Weekly review

The FTSE 100 ended the week 131.66 points higher, closing at 7,669.56 on Friday.

Equity view

Financial services company CMC Markets said on Friday that the fourth quarter of its recently wrapped up trading year had been its strongest, leaving full-year net operating income at the top end of guidance. CMC Markets stated annual net operating income was predicted to be approximately £280.0m, a record performance outside of the Covid-19 pandemic period, but did also warn that gross leveraged client income was pegged to have fallen from £335.0m to £288.0m, while leveraged and non-leveraged trading revenues were expected to have slipped 34% and 12% year-on-year, respectively.

Sustainable technology company Johnson Matthey said it expected annual results to be in line with market expectations, but warned of continued supply chain disruption for its automotive customers and increased cost inflation. In a trading update, the company said growth was driven by improved performance in its clean air division, where it saw increased activity in autos as end markets partially recovered.

Woodside Petroleum’s merger with the petroleum business of BHP Group has been given the seal of approval by an independent expert. Ahead of a Woodside shareholder vote on the deal on 19 May, KPMG Corporate Finance said in a report that the deal was in the best interests of Woodside shareholders.

Anglo-Russian precious metals miner Polymetal said on Friday that Deloitte has resigned as its auditor because of its links with Russia. Deloitte had already said last month that its Russian and Belarus firms would separate from the global network of member firms of which it is a part. As a result, it has concluded it will not be able to carry out an audit of the company given that the majority of its assets and operations are in Russia.

Real estate investment trust Workspace said on Thursday that growth in like-for-like occupancy and a rise in rent per square foot had resulted in a higher fourth-quarter rent roll. Workspace reported another quarter of strong growth in like-for-like occupancy, up 3.0% in the quarter to 89.6%, and up 7.8% over the year, to reach normalised pre-Covid levels with scope for further growth.

Energy giant Shell on Thursday said it expected to book up to $5bn in post-tax write offs after its decision to exit Russia, adding that oil & gas earnings would be “significantly higher” on the back of surging prices. The write offs are higher than the $3.4bn previously disclosed by the company, but would not impact adjusted earnings, Shell said in a trading update.

Bellway and Vistry said the extra cost of making buildings safe after the Grenfell Tower fire would be £300m and up to £50m respectively. Both housebuilders said they had signed or would sign a pledge to put right fire hazards such as flammable cladding on properties they built or refurbished that are over 11 metres high.

Landscape products manufacturer Marshalls said on Thursday that it has raised around £187m in an accelerated bookbuild to help fund the acquisition of roofing specialist Marley. The company placed just over 28.8m shares at 650p each. This is a 6.1% discount to the closing share price on Wednesday.

Tobacco company Imperial Brands said on Wednesday that it had made "good progress" in delivering on its strategic objectives in the six months ended 31 March, with the group expecting to report broadly flat interim revenues and operating profits as it continued to perform in line with its five-year strategy. Imperial Brands stated it was on track to deliver full-year results in line with revised guidance issued on 15 March, with expected full-year net revenue growth of around 0-1% on a constant currency basis and adjusted operating profit growth of around 1% year-on-year.

Engineered ceramics company Vesuvius has nominated Carl-Peter Forster to its board as both a non-executive director and chairman designate. Vesuvius said on Wednesday that Forster, currently the chairman of Chemring Group, will join its board on 1 November before assuming the position of chairman on 1 December.

Housebuilder Redrow said on Wednesday that it has signed the UK government's pledge to make properties safe following the Grenfell Tower fire and that it expects to make an additional provision of £164m as a result. The company said it will be remediating all the buildings in which it was involved, whether or not it built them, going back 30 years.

Events company Hyve hailed strong first-half trading on Wednesday as it announced the disposal of its Russian business to Rise Expo for up to £72m in cash. In the six months to the end of March, revenues came in at around £58m, up from £5m in the same period a year earlier, excluding Russian revenues of circa £17m, up from £5m. Revenues were underpinned by the reopening of western markets and strong performances across all key performance indicators, including like-for-like customer spend, visitor density and NPS.

Polymer solutions firm Victrex revealed on Tuesday that Ian Melling had been tapped to take over as its next chief financial officer, with effect from 4 July. Victrex said Melling had been selected to succeed Richard Armitage, who will step down as CFO on 27 May, following "a diverse and thorough search process".

Moonpig upgraded its revenue outlook for the current financial year after sales were boosted by consumer behaviour during the Omicron strain of Covid-19. The online greeting card and gift platform said revenue in the year to the end of April would be about £300m - up from earlier guidance of £270m-£285m. The outlook for underlying revenue is unchanged at about £265m.

Home repairs service Homeserve, currently in the sights of Canada’s Brookfield Asset Management, said it had traded in line with expectations during its fiscal year with steady policy retention rates in the UK and US. The company on Tuesday said its total membership business had retained 84% of policies in the 12 months to March 31, up from 83% a year earlier.

Crest Nicholson said the extra cost of dealing with dangerous cladding on properties it built would be up to £120m after the government widened the list of affected homes. The FTSE 250 housebuilder said it had recorded £47.8m of net charges since October 2019 following the 2017 Grenfell Tower fire that killed 71 people.

Insurer Aviva said it had appointed Charlotte Jones as chief financial officer with effect from September 5. Jones was previously CFO of RSA Insurance and interim chief executive officer of its UK & international business.

Low-cost airline Wizz Air said on Monday that it had carried 2.47m passengers in March, a 416% increase year-on-year. Wizz Air, which also reported a 23.7 basis point improvement in its load factor to 86.2%, said it had continued to grow its network and improve its customer offering in March, expanding existing operations in Romania and announcing new routes originating from Italy, the United Kingdom and the United Arab Emirates to destinations ranging from Greece, Spain, Bulgaria, Cyprus, Montenegro, Israel to Sri Lanka.

Endeavour Mining said it was set to start construction of the $290m expansion of its Sabodala-Massawa gold project in Senegal. The company on Monday said the move was supported by a recently-completed feasibility study and could help the mine produce 400,000 ounces of gold a year.

Ryanair narrowed the range for its annual loss guidance on Monday as it reported a recovery in traffic. The budget airline now expects a pre-exceptional loss of between €350m and €400m for the year to the end of March 2022, versus previous guidance of between €250m and €450m. The company said full-year traffic recovered strongly to more than 97m from 27.5m in FY21, although it was still below pre-Covid traffic of 149m.

Economic news

UK starting salaries rose at a record pace in March but hiring slowed, according to a survey released on Friday by KPMG and the Recruitment & Employment Confederation. The survey found that growth in hiring activity eased as candidate shortages restricted growth in both permanent placings and temporary billings. However, the rate of hiring remained high by historical standards amid increasing demand for staff.

Visits to UK retailers picked up in March as Covid-19 restrictions were lifted and signs of spring appeared but squeezed incomes cast a cloud over the sector, an industry survey showed. Store footfall fell by 15.4% from 2019 but the figure was a 1.2 percentage point improvement on February, the British Retail Consortium said. The survey compared 2022 with 2019 to capture the change since before the pandemic.

Tesco announced a 55p-per-hour pay rise for its supermarket staff on Thursday, bringing the UK’s largest private employer into line with its discounter competitors in terms of pay. The FTSE 100 retail giant said staff would be paid £10.10 per hour from 24 July, up from £9.55 per hour currently.

The Bank of England has its work cut out for it in trying to bring inflation to heel while not tipping the economy into recession, argue economists at Berenberg. Ideally, policymakers would wait a while to see how the economy handles itself but time is now a luxury that it can no longer afford.

The Financial Conduct Authority pledged to do more to protect consumers and shut down harmful firms as the regulator seeks to restore its reputation after the London Capital & Finance (LCF) scandal. The FCA said it would hire 80 more people to shut down problem firms that do not comply with basic regulations. The watchdog also said it would hold itself accountable against targets when protecting consumers.

House prices continued their northward stride in the UK in March, with fresh industry data on Thursday morning pointing to the largest increase in six months. The Halifax House Price Index showed monthly growth of 1.4%, with the average UK house price now sitting at £282,753 - another record high.

Retail footfall bounced back from the pits of Omicron in March, fresh industry data revealed on Thursday, though it was being viewed with caution as a possible calm before the inflationary storm. According to retail analysts Springboard, the month delivered “encouraging news” for retailers, as footfall bounced back to sit 15.3% below the pre-Covid levels of 2019.

Economists at Bank of America raised their short-term inflation forecasts for the UK, predicting that the Bank of England would hike short-term interest rates four more times as it tried to navigate both the risk of a recession and of too-high inflation. The annual rate of increase for consumer prices in the UK was now seen averaging 7.0% in 2022 and 3.9% for 2023.

The financial wellbeing of UK households is at its lowest level for two years amid the cost of living crisis, according to a survey released on Wednesday. The Scottish Widows Household Finance Index, which measures overall perceptions of financial wellbeing, fell to 38.5 in the first quarter, marking the fastest decline since just after the pandemic began in the second quarter of 2020 and among the lowest on record.

UK construction sector growth was unchanged in March despite inflationary pressures, according to a survey released on Wednesday. The S&P Global/CIPS construction purchasing managers’ index printed at 59.1, in line with February and comfortably above the 50.0 mark that separates contraction from expansion. Analysts were expecting a drop to 57.8.

International events

Equity strategists at Bank of America called into question European stocks' rally from the selling that ensued after Russia invaded Ukraine. The pan-European Stoxx 600 had rallied 10% from its lows, helped by a halving in natural gas prices as the threat of sanctions and energy supply disruption faded, while estimates for companies' earnings per share had continued to be revised higher.

The US labour market was far tighter than previously thought, the weekly jobless claims data revealed. According to the Department of Labor, initial unemployment claims declined by 5,000 over the week ending on 2 April to reach just 166,000.

Eurozone retail sales rose less than expected in February, according to figures released on Thursday by Eurostat. Retail sales increased by 0.3% on the month following a 0.2% rise in January, missing analysts' expectations for a 0.6% jump.

The European Union will delay implementing a ban on Russian coal until mid-August because of pressure from Germany, according to a report. EU envoys will approve the plan on Thursday but it will take effect a month later than expected, Reuters said. The European commission had originally proposed a three-month wind-down of existing contracts.

Rate-setters in Warsaw hiked short-term rates by a greater-than-expected 100 basis points following inflation readings that came in at a more than two decade high. That left official short-term rates at 4.50%.

President of the European Council Charles Michel stated on Wednesday that sanctions against Russian oil and gas would be required "sooner or later", as the EU continues to lean towards completely banning energy purchases from Moscow. EU ambassadors will meet in Brussels on Wednesday to ink a fifth sanctions package, which proposes a total ban on Russian coal but falls short of prohibiting the import of Russian oil and gas.

German factory orders fell in February for the first time in four months, dragged lower by a drop in foreign orders, according to figures released on Wednesday by Destatis. Orders declined by 2.2% on the month following a revised 2.3% increase in January, missing expectations for a 0.2% dip.

America's shortfall on trade with the rest of the world edged past forecasts in February. According to the US Department of Commerce, in seasonally adjusted terms, the US foreign trade deficit dipped by 0.1% month-on-month to reach $89.2bn.

Services sector activity in the US strengthened last month despite widespread reports of rising prices and supply disruptions, as the headwinds from Covid-19 eased, the results of a closely-followed survey revealed. The Institute for Supply Management's services sector Purchasing Managers' Index rose from the 56.5 point level for February to 58.3 in March.

The EU is planning a mandatory phase-out of coal imports from Russia in response to reports about Russian atrocities in Ukraine, according to a report. The action would be added to measures already ready for debate by EU ambassadors, Bloomberg reported. Details of the plan are under discussion, people familiar with the proposals told Bloomberg.