Weekly review

Equity view

Legal & General is to sell its US protection business to Japanese peer Meiji Yasuda in a $2.3bn deal that will see the latter take a 5% stake in the UK financial services group. L&G's chief executive António Simões called it a "transformative transaction" that will bring both significant strategic and financial benefits to the company.

Polymers maker Victrex held guidance after a solid first-quarter performance saw revenues rise 9% but warned trading conditions remain mixed, with medical sales still subdued, driven by ongoing destocking among its customers. The company, which makes parts for anything from smartphones, aircraft and cars to energy production and medical devices, said guidance remained for at least mid-single digit volume growth for fiscal 2025, with underlying pre-tax profit growth ahead of volume growth.

Ashmore Group reported broadly stable assets under management at $48.8bn for the six months ended 31 December on Friday, as improved net flows and reduced redemptions helped to offset market volatility. The FTSE 250 specialist emerging markets asset manager recorded a net outflow of $1.1bn - a significant improvement from prior periods, while positive investment performance added $0.6bn.

Agronomics announced on Friday that its portfolio company Meatly has launched the world’s first cultivated meat dog treat, marking the first sale of cultivated meat in Europe. The AIM-traded firm said the product, ‘Chick Bites’, is a limited-release collaboration with plant-based dog food brand The Pack, and would be available at Pets at Home in Brentford, London, from 7 February.

UK engineering company IMI on Thursday said it had been hit by a cyber attack on its computer systems. In a short statement, it added that it “engaged external cyber security experts to investigate and contain the incident”.

Catering giant Compass has delivered a strong first quarter, with a decent performance across all sectors and regions pushing organic revenue growth ahead of full-year guidance, but warned that currency movements could put a dampener on annual results. The company warned that, if current foreign exchange rates persist for the remainder of the year, they would have a $558m negative impact on revenues, compared with a hit of just $69m last year. The impact on operating profits would be $36m, up from $16m registered in the year just gone.

London-focused property developer Great Portland Estates has announced four new leases for fully managed offices at its newly completed building near Goodge Street in Fitzrovia. The four leases cover 10,800 square feet of office space at 31 Alfred Place, WC1 and have been let ahead of estimated rental value at £222 per sq ft on average, with all four clients set to move in over the next few weeks.

Anglo American reported a mixed but “solid” production performance 2024 on Thursday, with notable declines in copper, diamonds, and steelmaking coal output, while iron ore production saw modest gains. The FTSE 100 mining giant also signalled potential impairments in its De Beers diamond business amid challenging market conditions.

Media group Future said on Wednesday that it was on track to achieve full-year market expectations after its performance in the four months to the end of January was as expected. For FY25, market expectations are for revenue of between £758.5m and £785.4m and adjusted operating profit of £197.3m to £223m.

GSK's annual revenues were held back weak vaccines sales, but shares in the pharma giant jumped on Wednesday after the company unveiled plans to buy back £2bn of stock over the next 18 months and raised its guidance for long-term growth. Sales in 2024 increased by 3% to £31.38bn, driven by 19% sales growth from its specialty medicines division, with HIV treatments up 13% and oncology drug sales surging 98%. General medicines sales were also 6% higher over the year.

SSE said in an update on Wednesday that it expects full-year adjusted earnings per share for 2024-2025 to range between 154p and 163p, reflecting solid operational performance amid variable weather conditions in the third quarter. The FTSE 100 power giant confirmed that expectations for business unit operating profit remained unchanged.

Sales and marketing firm DCC said on Wednesday that it had delivered a “robust” Q3 performance, with adjusted operating profits broadly in line with the prior year. DCC said its energy unit “traded robustly” and delivered good operating profit growth. Despite the impact of warmer weather conditions, Energy Solutions delivered good growth driven by its performance in Continental Europe.

Beverages giant Diageo has pulled its medium-term guidance ahead of incoming tariffs on Mexican and Canadian imports by the Trump administration, saying it cannot yet accurately predict how additional duties will affect its financial performance. At the weekend, Donald Trump announced the implementation of 25% tariffs on goods imported into the US from Canada and Mexico, with both countries promising to impose retaliatory protectionist measures on US products in response.

FirstGroup said on Tuesday that it has bought Matthews Coach Hire, an independent, family-owned coach and bus operator in Ireland, for an undisclosed sum. Founded in 1995, Matthews has a fleet of more than 40 vehicles that includes two newly-acquired electric coaches for the business. It is built around the operation of six licensed, commercial routes between two key and rapidly growing commuter towns, Drogheda and Dundalk, to the northeast of Dublin.

UK housebuilder Crest Nicholson said it has seen a slight improvement in its sales performance since the start of the new year financial year, though tough conditions and one-off fire-safety charge over the 12 months to 31 October saw it swing to a substantial annual loss. "Recent weeks have shown an ongoing incremental improvement in sales performance, supported by encouraging early indicators such as increased website visits and follow-up appointments," Crest Nicholson said.

Transport company Mobico has announced that its chair of two years Helen Weir has decided to step down for personal reasons. Mobico, formerly known as National Express group, said on Tuesday that the non-executive chair, who has been in the position since January 2023, has decided that she will not stand for re-election at the AGM in June.

AstraZeneca's Imfinzi has been recommended for approval in the European Union (EU) as a monotherapy for the treatment of adults with limited-stage small cell lung cancer (LS-SCLC) whose disease has not progressed following platinum-based chemoradiation therapy. The Committee for Medicinal Products for Human Use of the European Medicines Agency based its positive opinion on the results from the ADRIATIC Phase 3 trial which showed Imfinzi reduced the risk of death by 27% versus placebo. An estimated 57% of patients treated with the drug were alive at three years compared to 48% for placebo.

UK Continental Shelf-focused oil explorer Serica Energy has announced that its license to operate the part-owned Rhum field has been extended by two months. The AIM-listed firm, which is responsible for about 5% of the natural gas produced in the UK, said that the OFAC License and secondary sanctions relating to its 50%-owned Rhum asset have been extended to 31 March 2025.

Tools and equipment rental firm Speedy Hire tumbled on Monday as it warned that full-year profit was set to be lower than expected due to the "challenging start" to its final quarter and ongoing macroeconomic uncertainty. In an update for the 10 months to the end of January, the company said it achieved year-on-year growth in the quarter to the end of December, with hire revenue for December 5% above the previous year.

Bank of Georgia Group announced on Monday that its Armenian banking subsidiary Ameriabank has secured a €105m loan agreement with the European Investment Bank (EIB Global). The FTSE 250 company said the financing would support micro, small, and medium-sized enterprises (MSMEs) and mid-cap companies in Armenia by facilitating investment in growth, enhancing competitiveness, and promoting sustainable business practices.

Economic news

House prices jumped in January to reach fresh highs, industry data showed on Friday, reversing December’s fall. According to the latest house price index from Halifax, prices rose by a surprise 0.7% in January, following a 0.2% dip a month earlier. Analysts had been expecting a far smaller improvement of 0.2%. The average property price now stands at £299,138 - a new record high.

Retail footfall jumped in January, industry data showed on Friday, as shoppers braved winter weather to hit the January sales. According to the latest BRC-Sensormatic footfall monitor, total UK footfall increased by 6.6% last month, comfortably reversing December’s 2.2% decline. All types of destinations saw an uptick in footfall, led by retail parks and shopping centres.

The Bank of England trimmed interest rates by a quarter point on Thursday, as widely expected. The Monetary Policy Committee voted to cut the cost of borrowing to 4.5% by a majority of 7 to 2. The two external members who voted against – Swati Dhingra and Catherine Mann – argued instead for a bigger 50 bps reduction. The MPC last reduced rates in November.

The UK construction sector slumped in January, a closely-watched survey showed on Thursday, as concerns about the economy weighed heavily. The latest S&P Global UK construction PMI came in far below analyst expectations, tumbling to 48.1 in January from 53.3 a month previously. It is the first time that the index has fallen below 50.0 since February 2024. A reading above the neutral 50.0 benchmark indicates growth, while one below it suggests contraction.

The UK’s services sector faltered in January, a closely-watched survey showed on Wednesday, as costs mounted and nervous clients tightened belts. The S&P Global UK services PMI business activity index for January came in at 50.8 last month. Although still in positive territory, it was down on December’s 51.1 and the joint-lowest print for 15 months. It was also below expectations of 51.2. A reading below the neutral 50.0 benchmark suggests contraction, while one above it indicates growth.

New car sales in the UK declined in January for the fourth straight month, according to figures out on Wednesday from the Society of Motor Manufacturers and Traders (SMMT), with growth in electric and hybrid models offset by falls in conventional fuel vehicles. Registrations totalled just 137,000 last month, down 2.5% from 142,876 in January 2024, with the SMMT blaming "weak consumer confidence and tough economic conditions". Sales of diesel vehicles fell 7.7% year-on-year to 8,625, while petrol vehicle sales dropped 15.3% to 70,075, meaning the combined market share of conventional fuel cars fell to 56.5%, down from 64.4% a year earlier.

Supermarket take-home sales rose 4.3% over the four weeks ended 26 January compared with the same period last year, according to fresh data from Kantar on Monday. According to the consumer research organisation, shoppers benefited from a continued slowdown in grocery price inflation, which eased to 3.3% for the month. Health-conscious spending shaped purchasing trends, with demand for fresh produce and low-alcohol drinks increasing.

The decline in UK manufacturing activity eased more than expected in January, though confidence among purchasing managers remained weak as companies grappled with weak demand and rising costs. The final reading of the S&P Global UK manufacturing purchasing managers' index (PMI) came in at 48.3 last month, up from the preliminary reading of 48.2 released two weeks ago. This marked a rebound from December's 11-month low of 47.0 but was still firmly below the neutral 50-point level which separates contraction and growth.

International events

US hiring slowed by more than anticipated at the start of 2025, albeit after a sharp rise at the end of the previous year. According to the US Department of Labor, in seasonally adjusted terms non-farm payrolls grew by 143,000 during the month of January. That followed an upwardly revised gain of 307,000 for December.

German industrial production slumped in December, official data showed on Friday, as Europe’s biggest economy ended 2024 on the back foot. According to provisional data from Destatis, the Federal Statistical Office, production slid by a surprise 2.4%, to the lowest level since May 2020. It also reversed November’s downwardly revised 1.3% increase. Analysts had been expecting a far more modest 0.6% decline.

Americans lined up for unemployment benefits at an accelerated pace in the week ended 1 February, according to the Labor Department. Initial jobless claims rose by 11,000 to 219,000, above market expectations for a smaller increase to 213,000, while continuing claims rose by 26,000 to 1.88m, also coming in ahead of expectations of 1.87m, The four-week-moving average, which aims to strip out week-to-week volatility, rose by 4,000 to 216,750 on the back of sharp increases in New York and California.

Retail sales across the eurozone failed to grow for the third straight month in December as food, drinks, and tobacco volumes dropped sharply. According to Eurostat, the seasonally adjusted volume of retail trade was 0.2% lower over the month, following a flat reading in November and the 0.3% decline seen in October. The consensus forecast was for a smaller fall of 0.1%.

The decline in eurozone construction activity eased to its slowest pace in almost two years, although new orders continued to fall markedly amid a bleak outlook, according to a survey published on Thursday. The HCOB Eurozone Construction PMI Total Activity Index — a seasonally adjusted index tracking monthly changes in total industry activity — rose to 45.4 in January from 42.9 in December, indicating a sharp, but softer contraction in activity across the euro area construction sector.

Factory orders in Germany rebounded strongly in December after two months of declines, according to data out on Friday from Destatis, the Federal Statistical Office. Price-adjusted new orders in manufacturing were up 6.9% over the month, following a revised 5.2% slump in November. That was well ahead of the 2.0% increase expected by economists.

Private sector employment in the US rose more than expected in January, according to data released on Wednesday by ADP. Employment increased by 183,000 from December, versus expectations for a 150,000 jump. The total number of jobs gained for December was revised from 122,000 to 176,000. Small businesses with fewer than 50 employees added 39,000, while medium businesses with between 50 and 499 employees added 90,000.

Gold prices surged on Wednesday, hitting fresh highs, as geopolitical worries and trade tensions between the US and China intensified. The safe haven asset has been on the rise since US president Donald Trump started imposing tariffs on a number of countries last month. Gold prices have already put on more than 8% so far this year, and on Tuesday spot gold added another 1% early in the session to reach a new record of $2,869.68 per ounce.

Eurozone industrial producer prices rose 0.4% in December on a monthly basis, according to flash estimates from Eurostat, the statistical office of the European Union. Prices for the month were unchanged on an annualised basis. The annual average of industrial producer prices fell by 4.2% in the eurozone and by 4% in the EU in 2024, Eurostat added.

China’s services sector expanded at a slower pace in January as growth in new business softened and employment contracted, according to the latest Caixin/S&P Global survey. The services purchasing managers’ index (PMI) fell to 51.0 from December’s 52.2, marking a slowdown in activity despite remaining in expansion territory. That decline reflected weaker domestic demand and the impact of an earlier-than-usual Lunar New Year holiday, which contributed to the sharpest drop in employment since April 2024.

Economic activity across the eurozone turned positive in January for the first time in five months, according to final estimates out on Wednesday from S&P Global and Hamburg Commercial Bank (HCOB). The eurozone composite purchasing managers' index rose to 50.2 last month after a reading of 49.6 in December, in line with the flash estimates released two weeks ago. This was the first time above the neutral 50-point mark since August.

Job openings in the United States dropped sharply in December, nearing a three-year low registered in the autumn. Job openings totalled 7.6m in the final month of 2024, down 556,000 from a revised 8.2m in November and well under the 8m consensus forecast. The drop was mainly a result of fewer openings in finance, professional and business services, and healthcare.