Weekly review

Equity view

Berkeley Group reported a pre-tax profit of £275.1m for the six months ended 31 October on Friday, a 7.7% decline compared to the prior year. The FTSE 100 housebuilder said basic earnings per share fell by 5.8% to 186.6p, while its operating margin improved by 0.7 percentage points to 20.2%. Despite the softer profit figures, Berkeley reaffirmed its guidance for both the 2025 and 2026 financial years.

Metals and critical minerals explorer Rockfire Resources has raised £0.66m, it announced on Friday, to fund the development of its Molaoi project in Greece and support the company’s working capital requirements. The London-listed company said the funds were raised through a placing of 550 million new shares at a price of 0.12p each.

AIM-listed food producer Camellia has launched a £9m share buyback plan to return capital to shareholders following the completion of the $100m sale of its stake in Bermuda and Caribbean-focused insurer BF&M. The sale, first announced in June 2023, saw Camellia dispose of its 36.9% stake to Bermuda Life Insurance, part of the Argus Group, generating a net profit of £10.7m for the company.

Mike Ashley’s Frasers Group said on Friday that it was launching a voluntary offer for all the shares in Norwegian sporting goods retailer XXL that it does not already own at 10 Norwegian kroner per share. The offer values XXL at approximately NOK246.36m. Frasers is currently the second largest shareholder in XXL with an interest of just under 26%.

DS Smith posted a slide in half-year earnings on Thursday, hit by "challenging" market conditions, including weaker prices and higher costs. The paper and packaging firm said revenues in the six months to 31 October fell 4% to £3.4bn, while adjusted operating profits slumped 39% to £221m. Like-for-like box volumes grew by 2%, however.

The Competition and Markets Authority has cleared the proposed merger between Vodafone and Three on the proviso that the companies promise to invest billions to roll out a combined 5G network across the UK. The competition regulator also said that the telecoms companies, which first announced their tie-up 18 months ago, should also cap certain mobile tariffs and data plans for three years, protecting customers from short-term price rises.

Wood Group said on Thursday that it has secured three "major" agreements with BP to provide engineering and project delivery services for their capital projects worldwide. The contracts cover a new master services agreement (MSA) for engineering, procurement and construction management (EPCm) services as well as two extensions to existing long-term frameworks for the provision of conceptual engineering and Pre-FEED/FEED (front end engineering and design).

Investment platform AJ Bell reported record full-year financial results on Thursday, with revenue rising 23% year-on-year to £269.4m, while profit before tax increased 29% to £113.3m. The FTSE 250 company said its pre-tax profit margin improved to 42% for the 12 months ended 30 September, from 40.2% a year earlier, bolstered by an increased revenue margin of 31.6 basis points and operational efficiencies. Diluted earnings per share climbed 23% to 20.34p.

Financial services and investment group Legal & General has maintained profit guidance for the full year and hinted at more returns for shareholders than previously announced. Alongside a "deep dive" statement covering its Institutional Retirement division on Wednesday, L&G said it expects to return to shareholders a proportion of the capital not deployed on strain this year.

Rio Tinto on Wednesday forecast higher consolidated mined copper production for the 2025 financial year driven by higher output from its Oyu Tolgoi operation in Mongolia and also faced calls from hedge fund Palliser to scrap its dual listing structure. The miner said it expected copper production of 780,000-850,000 tonnes, compared with 660,000-720,000 tons expected in fiscal 2024.

Energy suppliers Centrica and EDF have announced the extension of the lives of four operational nuclear power stations, which they say will help maintain grid stability in the UK. The advanced gas-cooled reactor stations at Heysham 1 and Hartlepool are now expected to generate electricity until March 2027, one year later than planned, while generation at Heysham 2 and Torness has been extended by two years to March 2030.

Power generation company Drax said chief financial officer Andy Skelton was retiring his position and as an executive director. Skelton, who said he was retiring from corporate life “to spend more time with my family and pursue other personal interests” will remain in post until a successor is in place.

Upper Crust and Ritazza owner SSP reported a jump in full-year profit and revenue as good performances in North America and the UK helped to offset a disappointing performance in Continental Europe. In the year to 30 September, pre-tax profit rose 35% to £119m, while earnings before interest, tax, depreciation and amortisation grew 23% to £343m. Revenue was up 17% at £3.4bn, with like-for-like revenue 9% higher.

HgCapital Trust announced the sale of bookkeeping automation solutions provider Dext Software to accountancy, education management, HR, and payroll specialist Iris Software Group on Tuesday. The FTSE 250 company said the terms of the transaction remain undisclosed, with completion subject to customary closing conditions.

Derwent London announced the acquisition of the remaining 50% stake in its 50 Baker Street W1 project from joint venture partner Lazari Investments on Tuesday, for £44.4m, equating to £370 per square foot of the consented floor area. The FTSE 250 company said the deal represented a 4.2% net initial yield based on the current passing income of £2m per annum, attributable to the acquired 50% share.

Shares in Victrex Group rallied in early trading on Tuesday, despite a slide in annual profits, after the polymer specialist said 2025 had got off to a "solid" start. The FTSE 250 firm said group sales volumes in the year to 30 September rose 4%, largely in line with expectations, to 3,731 tonnes. Revenues fell 5% to £291m, however, due to destocking in its medical division, while underlying pre-tax profits slid 26% to £59.1m.

Begbies Traynor, the financial advisory, property services and corporate restructuring specialist, has announced the bolt-on acquisition of White Maund Insolvency Practitioners. White Maund, which was purchased for an undisclosed amount, is an independent firm specialising in financial and business reconstruction and rescue, as well as formal insolvency procedures.

Infrastructure investor International Public Partnerships (INPP) reaffirmed its 2024 dividend target of 8.37p per share in a portfolio update on Monday, making for a 3% increase from 2023 and maintaining its record of annual dividend growth since its 2006 initial public offering. The FTSE 250 firm said that from 2025, dividend payments would shift from semi-annual to quarterly, enhancing income predictability for shareholders.

Early-years brand Mothercare swung into the red in the first half after a sharp decline in revenues, but hopes that its new £30m joint venture in South Asia and recent refinancing will support growth going forward. The company, which primarily operates a franchise partnership model, said in October that it has entered into a new partnership with India's Reliance Brands, covering markets in India, Nepal, Sri Lanka, Bhutan and Bangladesh.

Topps Tiles hit back on Monday after its largest shareholder MS Galleon criticised the tile specialist for a series of "costly blunders" and called on the board to overhaul its senior management and strategy. According to The Times, Piotr Lipko, managing director of the Austrian investor MS Galleon, wrote to Topps Tiles’ chairman Paul Forman last week claiming that management had shown a "complete failure" to adapt to the changing retail landscape, citing its comparatively small online business.

Economic news

UK house prices rose in November for the fifth month in a row to hit a record high of £298,083, according to figures released on Friday by Halifax. Prices ticked up 1.3% on the month following a 0.4% jump in October. Meanwhile, annual house price growth was 4.8% in November - the strongest level since November 2022 - following 4% growth the month before.

S&P Global's UK construction PMI rose to 55.2 in November, up from 54.3 in October and ahead of expectations for a reading of 53.4. S&P Global said last month's upturn was principally a result of the strongest rise in commercial work seen for two-and-a-half years. However, residential work declined at the steepest rate since June.

Business optimism across UK service providers sank to a two-year low in November, a closely-watched survey showed on Wednesday, on mounting concerns about higher costs. The final S&P Global UK services PMI business activity index came in at 50.8 in November. While still in positive territory, it was down on October’s 52.0 and the lowest reading for 13 months. A reading above the neutral 50.0 benchmark indicates growth, while one below it suggests contraction.

The governor of the Bank of England has said that four more interest-rate cuts are on the cards for next year if the trajectory of the UK economy continues as expected. After lowering the Bank Rate by 25 basis points to 4.75% in November – the Bank's second 25bp reduction since August – governor Andrew Bailey predicted on Wednesday that any future cuts would be "gradual".

The government has announced plans to bring train operators South Western Railway (SWR), c2c and Greater Anglia under public ownership next year, as the first parts of its sweeping nationalisation of the UK rail network. The move, a key campaign pledge, was designed to improve service reliability and channel fare revenue into operations rather than shareholder payouts, potentially saving £150m annually, according to the Department for Transport (DfT).

Fresh retail sales data on Tuesday morning showed a sharp decline in sales in November, reflecting a challenging time for the retail sector due to the later timing of Black Friday. The latest BRC-KPMG retail sales monitor, covering the four weeks from 27 October to 23 November and thus not including Black Friday on 29 November, revealed a 3.3% year-on-year drop in sales.

UK manufacturing activity fell to a nine-month low in November as new orders fell, according to a survey released on Monday. The S&P Global manufacturing purchasing managers’ index fell to 48.0 from 49.9 in October. This was below the flash estimate of 48.6 and below the 50.0 mark that separates contraction from expansion.

The UK government is poised to decide early next year whether to shift the release of key economic data to within financial market hours, it emerged on Monday, in response to concerns from traders and market participants over volatility caused by the current pre-market timing. According to Bloomberg, the Office for Statistics Regulation (OSR) was leading a review with input from the Office for National Statistics (ONS) and other stakeholders.

High street sales plunged in November, falling at their steepest levels in nearly four years, with retailers bracing for a tough Christmas selling period amid an atmosphere of “economic anxiety”. That’s according to BDO, which released the results of its monthly High Street Sales Tracker on Monday, which showed sales were down 5.8% in November, compared with an already weak November 2023 when sales fell 0.3% year-on-year.

UK companies expect 2025 to get off to a poor start, an industry survey showed on Monday, weighed down by rising labour costs and weak sentiment. According to the latest Confederation of British Industry Growth Indicator, private sector firms expect activity to fall in the three months to February 2025, with a weighted balance of -10. It is the first time this year growth expectations have been negative.

International events

Hiring in the US rebounded a tad more strongly than expected last month, once the impact from hurricanes and strikes in October had passed.According to the US Department of Labor, in seasonally adjusted terms non-farm payrolls grew by 227,000 in November. Economists' median forecast was for an increase of 214,000.

Economic output in the euro area rose more quickly over the three months ending in September than over the preceding quarter, as Germany skirted recession and aggregate demand in Ireland spiked. According to Eurostat, gross domestic product in the single currency area expanded at a quarter-on-quarter pace of 0.4%, after growth of 0.2% during the three months to June. Key to that outcome, German GDP rebounded by 0.1% on the quarter after a 0.3% drop during the previous three months.

German industrial production fell unexpectedly in October, due to declines in energy production and the automotive industry, according to official data published on Friday. Production decreased 1% month on month and 4.5% year on year, the federal statistics office said. Economists had forecast a 1.2% rise. "This means that the industrial economy is still in a downturn," said the economy ministry in a statement.

Oil prices were up on Thursday as OPEC+ members agreed to extend supply cuts for three months to the end of March after their recent non-ministerial meeting. Eight members of the enlarged OPEC group, led by Saudi Arabia and Russia, said the would keep voluntary production cuts of 2.2 million barrels per day in place until the end of March 2025, with the cuts gradually phased out until the end of September 2026 to “support market stability”, they said in a statement after a virtual meeting.

Americans lined up for unemployment benefits at a slightly accelerated pace in the week ended 30 November, according to the Labor Department, hitting 224,000, up from 213,000 in the previous week and ahead of expectations of 215,000. However, even with the increase, last week's reading still adds weight to the belief that the US labour market remains at historically strong levels despite the aggressive tightening cycle implemented by the Federal Reserve in recent quarters, giving it room to slow the pace of monetary loosening if inflation were to remain stubbornly high.

The Eurozone’s construction sector slowed in November, a closely-watched survey showed on Thursday, heaping more pressure on the bloc’s faltering economy. The latest HCOB Eurozone construction PMI total activity index was 42.7, down on October’s 43.0. A reading above 50.0 indicates growth while one below it suggests contraction.

Factory orders in Germany slipped back in October after an upwardly revised surge the previous month, according to figures out on Thursday from Destatis. The Federal Statistical Office reported a 1.5% decrease in German factory orders over October, slightly less than the 2.0% decline expected by analysts.

The Institute for Supply Management's November services PMI declined to 52.1 in November, down from 56 in October and well and truly short of expectations for a reading of 55.5. Last month's reading pointed to the slowest growth in the services sector in three months, driven by falling business activity, new orders, employment and supplier deliveries. Inventories and order backlog also declined, while price pressures increased slightly.

Private sector employment in the US rose less than expected in November, according to figures released on Wednesday by ADP. Employment increased by 146,000 from October, versus expectations for a 163,000 jump. October’s gain was revised down from 233,000 to 184,000. Small businesses with fewer than 50 employees shed 17,000 jobs, while medium businesses with between 50 and 499 employees added 42,000 jobs.

US mortgage applications rose 2.8% in the week ended 29 November, according to the Mortgage Bankers Association. While last week's increase slowed from the previous week's 6.3% surge, mortgage applications still registered a fourth consecutive weekly Applications to refinance a mortgage retreated from 501.7 points to 498.50 points, while applications to purchase a home surged to 161.50 points from 152.90 points.