Weekly review

Equity view

Chemring said on Friday that it has retired a contingent liability of up to £15m after HMRC confirmed that an inquiry into its participation in the UK’s Controlled Foreign Company Finance exemption has been closed. HMRC concluded that Chemring was not a beneficiary of State Aid in the periods ending 2013 to 2018.

Electronic parts distributor Electrocomponents lifted annual guidance after reporting interim trading ahead of expectations, but said supply chain issues would persist. Like-for-like revenue For the six months to September 30 rose 31% year on year and 22% higher compared with 2019 before the Covid pandemic struck. Full-year revenue growth and adjusted operating profit margin were forecast to be slightly ahead of previous guidance.

Food delivery firm Just Eat Takeaway.com said on Friday that Matt Maloney has decided to step down as a member of the company's management board with effect from 1 December to pursue other opportunities. Maloney is the founder of US-based Grubhub, which was bought by Just Eat in June.

Jacamo and Simply Be owner N Brown posted a jump in interim profit on Friday despite a dip in revenue, as it hailed the success of its strategic transformation. In the 26 weeks to 28 August, adjusted pre-tax profit rose 7.1% to £24.2m even as revenue slipped 0.1% to £346.8m. Product revenue was up 3.3% to £222.1m, while revenue from financial services was 5.7% lower at £124.7m.

Paper and packaging group Mondi reported a jump in third-quarter earnings on Thursday as it benefited from higher prices and strong demand. Underlying earnings before interest, tax, depreciation and amortisation rose 27% from the same period a year ago to €388m.

Financial services company CMC Markets reiterated its full-year guidance on Thursday amid a pickup in market volatility and client trading volumes towards the end of the first half. CMC stated full-year net operating income was expected to settle in a range between £250.0m-280.0m, while overall client assets under management remained near record levels.

Recruiter Robert Walters said on Thursday that full-year profit was set to be "comfortably ahead" of market expectations after strong third-quarter trading. The group reported a 26% jump in Q3 gross profit to £91.8m, with Asia Pacific seeing the strongest growth of 46% to £44.4m. Meanwhile, UK profit rose 17% to £18.7m and Europe profit was up 15% at £22.7m.

Flexible office space provider Workspace said on Thursday that customer demand had improved in the second quarter of its trading year, with a strong pick-up in activity during September. Workspace stated there was an average of 935 enquiries and 138 lettings per month in the quarter, while like-for-like occupancy was 2.7% higher quarter-on-quarter at 85.6% and the firm's like-for-like rent roll was 2.1% stronger over the first six months at £87.3m.

Travel company TUI said it planned to raise €1.1bn (£940m) through a fully-underwritten capital increase to help pay down massive debts incurred during the Covid pandemic, as it reported a rebound in holiday bookings. TUI said on Wednesday that The company on Wednesday said it has seen a bounce in summer holiday bookings, led by Germany and Netherlands. UK sales had picked up since the government eased Covid travel curbs last month.

Recruiter PageGroup lifted its guidance for full-year operating profit on Wednesday as it reported a jump in third-quarter gross profit. The company said it now expects full-year operating profit of around £155m, up from a previous range of between £125m and £135m.

Mining company Ferrexpo said on Wednesday that iron ore pellet production had grown in the third quarter. Ferrexpo stated total iron ore pellet production was up 2% year-on-year at 2.6m tonnes, reflecting a "strong production performance" following pelletiser upgrade work undertaken by the firm in previous quarters.

Imperial Brands said on Wednesday that it was on track to meet full-year expectations as the business continues to perform well and losses were reduced in Next Generation Products (NGPs). Group net revenue is expected to grow by around 1% on an organic, constant currency basis, driven by continued strong pricing in tobacco. Meanwhile, adjusted organic operating profit is set to be in line with company guidance of low to mid-single digit constant currency growth. This reflects "significantly" reduced losses in NGPs and increased profit in distribution.

Aerospace and motoring engineer Melrose said it expected the global shortage of semiconductors to hit its automotive division after a sharp rise in customer cancellations in the first quarter. “At present the timing and duration of these constraints is uncertain, but recently the consensus view is that they have lengthened. There are a number of scenarios possible, but it is likely these are below previous expectations,” the company said on Tuesday.

Anglo American announced a number of senior leadership changes on Tuesday, confirming that Seamus French had decided to leave the company at the end of 2021 after 14 years with the company. The FTSE 100 miner said he would be replaced as chief executive officer of bulk commodities by Themba Mkhwanazi, currently CEO of Kumba iron ore.

Premium chocolatier Hotel Chocolat reported better-than-expected full-year profits on Tuesday as digital growth offset store closures due to Covid restrictions. In the year to 27 June, pre-tax profit rose to £10.1m from £2.4m the year before, coming in ahead of market expectations, with revenue up 21% to £165m. The retailer said more than 70% of group revenue was derived from digital, continuity products and partners.

Sri Lanka-focussed natural resources company Capital Metals announced on Tuesday that the auger drilling programme at its southern exploration license EL199 has started. The AIM-traded firm said it had engaged the Geological Survey and Mines Bureau (GSMB) in Sri Lanka to undertake the drilling programme.

AstraZeneca said its breast cancer drug Enhertu had been granted breakthrough therapy designation (BTD) in the US. The Food and Drug Administration granted BTD based on data from a phase 3 trial presented during the European Society for Medical Oncology Congress 2021.

Budget airline Ryanair reported a rise in September traffic and its load factor on Monday. Passenger numbers jumped to 10.6m from 5.2m in the same month last year. Meanwhile, the load factor - which gauges how full the planes are - increased to 81% from 71%.

Foodservice company Compass Group revealed on Monday that chief financial officer Karen Witts will step down from the role at the end of October. The FTSE 100-listed firm stated Palmer Brown, currently Compass' group commercial director, had been appointed to replace Witts on 1 November 2021 and join the firm's corporate responsibility committee.

Bookmaker Flutter has appointed Amy Howe as permanent chief executive of its American gambling subsidiary FanDuel. Flutter said on Monday that Howe, who joined FanDuel in February as president before being appointed interim CEO in July, had led the transformation and modernisation of Ticketmaster's ticketing platform before joining the company, doubling its growth in gross ticketing value and its mobile app customer base by 400%.

Economic news

The recovery in retail footfall stalled in September, according to fresh data on Friday, with wet weather dampening the propensity of consumers to head out and open their wallets. According to the British Retail Consortium (BRC), total UK footfall decreased 16.8% in September when compared to the same period in 2019, before the effects of the 2020 lockdowns, with a 1.2 percentage point increase from August.

Economists at Bank of America bumped up their consumer price forecasts for the UK on the back of the recent jump in energy quotes although they still assumed that inflation would dip below Bank's 2.0% target in April 2023 temporarily. The annual rate of consumer price inflation was now seen peaking at 5.1% in April and coming in at 5.1% for 2021 and 3.7% in 2022.

House prices rose in September at the fastest monthly pace since February 2007 amid a "race for space" as the stamp duty holiday drew to a close, according to a survey released on Thursday by Halifax. House prices increased 1.7% on the month to a record £267,587, following a 0.8% jump in August. On the year, prices were up 7.4% in September following a 7.2% increase in August.

The UK construction sector’s recovery stalled last month, a closely-watched survey showed on Wednesday, as higher prices, staff shortages and supply chain disruptions hit home. The IHS Markit CIPS UK Construction PMI total activity index came in a 52.6 in September, down on August’s 55.2 and a further decline on June’s 24-year high of 66.3.

New car registrations hit a 23-year low in September, industry data showed on Tuesday, as the global semiconductor shortage weighed heavily. According to the Society of Motor Manufacturers and Traders, 215,312 new cars were registered last month, a 34.4% slump on September 2020, when pandemic restrictions were continuing to curtail sales.

International events

Job growth in the US continued slowing unexpectedly September even as the latest wave of Covid-19 infections appeared to have peaked. According to the Department of Labor, non-farm payrolls for last month came in at just 194,000.

Analysts at Bank of America reiterated their negative view on European equities, telling clients that macro uncertainty was on the rise and economic growth momentum set to weaken, but stayed 'overweight' on lenders' and airline shares. Their forecasts called for a drop in the pan-European Stoxx 600 to 420 by year-end, premised on a shift from a so-called 'goldilocks' scenario to an anti-goldilocks' one characterised by slowing rate of economic expansion and rising government bond yields on the back of higher inflation.

Weekly US jobless claims in the US surprised to the downside last week and some economists expected them to continue doing so. According to the Department of Labor, initial unemployment claims for the week ending on 2 October decreased by 38,000 to reach 326,000.

Russia is set to boost gas supplies to Europe amid soaring wholesale prices, it was reported on Wednesday. According to Reuters, Russian president Vladimir Putin said the country would increase supplies to the continent, including via Ukraine, in response to the energy crisis, and that Russia “stood ready” to stabilise the market.

Job growth in the US sped ahead of forecasts last month, according to the results of a closely-followed survey. According to consultancy ADP, private sector payrolls increased by 568,000 in September.

The Eurozone construction sector looked to have stabilised in September after two months of declines, an industry survey showed on Wednesday. The IHS Markit Eurozone Construction total activity index was 50.0 in September, an improvement on August’s 49.5 and July’s 49.8. It is the first time the index has topped 50 since June, when it was 50.3.

Eurozone retail sales missed expectations in August, after spending on food, drinks and tobacco fell across the bloc. According to Eurostat, the statistical office of the European Union, the seasonally-adjusted volume of retail trade in August rose 0.3% month-on-month in both the Eurozone and across the wider EU. In July, sales fell by a downwardly-revised 2.6%.

US Treasury chief Janet Yellen warned Congress that the economy was prone to falling into a recession if lawmakers failed to raise the federal debt limit and avert a default on the country's debt. "It would be catastrophic to not pay the government's bills," Yellen reportedly told CNBC in an interview.

The Word Trade Organization has hiked its forecasts for the global trade in goods, but warned that downside risks from the pandemic and vaccine inequity in particular remained. The global trade body expects world merchandise trade volume to grow 10.8% this year, up from its forecast for growth of 8.0%, made in March.

Shares in Evergrande have been suspended ahead of a "major transaction", the embattled Chinese property developer confirmed on Monday. In a brief statement, the firm said trading in its Hong Kong Stock Exchange-listed shares had been halted "pending the release by the company of an announcement containing inside information about a major transaction".