Weekly review

Equity view

China's health authority has granted GSK's Blenrep blood cancer treatment with a so-called 'Breakthrough Therapy Designation' (BTD), which is designed to speed up development of investigational drugs. The award was based on results from GSK's phase III DREAMM-7 phase III clinical trial which evaluated Blenrep combined with BorDex for the treatment of relapsed or refractory multiple myeloma, a type of bone marrow cancer.

Infrastructure group Balfour Beatty said on Friday that it has been awarded a £363m contract by National Grid to deliver the Bramford to Twinstead Reinforcement project. The contract has been awarded through National Grid's RIIO-2 framework. Balfour said that once completed, the project will reinforce the electricity network in East Anglia and "ensure that it can continue to reliably and securely transport the cleaner, greener electricity required for the UK's transition to Net Zero".

Britain’s competition regulator on Friday said Vodafone and Hutchison Three’s £15bn merger could lead to higher prices for consumers and a “substantial" weakening of competition. The Competition and Markets Authority cited the supply of mobile telecommunications services to end customers and the supply of wholesale as two areas of concern but said it would explore solutions with the two companies before it makes its final decision in December.

Paddy Power owner Flutter Entertainment said on Friday that it has bought a 56% stake in NSX Group, a Brazilian operator of the Betnacional brand, for around $350m. Flutter said the deal fully aligns with its strategy to invest in leadership positions in international markets, "securing a podium position for Flutter on completion in the regulating and fast-growing Brazilian market".

Online trading business IG Group said on Thursday that total revenues had grown in the three months ended 31 August. IG Group said total revenues were up 15% year-on-year at £278.9m, reflecting higher revenue per client supported by elevated volatility across a range of asset classes in early August. Total active clients, however, slipped 1% to 263,000.

Renishaw reported solid full-year strategic progress in its final results on Thursday, with revenue reaching record levels, although profits slid. The FTSE 250 company posted a modest revenue increase of 0.4%, reaching a record £691.3m, supported by a strong performance in the final quarter. However, adjusted profit before tax dropped 13% to £122.6m, impacted by currency fluctuations and rising employee costs.

Business-critical services provider Marlowe intends to demerge its occupational health division from Marlowe to form Optima Health as an independent company to be admitted to trading on the AIM market of London Stock Exchange. Marlowe said on Thursday that the decision followed a strategic review of the company and would be implemented by way of a dividend in specie of ordinary shares in the capital of Optima Health to shareholders.

NCC Group said on Thursday that trading in the fourth quarter was better than expected and lifted its outlook, sending shares in the cyber security firm surging. For the four months to the end of September, the company had guided to overall revenue of about £100m and adjusted operating profit of approximately £3.5m. However, it said on Thursday that during the period, trading in the cyber security division was better than expected in what is historically a quieter period of the calendar year.

Rightmove has rejected a £5.6bn takeover proposal from Australian peer REA Group, saying it undervalues the UK property platform's future prospects. On 5 September, REA offered 305p in cash and 0.0381 new REA shares for each Rightmove share, which implied an offer value of 698p. This represents a 26% premium to the closing price on 30 August – the last trading day before REA confirmed speculation about its intentions.

Pest-control giant Rentokil Initial has scaled back its profit guidance for the full year after weaker-than-expected summer trading in North America. The company, which had already reduced profit targets in July due to additional investments in the second half, said that revised growth expectations and higher costs mean adjusted operating profits would be £50m lower than current expectations.

Homeware retailer Dunelm reported a rise in full-year profit and sales on Wednesday despite a "softer" market. In the 52 weeks to 29 June, pre-tax profit increased 6.6% to £205.4m, while sales rose 4.1% to £1.7bn. Dunelm pointed to growth across both stores and online, with digital sales now comprising 37% of total sales, up from 36% a year earlier.

Ascential, the B2B media and events company that's being taken over by Informa, announced on Wednesday that the sale of part-owned Hudson MX is unlikely to yield a special dividend for shareholders. Atlanta-based media tech group Hudson MX, in which Ascential holds a 36.5% stake, has been up for sale since October 2023 but talks are still ongoing with multiple parties.

Abrdn has appointed its former finance head Jason Windsor as its new official chief executive, after he emerged as the "unanimous choice" to lead the investment company following the exit of Stephen Bird in May. Windsor has been serving as interim CEO over the past five months since the firm announced a strategic repositioning to a specialist asset manager and digitally focused wealth manager, which resulted in the abrupt departure of Bird after four years.

Wickes posted a drop in interim profit on Tuesday as revenues fell, but backed its profit expectations for the year as it said trends were improving. In the 26 weeks to 29 June, adjusted pre-tax profit declined to £23.4m from £31.1m in the same period a year earlier, with revenues down 3.4% to £799.9m. Wickes said continued volume-driven growth in the retail segment was offset by like-for-like declines in Design & Installation. On a statutory basis, pre-tax profit ticked up to £22.9m from £21.1m.

Schroders announced the appointment of Richard Oldfield as its new group chief executive on Tuesday, effective from 8 November, pending regulatory approval. The FTSE 100 firm said Oldfield would take over from Peter Harrison, who had held the position since 2016. It said Oldfield would bring a wealth of experience from his 30-year career at PwC, where he held senior roles such as network vice-chairman and global markets leader.

Hill & Smith said on Tuesday that it has bought Whitlow, a designer and manufacturer of structural steel and substation components for the US electrical infrastructure market, for $30.2m (£23m). Founded in 1963 and based in Elberton, Georgia, Whitlow serves customers' utility infrastructure needs across the Southeast of the US, with a focus on Georgia, North Carolina, South Carolina, Virginia and Tennessee.

Barratt Developments, UK government agency Homes England and Lloyds Bank have formed a joint venture master developer platform that will focus on large sites to deal with Britain’s housing shortfall. Each partner will invest up to £150m in the venture, to be called the MADE Partnership to focus on multiple large scale, residential-led developments from 1,000 to more than 10,000 homes “along with a variety of community facilities and employment uses”.

Magners cider maker C&C Group said first-half earnings had been in line with expectations, with net revenues expected to be down 3%. Underlying operating profit in the six months to August 31 was expected in the range of €39m-€41m, reflecting the phased rebuilding of C&C’s distribution business profitability after a bungled software upgrade at its Matthew Clark and Bibendum businesses hit earnings last year.

Specialist healthcare property investor and developer Assura said on Monday that it has appointed Steven Noble to the newly-created role of chief investment officer to support the business' short and long-term growth strategy. Noble will join the company with immediate effect and will be responsible for implementing Assura's investment strategy across all healthcare markets, including delivery of capital recycling initiatives.

Sports betting and gambling giant Entain reported better-than-expected second-half results in an update on Monday, with online net gaming revenue (NGR) showing stronger growth than forecast. The FTSE 100 company said its UK and Ireland online operations returned to year-on-year growth sooner than anticipated, supported by increased volumes and margins in sports betting.

Economic news

The British public’s expectations for inflation have eased to a three-year low, a Bank of England survey showed on Friday. According to the central bank’s latest quarterly inflation attitudes survey, inflation expectations for the coming year fell from 2.8% in May to 2.7% in August, the lowest reading since August 2021.

National debt is on an "unsustainable path", the fiscal watchdog warned on Thursday, with climate change and an ageing population set to weigh heavily on public finances if left unaddressed. Publishing its latest fiscal risks and sustainability report, the Office for Budget Responsibility said the UK economy had been rocked by a series of "extraordinary" events: a global financial crisis, pandemic and surge in energy costs.

House prices sparked for the first time in nearly two years in August, industry research showed on Thursday, boosted by declining mortgage rates and improving confidence in the market. According to the latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors, the house prices net balance was 1, a significant improvement on July’s -18 and the first time prices have moved into positive territory since October 2022.

British airport Heathrow said on Wednesday that it had set a new monthly record for passenger numbers in August, with 7.97m people passing through its gates last month. Heathrow said passenger numbers were up 5.5% year-on-year in August for a fourth-consecutive month of record traveller volumes. On 18 August, Heathrow recorded its busiest day on record, with 269,000 passengers using the airport.

The UK economy continued to stagnate in July, according to figures released on Wednesday by the Office for National Statistics. There was zero growth in gross domestic product, unchanged on June. Economists had been expecting 0.2% growth. Output in the services sector grew 0.1% in July following a 0.1% decline in June. Meanwhile, production output fell 0.8% following 0.8% growth in June and construction output fell 0.4% following 0.5% growth in June.

UK grocery inflation fell in the four weeks to 1 September, according to data released by Kantar on Tuesday. Grocery price inflation declined to 1.7% from 1.8% in the previous four-week period. But Kantar said that despite the drop, nearly 60% of households remain worried about the rising cost of their shopping.

UK pay growth cooled in the three months to July, while the unemployment rate fell to a six-month low, according to figures released on Tuesday by the Office for National Statistics. The unemployment rate declined to 4.1% from 4.2% in the previous three months, in line with economists’ expectations. Meanwhile, growth in average earnings fell to 5.1%, hitting a two-year low. Annual growth including bonuses was 4%.

The UK government is close to finalising a £1.25bn deal with Tata Steel to support the transition of its Port Talbot steelworks to more environmentally-friendly operations, it emerged on Monday. According to Sky News, business secretary Jonathan Reynolds was set to update Parliament on the agreement. It said the deal, negotiated after Labour's general election victory, included a £500m government grant aimed at helping the Indian-owned company shift from traditional blast furnaces to electric arc furnaces.

UK businesses were experiencing a sustained period of growth, driven by robust performance in the services sector, despite ongoing challenges in the labour market, according to a fresh report from BDO on Monday. The advisory and accountancy firm’s Business Trends report highlighted a fourth consecutive month of business confidence remaining above historic growth levels, boosted by expectations of further interest rate cuts.

International events

Industrial output in the eurozone fell as expected in July, with further weakness expected into the second half of the year as the manufacturing sector across the region continues to struggle. Industrial production contracted by 0.3% in July, after a revised flat reading in June. This was in line with the consensus forecast and marked the third time over the past four months that output has declined.

A former top US central bank official said the size of the Federal Reserve's first interest rate cut in the current cycle was still up in the air. In remarks made at a forum organised by The Bretton Woods Committee, William Dudley said he saw a "strong" case for a 50 basis point reduction when the Federal Open Market Committee next met on 17-18 September.

The European Central Bank cut interest rates on Thursday by 25 basis points to 3.5%, as widely expected, pointing to a slowdown in inflation. This marked the second cut this year, after the ECB reduced interest rates in June for the first time in five years, from 4.0% to 3.75%.

Americans lined up for unemployment benefits at an accelerated pace in the week ended 7 September, according to the Department of Labor, in line with market expectations. US initial jobless claims rose by 2,000 week-on-week to 230,000, well above average seen earlier in the year and reinforcing the ongoing trend of a softening labour market.

Global demand for oil is slowing "sharply", the International Energy Agency said on Thursday, as it trimmed annual growth forecasts. The Paris-based body said demand rose by 800,000 barrels per day (bpd) year-on-year in the first half of 2024, significantly lower than the 2.3m bpd recorded in 2023. It was also the lowest since 2020.

The rate of increase in the cost of living in the US slowed sharply last month, as food inflation slowed and energy prices fell. Core consumer price gains on the other hand picked up a tad. According to the US Department of Labor, the rate of increase in the country's headline Consumer Price Index slowed from 2.9% in July to 2.5% for August. Economists had pencilled in a reading of 2.6%.

Capital Economics boosted its gold price forecast for the end of the following year, although it was expecting a bumpy ride. In a research note sent to clients, the economic consultancy raised its end-2025 price forecast for the yellow metal to $2,750/oz.. However, they added that "But even though we now forecast gold prices to end next year about 10% higher than their current level, the path between now and then is unlikely to be smooth.

The Organization of the Petroleum Exporting Countries has reduced its forecast for oil demand this year for the second straight month as it attempts to balance the market in the face of falling prices. The cartel said oil demand would grow by just 2.03m barrels per day in 2024, down from the 2.11m b/d forecast given in August.

German inflation was confirmed at 1.9% in August, its lowest level in three and a half years, according to final estimates from Destatis on Tuesday. The year-on-year change in consumer prices eased from 2.3% in July and matched the preliminary estimate released two weeks ago.

China's trade surplus rose last month as exports surged to their highest in almost two years, while imports barely changed, raising concerns over ongoing weak domestic demand. The trade balance was registered at 649.34bn yuan ($91.02bn) in August, up from CNY601.98bn in July, the General Administration of Customs reported on Tuesday. In dollar terms, the surplus rose to $91.02bn, comfortably ahead of the $83.90bn expected by the market.

Eurozone investor sentiment has weakened again this month, as worries grow over the state of the German economy and political situation, according to a survey published on Monday. The investor confidence index for the single currency bloc fell to -15.4 in September from -13.9 in August, according to behavioural research institute Sentix. It was the third consecutive fall and reached the lowest since January 2024.