Weekly review

Equity view

British insurer Aviva said it had sold its Polish unit to Allianz for €2.5bn to focus on its strongest businesses in the UK, Ireland and Canada and cut debt. The divestment is Aviva’s eighth in the past eight months, and “successfully concludes the planned refocus of the group's portfolio”, the company said on Friday.

Oxford Instruments said it was expecting a marginal improvement in revenue on Friday, following good progress in the second half. The FTSE 250 industrial and scientific supplier said revenue was expected to be “marginally ahead” of the prior year, including a small adverse impact from currency effects.

Nova Resources has lifted its offer for Kaz Minerals to 850p a share, valuing the London-listed copper miner at £4.1bn. Owned by Kaz’s two largest shareholders, chairman Oleg Novachuk and director Vladimir Kim, Nova made its initial offer for the 61% of the company it does not already own last October.

Scottish transport group Stagecoach said on Friday that it continues to see "good long-term prospects" for the business despite it being difficult to forecast a return to profitability as a result of the ongoing Covid-19 pandemic. Stagecoach said there was a positive long-term outlook for its regional bus business, with supportive government policy, including the new National Bus Strategy for England, and continued demand for its services despite the changing pattern of Covid-19 restrictions across the UK.

Compass Group said profitability improved in the second quarter while volumes stayed subdued because of the Covid-19 crisis. The world's biggest contract caterer's organic revenue fell 28% in the three months to the end of March from a year earlier compared with a 33.7% drop the previous quarter. In both the first and the second quarter organic revenue was 71% of 2019 levels, Compass said in a trading update.

Pharma giant AstraZeneca revised down the efficacy rate for its US Covid-19 vaccine trial to 76% after authorities there said the company had published incomplete data in trial results. The company earlier this week said the drug had an efficacy rate of 79%. AstraZeneca executive vice-president Mene Pangalos said the reassessment showed the data were “consistent” with the previous figures.

United Utilities said annual profit would fall in line with its expectations because of lower revenue and higher infrastructure spending. The water company said cash collection remained strong as the year to the end of March approached and that its financial assistance schemes would limit any continuing economic impact from Covid-19.

Online trading platform Plus500 said on Thursday that Professor Jacob A. Frenkel will succeed Penny Judd as chairman following the annual meeting on 4 May, subject to shareholder approval. Judd, who has been chair since April 2017, does not plan to nominate herself for re-election at the AGM, "in order to focus on other business interests and directorships".

Halma said annual profit would beat expectations after revenue continued to improve and rose in all its major regions. The safety and protection company said adjusted pretax profit for the year to the end of March would be similar to a year earlier - up from previous guidance for a drop of about 5%. This includes a small adverse effect from movements in exchange rates, Halma said in a trading update.

Diploma said first-half performance beat expectations as underlying revenue matched the pre-Covid-19 period a year earlier. The technical equipment supplier said it made good progress in all sectors on an underlying basis in the six months to the end of March. Reported revenue will be up by about 27%, reflecting a strong contribution from acquisitions, the FTSE 250 group said in a trading update.

Private equity company HGCapital said on Wednesday that its manager had agreed to sell its investment in Trace One, a retail business platform for consumer-packaged goods, to Symphony Technology Group, a Californian private equity firm focused on the software, data analytics, and software-enabled technology services sectors. HG Capital said the proposed sale, subject to French Workers' Council consultations and customary clearances, valued its investment in Trace One at approximately £5.8m, representing an uplift of 30% over the carrying value of £4.4m in HGT's net asset value on 28 February 2021.

Building materials business CRH said Jim Mintern will assume the role of finance director on June 1 after the retirement of Senan Murphy, the company said on Tuesday. Mintern joined CRH in Ireland as finance director for Roadstone in 2002 and since then has held several senior positions across the group, including country manager for Ireland and managing director of each of the Western and Eastern regions of its Europe Materials business.

Glencore said Gary Nagle would be appointed as chief executive on July 1 to succeed Ivan Glasenberg, who is set to retire on June 30. Glasenberg would seek re-election to the board at this year's annual general meeting on 29 April, for a term expiring on 30 June 2021, the company added in a shirt statement on Tuesday.

Airtel Africa said it was selling its telecoms tower companies in Madagascar and Malawi to Helios Towers for $108m and was looking to offload assets in Gabon and Chad as it focused on its core subscriber business. The deal is for 1,229 towers which form part of the group's wireless telecommunications infrastructure network, Airtel said on Tuesday.

Crest Nicholson shares rallied on Tuesday after the housebuilder lifted its full-year profit expectations as it hailed a "resilient" UK housing market. In an update for the period from 1 November 2020 to 22 March 2021, the company highlighted a good trading performance and said it now expects full-year adjusted pre-tax profit of around £85m, ahead of consensus expectations of £74.3m.

Centamin's annual profit soared as the higher price of gold more than offset a dip in production during the Covid-19 crisis. Pretax profit jumped 82% to $315m (£228m) in the year to end of December as revenue rose 27% to a record $829m. Earnings before interest, tax, depreciation and amortisation increased 54% to $439m.

Student housing developer and operator Unite Group has received resolution to grant planning permission for its 700-bed student accommodation development at Derby Road in Nottingham, it announced on Monday. The FTSE 250 company said the direct-let development, adjacent to the University of Nottingham campus, would open in time for the 2023-2024 academic year.

A final-stage US trial of AstraZeneca's Covid-19 vaccine has found it to be 100% effective at keeping patients out of hospital. The US phase III trial of AZD1222, developed with Oxford University, showed 79% vaccine efficiency in preventing Covid-19 and 100% efficacy at preventing severe disease and hospitalisation, the company said.

Oil giant Saudi Aramco paid out $75bn in dividends as it reported a sharp fall in annual profits on the back of a slump in demand due to the coronavirus travel bans and restrictions. The Saudi state oil company said net earnings fell 44% to $49bn (£35bn) in what it called "one of the most challenging years in recent history" as the price of crude plunged by 20% hitting rivals such as Royal Dutch Shell, BP and Exxon Mobil.

Commercial-stage biopharmaceuticals company Amryt Pharma announced on Monday that the French Ministry of Social Affairs and Health has approved ‘Myalepta’, or metreleptin, for reimbursement in the country as an adjunct to diet as replacement therapy. The AIM-traded firm said the approval was for the treatment of leptin deficiency in patients with congenital or acquired general lipodystrophy in adults and children two years and older, and familial or acquired partial lipodystrophy in adults and children 12 years and older, for who standard treatments had failed to achieve adequate metabolic control.

Economic news

UK retail sales recovered partly in February, according to figures released on Friday by the Office for National Statistics, following a big fall at the start of the third national lockdown in January. Retail sales rose 2.1% on the month in February, in line with consensus expectations and compared to an 8.2% slump the month before. Nevertheless, sales were still down 3.7% compared to February last year, before the coronavirus pandemic hit. This compares to a 5.9% slide in January and expectations for a 3.5% decline.

Commercial vehicle production in the UK declined 45.4% year-on-year in February, with 4,308 units built, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). It said commercial vehicle manufacturing entered its fifth consecutive month of decline, as supply chain shortages, new customs processes and prolonged lockdown measures affected output, resulting in the worst February on record.

Retailers remained under pressure in March but the situation is expected to improve next month, according to the latest survey from the Confederation of British Industry. The balance of retailers reporting year-on-year growth in sales was steady compared to February at -45. Analysts had expected it to improve to -37.

Inflation at the consumer level in the UK is headed nowhere very quickly, economists said. In a research note sent to clients, Bank of America's UK economist, Robert Wood, told clients that the UK consumer price index was likely to exceed the Bank of England's target of 2.0% from October 2021 to March 2022.

UK inflation unexpectedly fell in February as the price of clothes and second-hand cars declined, according to figures released on Wednesday by the Office for National Statistics. Consumer price inflation fell to 0.4% from 0.7% in January, coming in below expectations of 0.8%.

UK business activity returned to growth in March, powered by stronger consumer confidence and rebounding sales ahead of a planned lifting of the Covid-19 lockdown, a survey showed. The initial reading for the IHS Markit/CIPS UK composite purchasing managers' index jumped to 56.6 from 49.6 a month earlier. The increase was the fastest since August, supported by the first rise in new orders since September. The total figure was well ahead of the 50 mark that indicates no growth.

The UK unemployment rate unexpectedly ticked lower in the three months to January, according to figures released on Tuesday by the Office for National Statistics. The unemployment rate fell to 5% from 5.1% in December, coming in a little better than expectations of 5.2% as the government's furlough scheme continues to protect jobs during the pandemic. Still, the rate remains 1.1 percentage points higher than a year ago and 0.1 percentage points higher than the previous quarter.

Consumer spending declined 7.1% in 2020 due to the restrictions caused by the pandemic with buyers turning to local stores for their purchases. According to the latest survey by Barclaycard, 2020 was a turbulent year for retail and hospitality but lifestyle changes boosted growth for some sectors such as online grocery.

MPs announced on Monday that the UK government’s scheme for green home insulation was botched by a disastrous administration and is in urgent need of rescue. MPs said the scheme was “rushed in conception and poorly implemented … [the] scheme administration appears nothing short of disastrous”.

Footfall across UK retail destinations rose last week as the anniversary of lockdown looms, driven by high streets, according to the latest data from retail analysts Springboard. Footfall was up 0.5% from the week before, with footfall at high streets 4% higher. However, footfall in retail parks and shopping centres declined by 4.4% and 2.3%, respectively. Springboard noted that this is a big difference from the same week last year, when - ahead of the start of lockdown on 23 March - the government advised people to work from home and not travel. In that week, footfall fell a record 21.7%.

International events

German business activity beat expectations in March as sentiment jumped to the highest for almost two and a half years, a widely read survey showed. The Ifo business climate index for Europe's biggest economy rose to 96.6 from 92.7 a year earlier - the highest reading since June 2019. Analysts' average forecast was for a figure of 93.2.

Consumer spirits in America were buoyed in March by government stimulus checks arriving in their mailboxes and as the country's vaccination programme rolled on. The University of Michigan's closely-followed consumer confidence index rose from a reading of 76.8 in February to 84.9 for March - its highest level in a year.

German consumer sentiment is set to improve in April after the easing of the hard lockdown at the beginning of March but a third wave of coronavirus cases and further restrictions are expected to weigh on the mood going forward, according to a survey released by market research group GfK. GfK’s forward-looking consumer sentiment index for April rose to -6.2 from -12.7 in March. Analysts were expecting a reading of -12.1. Meanwhile, the economic expectations index printed at 17.7, up from 8.0.

North Korea launched two suspected ballistic missiles into the sea near Japan on Thursday in a test launch. The tests fueled tensions between Japan, the US and North Korea as they were carried out ahead of the Tokyo Olympics.

Eurozone business activity returned to growth in March, according to preliminary data released on Wednesday, but any further improvement was likely to be held back by the recent tightening of Covid-19 restrictions in several countries. The IHS Markit composite purchasing managers’ index - which measures activity in the manufacturing and services sectors - rose to 52.5 from 48.8 in February, hitting an eight-month high and coming in above the 50.0 mark that separates contraction from expansion. This marked the first increase in business activity since last September.

German Chancellor Angela Merkel's cabinet has approved the government's 2021 and 2022 budget plans, including the assumption of an extra €60.0bn in net debt for 2021 as part of an effort to help offset impacts stemming from the Covid-19 pandemic. The country's additional borrowing will take the annual total to over €240.0bn, with Germany spending freely in an attempt to support businesses hurt by coronavirus-related shutdowns as it still struggles to contain a third wave of cases linked to a more infectious variant.

Abu Dhabi state fund Mubadala Investment and Abu Dhabi Catalyst Partners, part-owned by Mubadala, announced on Tuesday they had made a combined investment of $150m in messaging app Telegram. Mubadala invested $75m in five-year, pre-initial public offering (IPO) bonds of Telegram, while Abu Dhabi Catalyst Partners invested a further $75m.

The US central bank should start hiking interest rates in 2021, a top Federal Reserve official reiterated on Tuesday. In an interview with CNBC, Dallas Fed boss, Robert Kaplan, said that his forecasts for the American economy had improved meaningfully.

The Turkish lira fell heavily on Monday after President Recep Tayyip Erdogan sacked the head of the country's central bank. The lira dropped as much as 14% on the news that Erdogan had fired his third central bank governor in less than two years. At 08:50 GMT the dollar was up 10.7% to 7.9940 lira.

The European Union has pushed back on suggestions it is considering using Russia’s Sputnik V to help keep its embattled vaccination programme on track. Last week it was reported that the bloc – which has signed deals with a number of vaccine makers including AstraZeneca and Pfizer – was mulling a possible order of the Russian vaccine. Although the European Commission has previously dismissed the drug, which has not yet been approved by the European Medicines Agency, Reuters said that faced with the slow roll out of its vaccination programme, a growing number of governments were considering talking to the vaccine’s developers.