Weekly review

The FTSE 100 ended a turbulent week 22.87 points higher, closing at 7,544.55 on Friday.

Equity view

Packaging company Smurfit Kappa said on Friday that both revenue and underlying earnings had grown by a third in the three months ended 31 March, reflecting the "significant, ongoing capital investment" made by the group to support customer growth and security of supply. Smurfit Kappa stated revenues were up 33% year-on-year at €3.02bn, while EBITDA had also grown 33% to €514.0m, with an EBITDA margin of 17% for the period.

Building materials supplier Travis Perkins said higher prices would form a higher proportion of sales growth this year due to inflation as it posted a rise in first-quarter sales and maintained guidance. Total sales for the three months to March 31, were up 13.6%.

Manufacturer Rotork said on Friday that first-quarter trading had been in line with internal expectations, with order intake growing "high-single digits" year-on-year on an organic constant currency basis despite a fresh wave of Covid cases in China leading to the shuttering of its key Shanghai factory. However, Rotork also cautioned that revenue was down "mid-single digits" year-on-year on an organic constant currency basis, reflecting continued component availability challenges, the cessation of deliveries to Russia, and reduced deliveries from its important Shanghai facility which particularly impacted its water and power division.

Computer services provider Computacenter said on Friday that it saw "strong top-line growth" in the first quarter, with growth in adjusted pre-tax profits at a more modest level due to a "very large volume customer" diluting overall margins. Computacenter stated that adjusted pre-tax profits at the end of the first half were likely to be behind 2021 but will still be in line with "the historical seasonality" of the business.

Kitchen supplier Howden Joinery said on Thursday that overall revenues had grown 21.8% year-on-year in the 16 weeks ended 16 April, while same depot revenues were up 20.1%, driven by increases in both prices and volume. Howden's stated that on a local currency basis, depot revenue in Continental Europe increased by 21.8% and by 24.2% on a same depot basis, compared to the equivalent periods last year.

Asia-focused bank Standard Chartered on Thursday reported a better-than-expected 6% rise in first-quarter profit, boosted by rising global interest rates. Statutory pre-tax profits rose to $1.49bn in the three months to March 31 from $1.4bn a year earlier and compared with the $1bn average estimate compiled by the bank.

Pharmaceuticals firm Indivior reported first quarter net revenue of $207m (£165.07m) in an update on Thursday, up 15% year-on-year, as it maintained its guidance for the full year. The FTSE 250 company said its reported operating profit was $54m for the period, down 5% from last year, while on an adjusted basis, first quarter operating profit rose 6% to $54m.

Venture capital firm Molten Ventures said in an update on Thursday that its unaudited net asset value per share was expected to be at least 929p for the financial year just ended, up from 743p a year ago. The FTSE 250 company said its gross portfolio value was set to come in no less than £1.53bn, up from £984m, with its gross portfolio increase in fair value expected to be at least £360m, or 35% excluding currency movements, over the year, in line with the £359m it reported for 2021.

Housebuilding company Persimmon said on Wednesday that it was currently trading in line with expectations, with demand remaining strong and private average sales rates rising 2% year-on-year. Persimmon, which highlighted its "robust" forward order book of roughly £2.8bn, anticipates that full-year completions will be weighted towards the second half, with first-half completions being lower than those delivered in 2021.

London Stock Exchange Group reported “strong” financial and operational progress in the first quarter on Wednesday, with total income excluding recoveries up 6.3%. The FTSE 100 exchange operator said it saw “good growth” across all divisions, with total income rising 6.8% adjusting for the actions taken in response to Russia’s invasion of Ukraine.

Primary Health Properties reported “good progress” in converting its year-end pipeline into committed deals in its first quarter on Wednesday. The FTSE 250 healthcare property operator said that, Including standing investments, direct and forward-funded developments and asset management projects, it had continued to generate and grow a “strong pipeline” totalling £360m in the UK and €145m (£122m ) in Ireland, of which £65m and €87m was in legal due diligence.

Communications group WPP has made a "strong start to the year", with like-for-like revenue guidance being raised from 5% to 5.5-6.5% amid continued investment into growth. WPP said on Wednesday that first-quarter revenues were £3.09bn, up 6.7% on a reported basis and 8.1% on a like-for-like basis, while revenues less pass-through costs were 10.3% higher on a reported basis at £2.57bn.

Housebuilder Taylor Wimpey said on Tuesday that it was trading in line with full-year expectations and that it remained on track to deliver against guidance set out at the time of its 2021 annual results. Taylor Wimpey stated its net private sales rate for the year ended 17 April was "strong" at 0.96, down only slightly from 1.00 in the equivalent period a year earlier, with cancellation rates flat year-on-year at 14%.

Energy company Diversified Energy has acquired certain East Texas upstream assets and related facilities from a private seller for $50.0m in cash. Diversified Energy said on Tuesday that the Acquisition built on its 2021 entry into the Central Region and expanded its progress to replicate the company's proven business model with high margin, low-decline production that was geographically proximate to its existing assets.

African telecommunications and mobile money services provider Airtel Africa confirmed on Tuesday that the Central Bank of Nigeria had awarded its Airtel Mobile Commerce Nigeria subsidiary with a full super agent licence. Airtel Africa, which has a presence in 14 countries across the continent, stated the licence would allow it to create an agency network that can service the customers of licensed Nigerian banks, payment service banks and licensed mobile money operators in Nigeria.

Coach operator National Express said on Tuesday that first-quarter group revenues were back to 2019 levels, with the group actually trading ahead of the same time two years earlier during March. National Express stated it had delivered its seventh consecutive quarterly improvement, with revenue up 30% year-on-year in constant currency, driven by a "particularly strong recovery" in its UK and ALSA coach businesses, demonstrating strong pent-up demand for travel.

LondonMetric Property on Monday said it had bought six London urban logistics warehouses in separate transactions for £26.7m, reflecting an anticipated blended initial yield of 4.3% and a reversionary yield of more than 4.5%. The assets are expected to generate a total rent of £1.2m a year. In a separate deal, the company sold a multi-let industrial estate for £8.5m.

Russian gold and silver miner Polymetal on Monday reported a rise in first-quarter revenue, driven by higher prices and despite a fall in production. Revenue for the three months to March 31 increased 4% year on year to $616m.

Real estate investor British Land has sold a 75% stake in the bulk of its Paddington Central assets to GIC for £694.0m in order to establish a new joint venture between the pair. British Land said the establishment of the joint venture, which was unconditional and will take place within three months, sees it deliver against one of its key strategic priorities of proactively recycling capital out of mature assets where it has created "considerable value".

Drugmaker AstraZeneca said on Monday that an application for priority review of its tremelimumab asset had been accepted by the US Food and Drug Administration. AstraZeneca stated the FDA will have a regulatory decision in the fourth quarter. If successful, tremelimumab will be used for the treatment of patients with unresectable hepatocellular carcinoma.

Economic news

House price growth in the UK slowed more than expected in April amid the ongoing squeeze on household incomes and rising interest rates, the results of a closely-followed survey revealed. According to mortgage lender Nationwide, house prices rose at a month-on-month pace of 0.3%, which marked their slowest clip since September.

The number of shops standing empty fell in the first quarter, industry research showed on Friday, as the UK economy reopened following the worst of the pandemic. According to the latest BRC-LDC Vacancy Monitor, the overall vacancy rate decreased to 14.1% in the first three months of the year, 0.3 percentage points down on the fourth quarter and only the second quarter of falling vacancy rates since the start of 2018.

UK car production tumbled in the first quarter, industry data showed on Thursday, as global supply chain issues weighed heavily. According to the Society for Motor Manufacturers and Traders, car manufacturing declined by 32.4% year-on-year in the three months to March end, to 207,347 units. The SMMT said production had been constrained by the ongoing global shortage of semiconductors and other components.

British Airways passengers are set to face more cancellations, it was reported on Wednesday, with disruption expected to last for at least the next two months. According to the Daily Mail, the IAG subsidiary had already cancelled more than 1,000 flights over the last three weeks.

UK retail sales struggled in April, industry research showed on Wednesday, as the cost of living crisis saw consumers rein in spending. According to the latest CBI Distributive Trades Survey, sales volumes tumbled by far more than expected, to -35 in the year to April compared to 9 a month previously. Analysts had been looking for a balance of around -5.

Grocery price inflation continued to mount in April, research showed on Tuesday, to hit levels not seen in over a decade. According to retail consultancy Kantar, like-for-like grocery inflation was 5.9% in April, the highest rate since December 2011.

The UK government borrowed less than expected in March and the estimate of borrowing for the rest of the past financial year was revised down, official figures showed. Public sector net borrowing, excluding public sector banks, was £18.1bn in March - lower than the average 19.8bn analysts' forecast. The government borrowed £151.8bn in the year to the end of March - £24bn more than forecast by the government's fiscal watchdog, the Office for National Statistics said.

Visits to shops fell last week, fresh industry data showed on Monday, after building up strongly ahead of the Easter holiday. According to retail analysts Springboard, footfall across UK retail destinations declined by -7% last week from the week before, with a drop of -10.2% in shopping centres and -6.9% in retail parks.

Business optimism in the manufacturing sector has tumbled, research published Monday showed, after growth slowed and costs surged. According to the latest Industrial Trends Survey from the Confederation of British Industry, business optimism fell to a net balance of -34% in April, from -9% in January. The CBI said it was the sharpest pace of decline since April 2020, at the start of the Covid crisis.

Nearly 90% of British adults reported an increase in the cost of living last month, data from the Office for National Statistics showed on Monday. According to the ONS’s latest Opinions and Lifestyle Survey, 87% of respondents said their cost of living had increased between 16 to 27 March over the previous month, up from the 62% who reported a rise in November 2021.

International events

The cost of living in the single currency bloc continued rising in April as inflationary pressures broadened out from energy. According to Eurostat, in seasonally adjusted terms, the euro area Consumer Price Index jumped at a month-on-month pace of 0.6%.

The US economy contracted unexpectedly in the first quarter as strong consumer and business spending was offset by a ballooning trade deficit, slower inventory build and a fall in public expenditure. Gross domestic product contracted 1.4% year on year in the three months to March 31, down markedly from the 6.9% increase posted in the final quarter of 2021, according to the Commerce Department.

Sweden’s central bank on Thursday raised a key interest rate from zero to 0.25%, citing the highest inflation level since the 1990s, and said more hikes would follow. The Riksbank said there had been “unusually large fluctuations in inflation in Sweden” and the rise last year “was largely due to rapid increases in energy prices.” Sweden's inflation rate hit 6.1% last month.

US initial jobless claims dropped 180,000 in the week ended 23 April, as expected by analysts, down from an upwardly revised print of 185,000 a week earlier. On a non-seasonally adjusted basis, initial claims increased by 5,005 from the previous week to 202,983, according to the Labor Department, with notable increases in New York and Massachusetts.

The cost of living in Spain came off the boil a little in April as the prices of fuels and electricity declined. According to the country's national office of statistics, the annual rate of increase in the country's Consumer Price Index eased from 9.8% for March to 8.4% in April.

The task of managing the differences between economies in the single currency bloc has been magnified by the war in Ukraine and may result in further losses for the euro, perhaps even towards parity with the US dollar, City-based analysts say. In a note sent to clients, Michael Hewson, chief market analyst at CMC Markets UK, said the European Central Bank was facing the prospect of having to raise interest rates into the teeth of an economic slowdown, even as the US Federal Reserve was signalling its intention of raising official short-term interest rates to more than 3% over the next 12 months.

Russia has cut off gas supplies to Poland and Bulgaria, causing European energy prices to spark. In a statement, state-control energy giant Gazprom – which supplies around 40% of European gas – said it had suspended supplies after both nations refused to pay in roubles. Prices for natural gas futures rose by around 20% in response in early trading.

New orders for manufactured durable goods increased 0.8% month-on-month across the US in March, according to the Census Bureau, bouncing back from a downwardly revised 1.7% drop in February but below market expectations of a 1% gain. Excluding transportation, new orders rose 1.1%, ahead of a 0.5% drop in February, and excluding defence, new orders advanced 1.2%, a marked improvement on the prior month's 2.1% fall.

Russian forces announced a unilateral ceasefire on Monday in order to allow for the evacuation of civilians from the besieged Azovstal steel plant in Mariupol, Ukraine. The head of Russia's National Defence Coordination Center, Mijail Mizintsev, said that Russian troops and those of the self-proclaimed independent republics of Donetsk and Luhansk would cease all hostilities from 1100 GMT and that the civilians would be allowed to head in whichever direction they chose.

German business sentiment unexpectedly strengthened in April, a closely-watched survey showed on Monday, despite the ongoing war in Ukraine. The ifo Business Climate Index rose to 91.8 points in April, from 90.8 in March. The current situation index rose only marginally, to 97.2 from 97.1, but the expectations index – which tumbled last month to 84.9 from 98.7 in February – rose to 86.7.