Weekly review
The FTSE 100 ended the week up 69.66 points, or 0.93%, finishing at 7,531.53 on Friday.
Equity view
Barratt Developments has a agreed the future sale of 604 homes to Citra Living Properties, a wholly-owned subsidiary of Lloyds Bank for £168.4m. The housebuilder on Friday said it would recognise revenue and profit on the legal completion of each home under the sale agreement.
Energy group Centrica has increased capacity its previously mothballed Rough gas storage facility, it confirmed on Friday. The owner of British Gas said that following engineering work, the facility – located 18 miles off the coast of east Yorkshire – can now hold 54bn cubic feet of gas, the equivalent of around six days of average gas use.
Global automotive distributor Inchcape has formed a global strategic partnership with China's Great Wall Motor Company, the company said on Friday. Under the partnership, Inchcape and GWM will develop new areas of collaboration, including opportunities to distribute GWM vehicles in markets where Inchcape is already present, starting with Indonesia.
Vanquis Banking Group has named City veteran Sir Peter Estlin chair, the subprime lender confirmed on Friday. The former acting chief financial officer of Barclays will succeed Patrick Snowball, who announced plans to step down as chair earlier in the year. Estlin joined the board of Vanquis, previously Provident Financial, as a non-executive director in April.
UK insurer Direct Line said rectifying unfair motor claim payments over a five-year period to 2022 would not have a "material financial impact" on this year's results. The company was on Wednesday ordered by Britain's Financial Conduct Authority to carry out a review of total losses where vehicles had been written off after it admitted it had underpaid some car and van insurance customers.
Construction group Morgan Sindall lifted annual guidance driven by a strong performance from its fit-out division in the first half. The company on Thursday said the division had continued to perform strongly since a trading update in May and was now expected to show a 40% year-on-year first-half profit rise.
Dutch discounter Action is on track to deliver another strong quarter of profit growth, owner 3i Group said on Thursday. In a brief trading update ahead of its annual general meeting, the blue chip investment firm said the retailer had seen “very strong” sales growth in the year to date, with like-for-like sales up 22% by the end of week 25.
Boohoo Group has criticised Revolution Beauty Group for granting free share options to its executive management team, just days after they were ousted and then immediately reinstated. Boohoo, which owns 26.6% of the cosmetics group, called on Revolution to publish the terms of the free share awards granted to chief executive Bob Holt and chief financial officer Elizabeth Lake.
Diversified Energy said it had sold some of its non-core, non-operated US assets for $40m. The assets include approximately 200 net, non-operated wells producing around 3 million barrels of oil equivalent per day. The deal represents an approximate four times next 12 months cash flow multiple and includes around 85,000 associated net acres located in Oklahoma and Texas.
Energean announced a deal to roll over part of its debt. Acting through its subsidiary Energean Israel Finance, the oil explorer priced an issue of $750m of debt maturing in 2033 and paying an interest of 8.5%.
NewRiver REIT has completed the sale of Kittybrewster Retail Park in Aberdeen and Glendoe and Telford Retail Parks in Inverness for a total consideration of £62.6m, it announced on Wednesday. The buyer, RI UK 1, acquired the assets which collectively generated a net rental income of £5.7m during the 2022-2023 financial year.
Warpaint London said trading and margins continued to be 'robust' over the first half of 2023. In a trading update issued ahead of its Annual General Meeting, the cosmetics supplier said sales for the six months ending on 30 June were expected to top £36m.
CLS said it had sold three properties for a total of £49m at an average of 7.5% above December 31, 2022 valuations. The company said it had sold Westminster Tower, Albert Embankment to Australian developer Third.i with expected completion in September 2023, a smaller office property, St Cloud Gate in Maidenhead, UK and a legacy land holding outside Helsingborg in Sweden with planning permission for logistics.
Telecom Plus - which trades as Utility Warehouse - hailed record full-year profits, revenue and customer growth on Tuesday as it hiked its dividend. In the year to the end of March, adjusted pre-tax profit rose 55% to £96.2m on revenue of £2.5bn, up from £967.4m a year earlier. Adjusted earnings per share were up 57% to 99.2p and the company lifted its full-year dividend to 80p a share from 57p a year earlier.
Luxury car maker Aston Martin said it was on track to post annual adjusted profits of £500m and sales of £2bn, by 2025. In a trading update before a presentation to investors, the company forecast it would “substantially achieve" those targets in 2024.
Shares in UK sportswear retailer JD Sports Fashion slid on Tuesday as the company warned of softening in its North American markets and a slowdown overall in May, but maintained annual guidance. The company on Tuesday said it still expected full-year profit to pass £1bn after positive trading in all regions through May with overall growth in organic sales of around 8%, compared with 15% in the first three months of the year.
UK cinema chain Cineworld on Monday said it was applying for administration as part of its proposed restructuring plan. The plan would involve the release of about $4.53bn of the group's funded debt, execution of a rights offering to raise $800m, and provision of $1.46bn in new debt financing, the company said in a statement.
GSK announced two significant advancements on Monday, with the approval of an updated indication for Shingrix in Japan, as well as a positive opinion from the European Medicines Agency for daprodustat. The FTSE 100 pharmaceuticals giant said Shingrix, a non-live, recombinant sub-unit adjuvanted vaccine, was initially approved in 2018 by Japan’s Ministry of Health, Labour and Welfare (MHLW) for the prevention of shingles in adults aged 50 years and over.
Capricorn Energy updated the market on its strategic review on Monday, with a focus on cost reduction, the refocusing of operations in Egypt, and returning excess funds to shareholders. The London-listed firm, which was holding its annual general meeting, told shareholders that progress made so far included a significant reduction in general and administrative expenses to align with the continuing business.
Shipping and energy markets advisor Braemar updated the market on its results for the 12-month period ended 28 February on Monday, while also revealing an investigation into a historic transaction. The London-listed company said it was expecting to report record revenue and profitability for the financial year, with revenue projected to be at least £150m - a significant increase from £101.3m in 2022.
Economic news
Analysts at Citi pointed out on Thursday that the UK life insurance sector's direct exposure to Thames Water was "minimal". They estimated that it was in a range of 0.2-0.3% of Aviva, L&G and Phoenix Holdings’ annuity portfolios and less than 0.5% M&G's. Furthermore, most of that debt was held at the opco level.
The UK car sector reported another jump in production in May as demand continued to recover, industry data showed on Friday. According to the Society of Motor Manufacturers and Traders, a total of 79,046 cars left production lines last month, a 26.9% jump on May 2022. It is the fourth consecutive month that UK car production has risen.
The UK economy grew by only 0.1% in the first quarter of the year, confirming an initial estimate published in May, the Office for National Statistics (ONS) said on Friday. GDP in the first quarter of 2023 was 0.5% smaller than it was in the final quarter of pre-Covid pandemic, also in line with a prior estimate, the ONS added.
UK house prices held steady in June, industry data showed on Friday, despite the mounting cost of borrowing. According to the latest Nationwide house price index, house prices nudged 0.1% higher over the month in June, reversing May’s 0.1% dip. Annually, prices fell 3.5%, marginally worse than May’s 3.4% decline. The average house price now stands at £262,239.
UK households drew heavily on savings last month, official data showed on Thursday, as higher interest rates weighed on borrowing. According to the latest Bank of England Money and Credit report, households withdrew a net £4.6bn from banks and building societies in May, the highest level on record. That compares to net deposits of £3.7bn a month earlier.
Ofwat finalised its decision to authorize 33 infrastructure schemes on Tuesday, amounting to a total investment of £2.2bn. The water regulator for England and Wales said the projects were set to start within the next two financial years. It said the confirmation came after a public consultation held in response to Ofwat's initial announcement of the programme in April.
UK shop price inflation eased in June, according to figures released on Tuesday by the British Retail Consortium and NielsenIQ. Shop price inflation edged down to 8.4% from 9.0% in May, with food inflation easing to 14.6% from 15.4%, coming in below the three-month average of 15.2% and marking the second consecutive deceleration in that category.
International events
Americans reined in their spending in June even as incomes grew more quickly than expected. According to the U.S. Department of Commerce, in seasonally adjusted terms, in June personal consumption expentures rose by 0.1% month-on-month (consensus: 0.2%) and incomes by 0.4% (consensus: 0.3%).
Consumer confidence in the US perked up in June amid a broad-based improvement across all demographic groups and price expectations retreated sharply. The University of Michigan's consumer confidence index rose from 59.2 points for May to 64.4 in June. That was better than the preliminary result of 63.9.
China factory activity continued to be muted in June as demand remained weak, although levels of output did rise, the results of a closely-followed survey revealed. The National Bureau of Statistics’ factory sector Purchasing Managers' Index edged up from 48.8 in May to 49.0, just as expected.
Inflation pressures in the single currency bloc ebbed in June. According to Eurostat, the headline rate of euro area consumer price increases slowed from the 6.1% year-on-year pace observed in May to 5.5% for June, as expected.
The US jobs market registered their largest decline for 20 months, defying once again some economists' forecasts for further easing, , although the Juneteenth holiday may have been a factor. According to the Department of Labor, in seasonally adjusted terms, the number of initial unemployment claims during the week ending on 24 June dropped by 26,000 to reach 239,000.
Economic sentiment in the Eurozone has softened, a closely-watched survey showed on Thursday. The European Commission's Economic Sentiment Indicator fell to a seven-month low of 95.3 in June, down from 96.4 in May. It was also below consensus, for 96.0, as well as the long-term average.
The cost of living in the euro area's largest economy picked up as expected in June. According to a preliminary estimate from Destatis, in seasonally adjusted terms, the harmonised German Consumer Price Index rose by 0.4% on the month and 6.8% year-on-year.
Inflation in Spain eased to 1.9% last month, official data showed on Thursday, making it the first Eurozone country to see the rate drop below the European Central Bank’s target of 2%. Spain’s National Statistics Institute said its flash estimate for the consumer price index was 1.9% year-on-year in June. That was down notably on May’s 3.2% although it was marginally ahead of consensus, for 1.7%.
German consumer confidence fell for the first time since October, reflecting the fall of Europe's largest economy into recession, according to a survey published on Wednesday. GfK said its forward-looking survey of around 2,000 people fell to -25.4 points in July from 24.4 points in June, marking its lowest point since last October's -42.8 points, amid surging inflation soared and consumer worries over energy costs.
Consumer confidence in the US bounced back led by younger Americans with fewer respondents expressing concern over a looming recession. The Conference Board's consumer confidence index rose from a reading of 102.5 for May to 109.7 in June (consensus: 103.5).
Orders for goods made to last more than three years soared in May, even if the bulk of the growth was due to increased orders for civilian jets. According to the US Department of Commerce, in seasonally adjusted terms, durable goods orders surged at a month-on-month pace of 1.7% to reach $288.2bn.
China's economy was expected to grow faster in the second quarter than the first three months of the year, said Premier Li Qiang on Tuesday. “We are on track to achieve the annual growth target of ‘around 5%’ that we set earlier this year,” he said at a World Economic Forum summit in Tianjin.
German business sentiment deteriorated more than expected in June, according to a survey released on Monday by the Ifo Institute. The business climate index fell to 88.5 from 91.5 in May, coming in below consensus expectations of 90.7.
Reporting by staff and contributors for Sharecast.com.