Weekly review

The FTSE 100 ended the week 215.43 points lower, closing at 7,317.52 on Friday.

Equity view

Investment outfit Apax Global Alpha revealed on Friday that the Apax X Fund, in which it is a limited partner, had sold its controlling stake in MyCase to AffiniPay. Apax said the sale of MyCase, which provides cloud-based legal practice management software and payment services, valued AGA's current look-through investment in the portfolio company at approximately €22.5m, representing an uplift of about 48% to last unaffected valuations and roughly €7.3m in the adjusted net asset value of AGA as of 31 March.

GlaxoSmithKline said its vaccine for respiratory virus had shown “statistically significant" and clinically meaningful efficacy in adults aged 60 years and above in a phase 3 trial. The company said the primary endpoint of the trial was “exceeded with no unexpected safety concerns observed” and would now start talks with regulators to start immediately with anticipated regulatory submissions in the second half of the year.

Food delivery giant Just Eat's US wing has attracted preliminary interest from private equity firms, including Apollo Global Management. According to Bloomberg, New York-based Apollo was said to be among possible suitors evaluating Just Eat's Grubhub unit. However, Bloomberg's sources stated that Just Eat was unlikely to get a price anywhere near the $7.3bn it paid for Grubhub in 2021, with some suitors said to be considering offers closer to $1.0bn.

ProCook warned on profits on Friday as it said consumers were tightening their belts, sending shares in the kitchenware retailer tumbling. The company said trading since the fourth quarter ended on 3 April has been impacted by "increasingly challenging" market conditions, with customers hit by well-documented pressures on discretionary spend. It also highlighted "exceptionally strong" comparatives from the prior year, when it was boosted by pent-up demand after Covid restrictions were lifted and retail stores reopened.

Bus and train operator FirstGroup has formally rejected a £1.2bn takeover approach from US private equity firm I Squared, saying it “significantly undervalues” the firm and a conditional cash component did not provide shareholders with enough certainty. The bid, which values FirstGroup at up to 163.6p a share, includes 45.6p that is conditional on the amount the company eventually receives from the previously agreed sale of its American businesses, including the Greyhound bus line.

Tobacco and nicotine products manufacturer British American Tobacco said on Thursday that its transformation was continuing "at pace", with strong revenue and volume growth driving market share gains. British American Tobacco stated further growth in its non-combustible product unit saw its consumer base reach 19.4m in the first quarter of the trading year amid continued new category investment, with over £1.0bn invested in the first half.

Detention centre and building facilities operator Mitie reinstated its dividend and unveiled a £50m share buyback as it swung to a full-year profit, boosted by new contract wins. The company posted a pre-tax profit of £52m for the 12 months to March 31, compared with a £14m loss a year earlier. A dividend of 1.8p a share was declared.

Food and beverage ingredients provider Tate & Lyle said on Thursday that it had seen "strong top-line growth" in the year ended 31 March, with both revenue and profits growing on an adjusted basis. Tate & Lyle said adjusted revenues from continuing operations were up 18% year-on-year at £1.37bn, while pre-tax profits from continuing operations were 14% higher at £145.0m. Pre-tax profits from discontinued operations were down 9% at £146.0m.

Information technology consultancy Aveva delivered "solid" full-year results on Wednesday, with annual recurring revenues up 10.2% at £768.7m and statutory group revenues up 44.5% year-on-year at £1.18bn. However, Aveva also reported a full-year pre-tax loss from operations of £6.5m, primarily due to the amortisation of £226.1m in intangible assets - a marked difference when compared to the pre-tax profit of £36.6m recorded in FY21.

Flexible office space provider Workspace Group said on Wednesday that full-year trading profit after interest was up 21% in the twelve months ended 31 March to £46.9m, driven by a 6.4% increase in net rental income to £86.7m. Workspace stated its "strong trading performance" was driven by customer demand throughout returning to pre-Covid levels by the end of the period and had resulted in a pre-tax profit of £124.0m, a marked improvement when compared to the prior year's loss of £235.7m.

Retailer WH Smith named Annette Court as a non-executive director and chair designate on Wednesday, succeeding outgoing chairman Henry Staunton. Court will join the board of WH Smith on 1 September before taking over as chairman from Staunton, who spent nine years in the role, on 1 December.

Melrose Industries surged on Wednesday after the GKN owner announced the launch of a £500m share buyback following the agreed sale of its US division. The programme, which will be launched on Thursday, will purchase no more than just over 437.2m shares and will end no later than 31 October.

Waste management specialist Biffa said on Tuesday that it has given the green light to a proposed takeover approach worth more than £1bn. The FTSE 250 firm said it had received a series of unsolicited, indicative proposals from affiliates of Energy Capital Partners, the private equity firm, and following talks, a possible cash offer of 445p per share has been proposed.

Funds advised by Apax Global Alpha have agreed to buy Norway’s EcoOnline for €12.3m, the company said on Tuesday. EcoOnline is an environment, health and safety company developing software for creating safer and sustainable workplaces while ensuring compliance and environmental sustainability, Apax said, adding that it had a strong position in the Nordics, with growing presence in the UK, Ireland, and the US.

Sirius Real Estate said on Tuesday that it expects to lift its total dividend for the year to the end of March by between 15.5% and 16.5% on the year. The owner and operator of branded business and industrial parks in Germany and the UK expects the dividend to be between 4.389 cents and 4.427 cents per share, versus 3.800 cents in the prior year.

UK accountant PWC has been fined around £5m by the industry regulator as part of a probe into its audit failures at builders Kier and Galliford Try. The Financial Reporting Council said PWC and audit partner Jonathan Hook had failed in a number of relevant requirements, including identifying and correcting errors in Kier's income and cash flow statements relating to the presentation of gains on corporate sales completed in 2017.

East Europe-focused budget carrier Wizz Air on Monday reported soaring passenger numbers for May as travel started to recover from the Covid pandemic. Wizz carried 4.1m passengers, a 390% increase year on year at a load factor of 84.2%.

GlaxoSmithKline said on Monday that the US Food and Drug Administration has approved its Priorix vaccine for measles, mumps and rubella in people aged 12 months and older. Priorix is currently licensed in more than 100 countries worldwide, including all European countries, Canada, Australia and New Zealand, with more than 800 million doses distributed to date.

Eve Sleep said on Monday that it was considering putting itself up for sale as it warned it would miss revenue expectations for the year. The mattress company has launched a strategic review to explore financing options as it looks to accelerate its push into the "wider sleep wellness space".

Airtel Africa announced the purchase of 58 MHz of additional spectrum in the Democratic Republic of the Congo (DRC) on Monday, spread across the 900, 1800, 2100 and 2600 MHz bands, for gross consideration of $42m (£33.55m). The FTSE 100 company said the licence for paired spectrum in the 2100 band would come up for renewal in September 2032, while all the other licences would continue until July 2036.

Economic news

UK finance minister Rishi Sunak "wasted" £11bn in taxpayer cash to pay interest on government debt, a think tank said on Friday. The National Institute of Economic and Social Research said the Treasury had failed to insure against interest rate rises, meaning higher payments on £900bn created through the quantitative easing (QE) programme.

Inflation expectations continued to accelerate in the Bank of England’s latest inflation attitudes survey, it was revealed on Friday, as actual prices continued to rise at historically-high rates. The BoE/Ipsos survey for May said when asked to give the current rate of inflation, respondents gave a median answer of 6.1%, up from 5.0% in February.

More than three-quarters of Britons are concerned about the rising cost of living, according to official survey data released on Friday, with 77% of adults feeling “very” or “somewhat” worried about red-hot inflation. The Office for National Statistics (ONS) said those most likely to report feeling very or somewhat worried included 81% of women and 73% of men.

The average cost of filling a family car with petrol has hit £100 for the first time in history, with the RAC declaring it "a truly dark day" for British motorists. The cost of filling a 55-litre tank with petrol reached £100.27 on Thursday, while for diesel it topped out at £103.43 as soaring fuel prices driven by the war in Ukraine and resulting efforts to cut Europe's dependence on Russian oil continue to hammer consumers.

UK economic growth will "grind to a halt" this year before falling briefly into contractionary territory, according to the British Chambers of Commerce. The BCC cut its 2022 growth forecast to 3.5% from 3.6% against "a deteriorating economic outlook". This is down from 7.5% growth a year earlier. The business group also said inflation could hit 10% in the final quarter of the year, "comfortably" outpacing average earnings growth.

Demand from prospective house buyers fell in May as rising interest rates and the cost-of-living crisis gave potential purchasers pause, even though house prices were still expected to rise in the short term, according to industry data released on Thursday. The latest UK residential market survey from the Royal Institution of Chartered Surveyors (RICS) reported that new buyer enquiries fell in May, with a net balance of -7%, down from a much more positive sentiment of +8% in April.

The UK is set to experience the slowest growth in the developed world next year, according to the Organisation for Economic Co-operation and Development (OECD). In its latest Economic Outlook, the OECD said it expects the UK economy to grow 3.6% this year, with no growth forecast for next year. That means it will go from being the second-fastest growing economy in the G7 to the slowest in 2023.

Growth in the UK construction sector slowed in May as deteriorating consumer confidence and rising inflation led to the weakest rise in residential work for two years, according to a survey released on Wednesday. The S&P Global/CIPS construction purchasing managers index fell to 56.4 from 58.2 in April, hitting its lowest level in four months. A reading above 50.0 signals expansion, while a reading below indicates contraction.

UK house prices slowed again in May as the market showed signs of cooling as soaring inflation starts to hit buyers, mortgage lender Halifax said on Wednesday. The annual pace of house price increases slowed to 10.5% in May from 10.8% in April. Prices rose for the 11th consecutive month, up by 1.0% in May after a 1.2% increase in April.

UK business growth slowed sharply in May, a closely-watched survey showed on Tuesday, as surging inflation hit home. The S&P Global CIPS UK Services PMI Business Activity Index fell to 53.4 last month from 58.9 in April, the weakest headline reading since February 2021, when the country was in lockdown.

International events

Germany’s central bank cut its economic growth forecasts for the country on Friday, as the war in Ukraine and red-hot inflation impacted the post-Covid recovery. Deutsche Bundesbank said it now expected the German economy to expand by 1.9% this year, down from the 2.5% it pencilled in last December, with 2023 and 2024 growth expected to reach 2.4% and 1.8%, respectively.

Consumer price inflation was unchanged in China in May, according to fresh official data released on Friday, while producer price growth slowed in line with expectations. The National Bureau of Statistics said the consumer price index was unchanged at 2.1% year-on-year in May, just shy of consensus expectations for a rise of 2.2%.

The European Central Bank boss was grilled by journalists about potential fragmentation risks in the euro area after the Governing Council announced its decision to stop asset purchases and to signal the start of an interest rate hiking cycle from July. The concern in financial markets appeared to be that the mix of fewer sovereign bond purchases, higher inflation still and lower economic growth combined might put undue stress on the public finances of some members of the single currency bloc.

Jobless claims in the US rose by more than expected during the latest week, although the Memorial Day holiday may have been partially to blame. According to the US Department of Labor, in seasonally adjusted terms, initial unemployment claims rose by 27,000 to reach 229,000 over the week ending on 4 June.

The European Central Bank announced that it will wrap up its asset purchases on 1 July and execute a first rate hike of 25 basis points that same month, followed by another - possibly larger - increase in September and with more to come thereafter. It also left the door open to an interest rate hike of more than 25bp September "if the medium-term inflation outlook persists or deteriorates."

Mario Draghi appeared to caution on Thursday against moving too quickly on tightening monetary policy. Speaking at the annual ministerial meeting of the Organisation for Economic Cooperation and Development, the former European Central Bank chief said that: "In the European Union, rising inflation is not wholly the sign of overheating, but largely the result of a series of supply shocks."

Chinese exports rose 16.9% year-on-year in May to hit $308.25bn, according to the General Administration of Customs, beating analysts' expectations amid a relaxation in recent Covid-19 lockdown measures, while imports rose 4.1% in dollar terms, the first expansion in three months, reaching $229.49bn. Economists were expecting to see exports rise 8% after a 3.9% gain in April, while imports were projected to rise 2.0% after staying unchanged in the previous month.

Eurozone GDP grew faster than initially estimated in the first quarter, while employment growth for April was also revised up, according to figures released by Eurostat on Wednesday. GDP rose by 0.6% on the quarter in the eurozone, following 0.2% growth in the final quarter of 2021. This was up from an earlier estimate of 0.3% growth.

German industrial production rose less than expected in April, according to figures released on Wednesday by Destatis. Production increased by 0.7 following a 3.7% decline in March, coming in below expectations for a 1% rise.

The World Bank cut its global growth forecast on Tuesday as it said the Ukraine conflict had compounded damage from the Covid-19 pandemic and warned over the risks of stagflation. In its Global Economic Prospects report, the Bank said it now expects global growth in 2022 to slump to 2.9% from 5.7% a year earlier, down from a forecast of 4.1% growth in January.

Reporting by Josh White, Iain Gilbert, Frank Prenesti, Michele Maatouk, Abigail Townsend and Alexander Bueso at Sharecast.com.