Weekly review

Equity view

Real estate investment trust Shaftesbury said on Friday that its recovery was "on-track", despite a short period of disruption caused by Omicron restrictions, as visitors and office workers were returned to London's West End and both its near and longer-term outlook remained "positive". Shaftesbury stated that although trading and footfall were impacted by efforts to stem the flow of the Covid-19 Omicron variant in the four months ended 3 February, strong trading seen in the lead up to the restrictions had enabled its tenants to weather the "period of disruption".

Telecoms company Airtel Africa reported a sharp rise in third quarter profit driven by strong revenue growth. Pre-tax profit for the three months to December 31, 2021 rose 48.5% to $297m, with revenue up 21.7% to $3.4bn.

Transitional energy group Chariot said on Friday that it and French renewable energy power producer Total Eren had inked a memorandum of understanding with platinum group metals and chrome producer Tharisa. The deal will see Chariot and Total work together to develop, finance, construct, own, operate, and maintain a solar photovoltaic project for the supply of electricity to Tharisa's mine in the North West Province of South Africa.

Travel food outlet operator SSP Group said trading in January softened due to the Covid Omicron variant but was confident its recovery remained on track. The Upper Crust owner said recent weeks had been “more encouraging”, as curbs were lifted in the UK and some Continental European markets, with sales now trending positively again, driven mainly by strengthening trading in the Rail sector as commuter travel returns.

Media firm Future said on Thursday that it continued to perform well in the four months ended 31 January, with ongoing momentum in digital advertising more than offsetting exceptional year-on-year comparators in audience and eCommerce. Future stated trading in the period was in line with expectations, with good conversion to both profit and cash, and underpinned its upgraded full-year outlook, despite continued macro uncertainties and inflationary pressures.

Cranswick backed its full-year expectations on Thursday following a solid performance over the festive period. In an update for the 13 weeks to 25 December, the food producer said UK retail demand remained strong, reflecting a continued shift towards more in-home consumption following the pandemic.

Virgin Wines posted a jump in first-half revenue on Thursday but warned that revenue and profit for the year would be below expectations due to the uncertain trading and macro environment and increased cost pressures. In the six months to the end of December, revenue rose 55% to £40.5m, with core channels sales up 6.2% to £29.6m. The online wine retailer said it had continued to deliver "excellent" growth across its subscription schemes, with customers on its flagship WineBank service performing ahead of expectations, delivering a 28% increase in revenue.

JTC said annual results would meet expectations after a year of strong new business growth for the asset manager. New business rose 16% on an annualised basis to £20.9m and JTC said it was pleased with progress on integrating seven acquisitions made during the year to the end of December.

Real estate investment trust British Land has acquired three warehouses in Wembley for £157.0m, bringing its urban logistics development pipeline to over £1.0bn. British Land said on Wednesday that the assets represented "a development-led opportunity", which it stated aligns with its strategy of delivering new urban logistics space through the intensification and repurposing of existing buildings.

Water services company Severn Trent said on Wednesday that its "strong operational performance" was "evident" across all areas of its business. The FTSE 100-listed firm stated 90% of Severn Trent Water's customer outcome delivery incentive measures remained on or ahead of target, including 100% on all environmental measures, with the firm's guidance to deliver "at least £75.0m" in customer ODI rewards for the year remaining unchanged.

Miner and commodity trader Glencore on Wednesday reaffirmed full-year guidance as operations in 2021 were in line with expectations in a “challenging” environment. Copper production fell 5% to 1.20m metric tonnes last year and coal output declined 3% to 103.3m tonnes. Cobalt rose 14% while zinc fell 4%.

UK oil company Harbour Energy revealed on Wednesday that Phil Kirk had notified the board of his intention to step down as executive director, president and chief executive of its European operations at the end of the month. The FTSE 250-listed firm's outgoing CEO said: "It has been an honour to be part of the Harbour Energy story and, as I depart to consider other business opportunities, I am very proud of what we have achieved.

3i Infrastructure said income in the third quarter was as expected and it was on track to pay its target annual dividend. Income and non-income cash was £26m in the three months to the end of December compared with £24m a year earlier. The 2022 dividend is on track to rise 6.6% to 10.45p a share, the FTSE 250 company said.

UK cinema chain operator Cineworld on Tuesday said it had begun talks with former shareholders of its US Regal Entertainment division over a potential rescheduling of its payment obligations. The company in September said it would pay $170m to investors who were angry with the price they received when the company took over the US chain in 2017.

Oxford Biomedica's licensee for a Parkinson's disease treatment has pulled out of development and returned the rights to the UK company. Sio Gene Therapies told Oxford on Monday that it would stop work on AXO-Lenti-PD, a gene therapy programme for Parkinson's. This followed the departure of Sio's chief executive and its announcement that resources were constrained, Oxford said.

Housing and social care provider Mears Group said on Tuesday that it ended 2021 "strongly", with the group now expecting to report full-year revenues in excess of £870.0m, up from £806.0m in 2020, and adjusted pre-tax profits of £25.5m. Mears said its solid full-year financial performance had been driven by sustained higher volumes of work across the group and highlighted that despite operational challenges posed by the Covid-19 Omicron variant in December and January, it had seen "no material impact" on activity levels or service quality.

Advertising and media firm WPP has appointed Simon Dingemans to its board as a non-executive director, with immediate effect. WPP said on Monday that Dingemans will join the firm from The Carlyle Group, where he is a senior advisor, focussed on the healthcare sector and other investment opportunities in the UK.

Educational publisher Pearson on Monday said it had bought the remaining 80% of skills verification operator Credly it does not own for an undisclosed sum. Credly runs a platform for organisations, companies, educational institutions and learners to award digital credentials that verify an individual's skills.

British food producer Cranswick said on Monday that it had acquired dry dog food manufacturer Grove Pet Foods for an undisclosed sum. Cranswick stated the addition of Grove Pet Foods, which owns the Vitalin and Alpha Feeds brands and operates predominantly from Lincolnshire, represented a "platform for future growth" in the "attractive UK pet food market".

XP Power said it had bought the German firms FuG Elektronik and Guth High Voltage from Dr Simon Consulting for €39m in cash (£32.8m). The deal was funded using existing debt facilities and is subject to customary post-completion working capital adjustments, XP power, which develops and makes power solutions for the electronics industry, said on Monday.

Economic news

New car registrations rose 27.5% across the UK in January but the Society of Motor Manufacturers and Traders warned that registrations were also likely to grow at a slower than previously expected clip in 2022 as heightened living costs and ongoing supply problems weighed on sales. The SMMT lowered its full-year guidance for new car registrations to 15%. While better than last year, the expected growth would still leave new car registrations almost 18% below 2019's pre-pandemic level.

Growth in the UK construction sector hit a six-month high in January as cost pressures and worries about Omicron eased, according to a survey released on Friday. The IHS/Markit CIPS construction purchasing managers’ index rose to 56.3 from 54.3 in December. This marked the strongest rate out of output expansion since July last year. A reading above 50.0 indicates expansion, while a reading below signals contraction.

The UK retail sector got off to a sluggish start in 2022, industry data showed on Friday, despite a fall in Covid cases and the easing of restrictions. According to the latest BRC-Sensormatic IQ Footfall Monitor, total UK footfall was down 17.1% on January 2020, and up just 1.5 percentage points on December 2021.

The UK property market had its busiest January on record as buyer enquiries and homes for sale rose strongly, Rightmove said. Buyer demand increased 16% from a year earlier and 24% from January 2020 as households continued to rethink their property needs in light of the pandemic, the UK's biggest property website said.

The Bank of England has increased interest rates to 0.5%, it was announced on Thursday, as it looks to curb soaring inflation. The widely-expected 0.25 percentage point hike follows December’s decision to increase rates to 0.25% from a record low of 0.1%. It is the first time since 2004 that the central bank has opted to lift interest rates at two consecutive Monetary Policy Committee meetings.

The chancellor has set out a series of measures intended to help households tackle the soaring cost of living. Speaking shortly after energy regulator Ofgem announced average energy bills would rise by £693 this year, and the Bank of England increased the cost of borrowing, Rishi Sunak told MPs that the government would provide "direct support" for households.

The energy price cap will rise by more than 50% from 1 April, Ofgem confirmed on Thursday, causing average household energy bills to surge to around £2,000 a year. The energy regulator said the 54% hike would affect 22m households, with those on default tariffs paying by direct debit seeing an increase of £693, from £1,277 to £1,971.

Prices charged by UK service providers rose at the fastest pace for more than 25 years in January as business activity strengthened, a survey showed. About one in three service businesses increased their prices and only 3% reported a decline, according to the IHS Markit/CIPS UK purchasing managers' index. The increase was the highest on record since the survey began in 1996.

The UK construction sector expects to grow throughout the current year, an industry survey showed on Thursday, despite ongoing skills and material shortages. According to the latest RICS Construction and Infrastructure Monitor, a net balance of 33% of respondents said they had continued to see an increase in demand during the last three months of 2021. New infrastructure projects, specifically in the energy sector, were responsible for much of the increase in workloads.

The rate of price rises in UK shops almost doubled in January, adding to pressure on the cost of living with more increases to come, according to a survey. Shop-price annual inflation accelerated to a near-decade high of 1.5% from 0.8% a month earlier, the British Retail Consortium's survey showed. The rate of increase was higher than the six-month average rise of 0.1% and was the highest since December 2012.

International events

Equity strategists at Bank of America declared themselves to be "bearish" on equities, arguing that the 2021 inflation shock would reverberate in 2022 via an interest rate shock in the first half of the year followed by a "growth shock" in the back half of the same year. The result would be negative returns on credit and stocks, the strategy team led by Michael Hartnett said in a research report sent to clients.

German factory orders rose much more than expected in December, with domestic demand driving growth, according to figures released on Friday by Destatis. Orders were up 2.8% on the month following a revised 3.6% jump in November, beating expectations for a 0.5% increase.

The European Central Bank will not be rushed into interest rate hikes and observers shouldn't overdo it when speculating on possible hikes. In her press conference following Wednesday's decision, ECB chief, Christine Lagarde, said that risks to the outlook for prices were to the "upside", "particularly for the near-term", although inflation was then expected to decline "gradually" over the course of 2022.

The European Central Bank kept all its main policy levers at their current settings following Thursday's meeting of its governing council. As was announced at its December meeting, asset purchases under Pandemic Emergency Purchase Programme would stop at the end of March, even as purchases under its alternate Asset Purchase Programme were bumped up in order to ensure a smooth transition.

Services sector activity in the single currency area slowed further at the start of 2022 due to the drag from rising numbers of Omicron cases, the revised results of a closely-followed survey revealed. IHS Markit's euro area services sector Purchasing Managers' Index retreated from a reading of 53.1 for December to 51.1 in January (Preliminary: 51.2), its softest reading since March.

The Organisation of the Petroleum Exporting Countries and its main allies, or OPEC+ as they are collectively known, will raise their combined output of crude oil in March as expected. At their meeting on Wednesday, OPEC+ energy ministers agreed to go ahead with their previously announced plan to boost production by a total of 400,000 barrels per day to approximately 41.294m.

Private sector employment in the US unexpectedly fell in January amid a surge in Covid infections, according to the latest data from ADP. Employment declined by 301,00 from December, versus expectations for a 207,000 jump. Meanwhile, the December total of jobs added was revised from 807,000 to 776,000.

The cost of living in the Eurozone nudged higher unexpectedly at the start of 2020 as energy and unprocessed food prices jumped sharply. According to Eurostat, in seasonally adjusted terms, the year-on-year rate of consumer price inflation picked up from 5.0% in December to 5.1% for January.

The Covid-19 vaccine being developed by Spain's Hipra has shown a "high efficacy" against the new Omicron variants and is now entering third phase clinical trials. Indeed, Hipra's head of research and development reportedly said the vaccine achieved better results against Omicron than Pfizer's booster shot.

The number of job openings in the US increased a little at the end of 2021, even as hiring and voluntary separations dipped. According to the US Department of Labor, job openings grew at a month-on-month pace of about 1.4% to reach 10.775m.