Weekly review

Equity view

Investment platform AJ Bell said on Friday that it has bought Adalpha - which is currently developing a mobile focused platform proposition for financial advisers - for an undisclosed sum. AJ Bell said this simplified proposition has the potential to complement its existing adviser platform business, AJ Bell Investcentre. As part of the deal, all of Adalpha's staff will transition to AJ Bell.

Halfords has agreed to buy a garage chain in the south east of the UK for £15m as part of the group's push to expand its motoring services business. The company will buy Universal Tyre and Autocentres, which has 20 sites and 89 commercial vans. The chain, based in Kent, specialises in tyre services as well as carrying out general vehicle maintenance.

US power generation firm ContourGlobal lifted its dividend as it reported a rise in annual adjusted core earnings boosted by its acquisition of Mexican CHP assets. The company on Friday reported a 3% rise in adjusted earnings before interest, tax, depreciation and amortisation to $722m for the year to December 31. Pre-tax profit increased by $12.9m to $72.3m and the dividend was lifted 10% to 4.05 cents a share, in line with its dividend growth policy.

Sanne reported a rise in full-year profit and revenue on Friday despite the impact of the Covid-19 pandemic, as it hailed revenue growth across all regions. In its preliminary results for the year to the end of December 2020, the company said underlying pre-tax profit increased 16% to £44.9m on revenue of £169.7m, up 7.7% on the previous year. On a statutory basis, pre-tax profit was up 114.9% at £20.5m, while turnover grew 9.5% to £174.9m.

Vodafone’s Vantage Towers business set the price for its initial public offering at €24 a share for a transaction that will value the mobile phone tower operator at €12.1bn. The offer price is at the bottom of a €24-€25 range tightened on Tuesday from an original range of €22.50 to €29.

National Express said on Thursday that it swung to a loss in 2020 as it took a hit from the Covid-19 pandemic. In the year to 31 December 2020, the bus and coach operator swung to a statutory operating loss of £381.4m from a profit of £242.3m a year earlier, with group revenue down 28.7% to £1.96bn. The group posted a statutory pre-tax loss of £444.7m versus a profit of £187m in 2019.

Award-winning songwriter Carole Bayer Sager has become the latest musical artist to sell their song catalogue after a deal with Hipgnosis Songs Fund for an undisclosed sum. Bayer Sager's catalogue of 983 songs spans 55 years, starting with ‘A Groovy Kind Of Love’, written when she was still at high school. She has won Grammy, Oscar and Golden Globe awards and charted 49 Number 1 hits and 109 Top 10s.

National Grid has agreed to buy Western Power Distribution (WPD) from PPL Corp of the US for £7.8bn and to sell Narragansett Electric (Neco) to PPL for $3.8bn (£2.7bn) to shift its business towards electricity. The FTSE 100 company also said it would sell a majority stake in National Grid Gas (NGG), the owner of the UK's gas transmission service.

UK outsourcing contractor Serco has been awarded a contract extension worth a potential £870m to provide support services at the 5 Wing Canadian Forces base in Goose Bay. The company on Wednesday said it anticipated annual revenue of £20m-£30m in the opening years of the initial £400m 10-year period. The contract has provision for two five-year extensions with a potential ceiling value to Serco over the full 20 years, including indexation, of around £870m.

Hargreaves Lansdown said annual profit would beat expectations after clients dealing in US stocks maintained strong dealing volumes. The investment platform said after strong trading in January it had continued to experience high volumes of share dealing. The period covered frenzied dealing in US shares such as GameStop by retail investors.

The UK government on Wednesday said it had auctioned a new tranche of 5G mobile network spectrum for £1.36bn. EE, owned by BT, paid a total of £452m after it won 2x10 MHz of paired frequency spectrum in 700 MHz band for £280m, 20 MHz of supplementary downlink spectrum in 700 MHz band for £4m and 40 MHz in 3.6-3.8 GHz band for £168m.

Outsourcer Capita said on Wednesday that it was simplifying its business into three divisions, as it posted a decline in full-year pre-tax profit after taking a hit from the pandemic. In the year to 31 December 2020, adjusted pre-tax profit fell to £65.2m from £197.7m in 2019, with adjusted revenue down 9% to £3.18bn.

State-controlled NatWest Bank has been charged with money laundering in the first case of its kind in the UK, Britain’s Financial Conduct Authority said on Tuesday. The FCA said the bank, formerly Royal Bank of Scotland and 60% owned by the UK taxpayer, allegedly accepted “increasingly large cash deposits” totalling £365m into the accounts of a UK incorporated customer between November 2011 and October 2016, including £264m in cash.

AstraZeneca said it had amended its existing agreement with the US government to supply up to 500,000 extra doses of its Covid-19 vaccine AZD7442 for $205m. The agreement with the Department of Health and Human Services and the Department of Defense (DoD) builds on an agreement from October 2020 for the support of the late-stage development of AZD7442 and for the supply of an initial 100,000 doses of the LAAB combination, the company said on Tuesday.

Mining giant Antofagasta said on Tuesday that full-year profits had shot up in 2020 amid elevated copper and gold prices, leading the group to increase its annual dividend. Antofagasta posted underlying earnings of $2.73bn for the twelve months ended 31 December, a 12.3% improvement year-on-year that matched analyst expectations.

Online trading platform Plus500 expressed confidence in its outlook on Tuesday as it said trading in the first quarter of 2021 has remained strong, although monthly trading remains volatile. In an update ahead of its EGM, the company said trading in the first quarter was supported by continued outperformance of customer income, which is tracking ahead of the final quarter of last year and across key operating metrics.

Gambling company Flutter said it was considering spinning off its FanDuel business to cash on the growing US sports betting market. Responding to media speculation, the owner of Paddy Power and Betfair, said it “regularly evaluates its organisational and capital structure to assess how best to position itself to deliver upon the group’s strategy”.

Doorstep lender Provident Financial on Monday said the UK’s financial regulator has started a probe into its consumer credit unit. The company also said an internal review into the business “has made it clear” it needed to address the issue of rising customer complaints.

Sales, marketing, and support services group DCC has agreed to buy Wörner, a supplier of medical and laboratory products to the primary care sector in Germany and Switzerland, for around €80m. Established in 1991, Wörner is one of the leading primary care suppliers in the fragmented German market, providing nationwide sales and distribution coverage; it also has a strong presence in the Swiss market, DCC said.

HgCapital reported net assets of £1.29bn in its full-year results on Monday, marking growth of £252m over 2020, and still outperforming the FTSE All-Share index over one, three, five, 10 and 20-year periods, although its fortunes thus far in 2021 were not looking so positive. The FTSE 250 investment trust said its net asset value stood at 310p per share as at 31 December, making for a total return of 24% over the year, while the share price total return stood at 21%.

Economic news

UK government borrowing hit its highest level in February since records began in 1993, according to figures released on Friday by the Office for National Statistics. Public sector net borrowing was £19.1bn last month, up £17.6bn compared to February 2020 as the government continues to deal with the economic fallout from the pandemic.

Big companies with threadbare cash reserves will be banned from paying dividends and executive bonuses in an overhaul of UK corporate governance to be announced on Thursday. Company directors will also face fines, suspensions and bonus clawbacks if their businesses make big accounting errors or are exposed to fraud, according to reports. The long-delayed changes will be published in a white paper compiled after scandals at Carillion, BHS, Patisserie Valerie and others.

The Bank of England's stewards voted unanimously on Wednesday to keep policy unchanged, arguing that it was nowhere near close to starting to raise short-term interest rates. Like the US Federal Reserve the day before, the Monetary Policy Committee said it did not intend to tighten monetary policy "at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably."

UK consumer confidence rose in March as the vaccine roll-out and the government's plan to end lockdown raised spirits, a survey showed. GfK's consumer confidence index improved by 7 points to -16 in March as households' view of their future finances rose to a three-year high and all measures gained. The overall index score has risen in the first three months of 2021.

The UK government on Wednesday said it had auctioned a new tranche of 5G mobile network spectrum for £1.36bn. EE, owned by BT, paid a total of £452m after it won 2x10 MHz of paired frequency spectrum in 700 MHz band for £280m, 20 MHz of supplementary downlink spectrum in 700 MHz band for £4m and 40 MHz in 3.6-3.8 GHz band for £168m.

Unite announced 41 strikes at Heathrow Airport for the spring on Wednesday, as part of what the union described as a “bitter dispute” following the airport operator’s decision to fire-and-rehire its entire workforce. It said targeted strike action would begin on 2 April, with the 41 strikes to occur over 23 days, and the final action scheduled for 25 April.

The governor of the Bank of England said he expected inflation to approach the BoE's target soon but that he was cautious about whether the trend was sustainable amid continuing economic uncertainty. Andrew Bailey suggested a recent increase in market interest rates did not augur rapidly rising inflation and differed with his chief economist over the potential for a post-lockdown consumer boom as restrictions are relaxed.

Weekly retail footfall in the UK rose 7%, suggesting pent-up demand among shoppers during the third Covid-19 lockdown, a survey showed. Footfall rose on five days in the week to 13 March, led by shopping centres, Springboard said.

Confidence in the UK economy has surged as the vaccine rollout gathers pace, a survey showed on Monday. According to the latest Ipsos Mori Political Monitor, 43% of Britons think the economy will strengthen in the next months, a 14-point improvement on February. Around 41% of those surveyed thought it would worsen and 14% believed it would stay the same, giving an Economic Optimism Index score of +2, compared to February’s reading of -31.

Hand sanitiser, men's loungewear bottoms and hand weights have joined the basket of goods used to measure UK inflation to reflect changes in consumption during the Covid-19 crisis. The Office for National Statistics said it added the items to the basket to take account of people cleaning their hands on the move and more people working and working out at home. Smartwatches, and smart light bulbs also went into the basket to reflect home exercise and time spent in the house.

International events

Japan’s central bank signalled its move away from its huge monetary stimulus policy on Friday, dropping its massive annual target for stock purchases. The Bank of Japan first announced an annual JPY 6trn target for purchasing exchange-traded funds in 2016, maintaining it every year since, adding a much higher ceiling of up to JPY 12trn in March 2020 as the Covid-19 pandemic unfolded.

Strategists at Bank of America reiterated their 'positive' stance for European equities, telling clients the current vaccine 'malaise' would not derail the growth rebound anticipated later in 2021. Hence their continued 'positive' stance on European equities and decision to 'overweight' financials, 'cyclicals' over 'defensives' and 'value' over 'growth'.

EU car registrations fell 19.3% in February as Covid-19 containment measures and uncertainty continued to weigh on demand, industry figures showed. The 771,486 vehicles registered across the EU was the lowest February figure since 2013 during the eurozone crisis, trade body ACEA said.

Inflation across the eurozone remained steady in February, official data confirmed on Wednesday, supported by more expensive services. According to Eurostat, the European Union’s statistics office, annual inflation remained unchanged at 0.9% year-on-year in February, in line with both the flash estimate and consensus. A year previously, the inflation rate was 1.2%.

Demand for oil is set to rebound sharply in 2021 but talk of a supercycle is exaggerated, the International Energy Agency forecast on Wednesday. Publishing its monthly oil report, the Paris-based body said it expected world oil demand to increase by 5.5m barrels a day this year. Cold weather in Asia, Europe and the US supported higher-than-expected demand in the first quarter, while a stronger global economy and vaccine deployment was set to underpin growth in the second.

Housing starts fell more than expected in the US during February as extreme winter weather conditions hindered activity but still-elevated construction permits and backlogs seem to point to momentum in homebuilding remaining high over the next few months. Residential starts dropped 10.3% to an annualised rate of 1.42m last month, the lowest reading since August, according to the Census Bureau, short of Wall Street expectations for a reading of 1.56m.

Pfizer and BioNTech will bring forward some deliveries of their Covid-19 vaccine to the European Union to the second quarter. According to EU head Ursula Von der Leyen, the firms will ship over 200m doses of the jab over the three months to June.

German investor sentiment improved in March, according to the latest survey from the ZEW Center for European Economic Research in Mannheim. The headline ZEW investor expectations index rose to 76.6 from 71.2 in February, coming in ahead of consensus expectations for a reading of 74.0.

China’s economic recovery continued at pace in the first two months of the year, official data showed on Monday, fuelled by a surge in retail sales and strong exports. According to China’s National Bureau of Statistics, total retail sales rose by 33.8% year-on-year, compared to growth of 4.6% in December and above forecasts for growth of around 32.0%.

Iran’s Foreign Minister Mohammad Javad Zarif said on Monday that the US should drop sanctions before the next Iranian elections in June if it wanted to revive the nuclear deal. The elections will entail a waiting period of almost six months that will put a halt on current talks to bring back a 2015 nuclear deal.