. Fuel import prices fell by 7.0% versus August, whilst those of non-fuel imports edged up by 0.1%.

US mortgage applications fell by 17% in the week ended 11 October, according to the Mortgage Bankers Association of America, extending the prior week's 5.1% drop. Applications to refinance a mortgage plummeted 26%, while those to purchase a home were down 7% on the week. Last week's decline marked the sharpest weekly contraction in mortgage demand since 2015, excluding the Covid-19 pandemic, and comes alongside a sharp increase in benchmark mortgage rates as the strong jobs report and red hot inflation print led to less dovish expectations for the Federal Reserve and boosted the yield on the benchmark 10-year Treasury note.

Eurozone industrial production posted a robust 1.8% month-on-month increase in August, marking a significant rebound from the 0.5% contraction in July, according to fresh data from Eurostat. The rise was mirrored by a 1.3% increase across the broader EU. On a year-on-year basis, industrial output in the euro area showed modest growth, advancing by 0.1%, while the EU saw a 0.2% uptick. Germany played a key role in driving the monthly recovery, with industrial output surging by 3.3%, offsetting its July decline.

Economists, analysts and finance professionals turned more positive about the outlook for the German economy this month, according to the closely watched ZEW Indicator of Economic Sentiment on Tuesday. The index, which tracks the sentiment of around 350 experts each month, rose to 13.1 in October, up from an 11-month low of 3.6 in September. This was ahead of the consensus estimate of 10 but not as high as the 19.2 level registered in August.