Weekly review

Equity view

Computacenter said on Friday that it was on course to deliver record revenue, profit and earning per share for the full year after the third quarter ended "marginally above" its expectations. The company said it entered the fourth quarter with strong backlogs in both Services and Technology Sourcing.

Mining giant Glencore on Friday said it expected annual earnings to beat the top end of guidance and maintained production forecasts. The company forecast earnings before interest and tax at its marketing unit to exceed the top end of its $2.2bn - $3.2bn long-term guidance.

Medical products company ConvaTec said on Friday that full-year organic revenue growth is set to be towards the upper end of its guidance range after an in-line third-quarter performance, which saw sales slow from the second quarter. Reported revenue grew 3.7% on the year in the three months to the end of September, to $511m. ConvaTec highlighted continued momentum in Advanced Wound Care, modest growth in Ostomy Care and Continence Care, and declines in Infusion Care and Critical Care, as expected against tough prior year comparatives.

Hilton Food Group has acquired UK foodservice meat supplier Fairfax Meadow Europe from Argent Holdings, it announced on Friday, for £23.8m. The FTSE 250 company said Fairfax Meadow was established more than 40 years ago, and supplies some of the largest businesses in the UK hospitality and travel sectors.

Aerospace engineer Meggitt said annual revenues would fall by 5% due to supply chain issues and a weaker defence market. The company on Thursday said it expected to deliver full-year underlying operating profit of £170m - £190m and positive cash flow.

WPP upgraded its guidance for 2021 on Thursday as it hailed a "very strong" third-quarter performance. The advertising giant said third-quarter like-for-like revenues less pass-through costs - its core metric - rose 15.7% year-on-year to £2.6bn. Analysts had been expecting a 9.4% jump. Compared with Q3 2019, they were up 6.9%.

Packaging company DS Smith said its first half was in line with expectations as price rises offset rising input costs. The company on Thursday said corrugated box volume growth had “very good” in the six months to October 31, with the fast-moving consumer goods sector, which accounts for more than 80% of volume, particularly strong.

Telecommunications provider Airtel Africa posted a jump in first-half profit and revenue on Thursday, with "strong" performances across its regional segments and key services. In the half year to 30 September, pre-tax profit rose to $567m from $281m in the same period a year ago, while reported revenues were up 25.2% to $2.27bn, with double-digit growth across all regions.

HomeServe on Wednesday said it had bought CET Structures, a UK home emergency assistance business, for £53m and added that current trading was in line with guidance. CET provides outsourced emergency plumbing, heating and electrics services to home insurance policy holders on behalf of consumer brands, via its digital claims handling and job management platform.

Software group Aveva on Wednesday said first-half revenue rose 9% on a constant currency basis driven by a strong contribution from the recently acquired OSIsoft business. The company said the reported rise was before forex translation headwinds due to the relative strength of sterling, adding that the revenue increase resulted in “significant” margin leverage and growth in adjusted earnings before interest and tax.

Housebuilder Berkeley Group said on Wednesday that executive director Sean Ellis will be leaving in a year "to pursue other interests" and will step down with immediate effect. Ellis had been an executive director at Berkeley since 2010.

Wickes, which recently demerged from Travis Perkins, confirmed its full-year profit guidance on Wednesday despite inflationary headwinds, as it reported a dip in third-quarter sales. Total like-for-like sales fell 1.6% compared to 2020, which benefited from an uptick in DIY due to Covid restrictions. On a two-year basis, however, sales were 16.3% higher.

IT infrastructure and services provider Softcat reported record full-year results on Tuesday amid strong public sector demand and a recovery in the corporate sector. In the year to the end of July, pre-tax profit rose to £119m from £93.6m on revenue of £1.16bn, up 7.4% on the previous year. Operating profit grew 27.4% to £119.4m and the company declared a final dividend of 14.4p a share, up from 11.2p, and a special dividend of 20.5p, compared to 7.6p a year earlier.

Essentra said it was considering selling its filters business as a first step to becoming a pure-play components business as the company said its results were on track to meet full-year expectations. Like-for-like revenue rose 5.1% in the third quarter from a year earlier, driven by its core components business where revenue on that basis rose 28.5%. Filters revenue rose 2.8% and packaging revenue fell 6.1%.

Distribution and services group Bunzl said third quarter revenues rose, driven by a strong recovery in its core business. Revenue for the three months to September 30 rose 7.8% year-on-year, with acquisitions contributing 4.3% to growth.

Hochschild Mining reported its strongest quarter of the year and said it was on track to meet annual production and cost targets. The FTSE 250 miner said it produced 93,630 gold equivalent ounces or 8.1 million silver equivalent ounces in the three months to the end of September - 5% more than in the second quarter helped by a particularly strong period at the Inmaculada mine in Peru.

AstraZeneca said its Imfinzi drug “significantly” improved overall survival in biliary tract cancer when combined with chemotherapy, according to phase 3 trial results. The company on Monday said the trial revealed Imfinzi “demonstrated a statistically significant and clinically meaningful overall survival (OS) benefit versus chemotherapy alone as a 1st-line treatment for patients with advanced biliary tract cancer (BTC)”.

Online trading platform Plus500 posted a dip in its third-quarter earnings on Monday but said full-year revenues and underlying earnings were set to be ahead of analysts’ expectations after an "excellent performance" so far this year. In an update for the third quarter, the company said earnings before interest, tax, depreciation and amortisation fell 4% to $128.6m, with revenues down 2% to $211.4m. This came as the number of new customers slumped 43% to 26,169, with active customers down 16% to 166,310.

Miner Petropavlovsk said third-quarter production fell 2%, but maintained full-year output guidance. Production for the three months to September 30 decreased to 111,600 ounces from 114,000 a year ago, the company said on Monday, citing lower gold production from third-party concentrates.

Intellectual property-based business developer IP Group said on Monday that, following the completion of a funding round by a portfolio company in its top 20 most valuable holdings, it recorded a net realised and unrealised fair value gain of about £27.5m, or 2.6p per share. The FTSE 250 company said that in addition, it took the opportunity to realise a modest proportion of its holding, generating net proceeds of around £9.4m.

Economic news

Britons continued to display caution last month, adding to their stash of excess savings, although the opposite was true of corporates, the latest money and credit data from the Bank of England appeared to show. Households' total liquid assets, defined as their deposits with banks and building societies, grew by £9.4bn in September, which was down from £9.9bn during the previous month but ahead of an average net flow of £8.9bn between April and August 2021.

The government is reportedly accelerating contingency plans for the collapse of energy supplier Bulb. According to Sky News, ministers and officials, along with industry regulator Ofgem, believe that Bulb could collapse as soon as next week amid diminishing expectations of a rescue deal.

The long-awaited but never-arrived Elizabeth line could be facing yet another delay, as MPs warned the cross-London railway was facing yet another funding shortfall of around £150m. A Public Accounts Committee report has said that the estimated cost of completing the megaproject, also known as Crossrail, currently topped available funding by that amount.

Empty UK stores remained at a record high in the third quarter but vacancies did not rise for the first time in more than three years as independent retailers revived, an industry survey showed. The vacancy rate was 14.5%, the same as the second quarter and 1.3 points higher than a year earlier, the British Retail Consortium said.

There’s a "high chance" the Bank of England will raise interest rates at next week’s meeting, Capital Economics said on Thursday, adding that it will be "fast out of the blocks but won’t go the distance". It expects the Monetary Policy Committee to raise rates from 0.10% to 0.25% at the meeting on Thursday 4 November. It also reckons the Bank could raise rates to 0.50% in February, if not in December.

Living standards will fall for many people in the UK as a result of Rishi Sunak's budget, one of Britain's top economic think tanks has warned. The Institute for Fiscal Studies said Sunak's budget was a "once in a decade event" because he raised taxes by about £40bn and put the tax burden on course to exceed 36% of national income and settle at a similar level.

UK Finance Minister Rishi Sunak on Wednesday gambled on a budget spending package to help Britain recover from the Covid pandemic with a strong signal that tax cuts would arrive before the next election. Sunak was given £51bn in headroom as economic growth forecasts were revised upwards to 6.5% for 2021 and tax receipts were higher than expected.

UK car production fell for the third month in a row, hitting its lowest level in four decades, industry data revealed on Thursday. A total of 67,169 cars were produced in Britain last month, down 41.5% year-on-year and the lowest since September 1982, the Society of Motor Manufacturers and Traders (SMMT) said, in what it called a "worrying trend".

Rising interest payments could hit the UK economy's chances of 6.5% growth next year, economists said on Wednesday after the government published its budget forecasts. The government's independent forecaster lifted its growth outlook for 2021 from the 4% it forecast in March, giving Finance Minister Rishi Sunak a £51bn windfall largely due to his lifting of the tax burden to its highest level since the 1950s.

UK shoppers face rising prices in the run-up to Christmas after the cost of goods increased for the third month running, the British Retail Consortium said. Total food prices rose 0.4% in October from a month earlier compared with a 0.1% month-on-month increase in September, the BRC/NielsenIQ shop price index showed. Overall prices remained below the level of a year earlier but the annual rate of decline reduced.

International events

Consumer confidence in the US continued to languish near the lows hit immediately following the start of the Covid-19 pandemic, as higher inflation and lower confidence in government's economic policies offset the effects of stronger income expectations and receding coronavirus infections, the results of a closely-followed survey revealed. The University of Michigan's consumer confidence index dipped from a reading of 72.8 for August to 71.7 in September (consensus: 71.4).

Personal income growth in the US surprised sharply to the downside last month, yet Americans continued splashing out more quickly than expected. According to the Department of Commerce, US personal incomes dropped at a month-on-month pace of 1.0% in September (consensus: -0.1%).

The cost of living in the Eurozone jumped past economists' forecasts in October on the back of nearly across-the-board gains in prices. According to Eurostat, in seasonally adjusted terms, the euro area's consumer price index increased at a month-on-month pace of 0.8%, pushing the annual rate of increase from 3.4% for September to 4.1% in October.

Economic activity in the single currency area edged past forecasts in the third quarter, thanks in large part to faster than expected growth in France and Italy. According to Eurostat, in seasonally adjusted terms euro area gross domestic product expanded at a quarter-on-quarter pace of 2.2% over the three months ending in September.

US economic growth slowed more sharply than anticipated over the three months ending in September, preliminary data showed. According to the US Department of Commerce, the rate of growth in US gross domestic product slowed to a quarterly annualised pace of 2.0% in the third quarter.

The European Central Bank left key interest rates unchanged on Thursday, as it said the pace of asset purchases under its Pandemic Emergency Purchase Programme (PEPP) would be "moderately lower". The Bank left the main interest rate at 0%, while the deposit rate was kept at -0.5%, in line with consensus expectations. The marginal lending facility rate was also unchanged, at 0.25%, in line with consensus.

Americans applied for unemployment benefits at a slower pace last week, indicating that the US job market and economy were continuing to recover from the coronavirus-induced recession. Initial jobless claims dropped by 10,000 to 281,000 in the week ended 23 October, a fresh pandemic-era low, according to the Labor Department.

Eurozone economic sentiment beat expectations but supply problems suggest problems ahead for the currency zone's businesses. The European Commission's economic confidence index rose to 118.6 in October from 117.8 a month earlier and was just short of a record high of 119. Analysts had on average expected the score to drop to 116.7.

Money supply growth in the single currency bloc continued to slow in September and in real terms pointed to further downside risks for economic growth, economists said. According to the European Central Bank, the annual rate of growth in the M3 monetary aggregate declined from 7.9% in August to 7.4% for September.

Saudi Aramco 's boss warned on Tuesday of a lack of crude oil production capacity. In an interview with Bloomberg, Amin Nasser reportedly said that "spare capacity is shrinking", adding that it was a "huge concern".