Weekly review

Equity view

Housebuilder Berkeley Group backed its full-year guidance on Friday as it said trading in the first four months of the year has been stable. In an update for the period from 1 May to the end of August ahead of its annual meeting, the company said it was on track to achieve its pre-tax earnings guidance for the full year ending 30 April 2025 of £525m. It added that 90% of this is already secured through exchanged sales contracts.

GSK announced positive results from its phase three ‘MATINEE’ clinical trial on Friday, which evaluated the effectiveness of ‘Nucala’, or mepolizumab, in treating chronic obstructive pulmonary disease (COPD). The FTSE 100 pharmaceutical giant said Nucala, a monoclonal antibody that targets interleukin-5 (IL-5), was tested in COPD patients with chronic bronchitis and emphysema who were already receiving inhaled maintenance therapies.

Cybersecurity specialist Darktrace announced on Friday that Poppy Gustafsson was stepping down as chief executive officer, effective immediately. The FTSE 100 company said Jill Popelka, currently its chief operating officer, would assume the role of CEO and also join its board of directors.

Nationwide Building Society’s £2.9bn takeover of Virgin Money UK has received regulatory approval, it was announced on Friday. Both the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority have backed the deal, an unusual takeover of a listed bank by a member-owned building society.

Housebuilder Vistry announced a further £130m share buyback on Thursday as it posted a 7% increase in first-half pre-tax profit. In the half year to 30 June, adjusted pre-tax profit rose to £186.2m from £174m in the same period a year earlier, with total completions up 9.1% to 7,792. Vistry hailed "good demand" across its Partner Funded markets.

Currys posted a jump in sales on Thursday as the electricals retailer took a nearly 50% share of the UK laptop market. In an update for the 17 weeks to 24 August, Currys said group like-for-like sales rose 2%, with LFL sales in the UK and Ireland up 5%. In the Nordics, however, the retailer said the consumer remained "subdued", with LFL sales down 2%.

Self-storage business Safestore reiterated its full-year earnings guidance on Thursday as it reported flat Q3 revenues. Safestore posted revenues of £56.3m for the three months ended 31 July, only slightly lower than the £56.5m reported at the same time a year earlier when it also booked an insurance premium tax linked to the disposal of customer-goods insurance, which was not repeated in FY24.

Communications watchdog Ofcom said on Thursday that it will assess whether certain changes to Royal Mail's Second Class letter delivery would meet postal users' needs, ahead of consulting on proposals in early 2025. Ofcom stated that while first-class post will remain at six days a week, it suggested moving towards second-class letters being delivered within three working days but not on Saturdays, one of its "modernisation" proposals from back January, enabling Royal Mail to "improve reliability, make substantial efficiency savings, and redeploy its existing resources to growth areas such as parcels".

Segro said on Wednesday that it has agreed to buy rival Tritax EuroBox in a deal with an implied enterprise value of around £1.1bn including debt. Under the terms of the agreement, Tritax EuroBox shareholders will be entitled to receive 0.0765 new Segro shares for each of their shares and a dividend of 1.25 cents per share for the quarter ending 30 September 2024.

UK home and car insurer Direct Line returned to profit but missed earnings expectations for the half-year as sharp price hikes saw customers shop for better deals. The company on Wednesday reported an operating profit of £63.7m, compared with a loss of £76m a year earlier, but well below company-compiled estimates of £85m.

Industrial thread maker Coats Group said it had completed de-risking its UK defined benefit pension scheme by purchasing a £1.3bn bulk annuity policy. Coats said the buy-in was "the final and most significant step in Coats' fully insuring its UK pension obligations" and would also give it the option to remove the scheme fully from the group's balance sheet in the future "at very limited further administrative cost".

Hilton Food Group reported strong first-half profit growth and increased volumes on Wednesday, although revenue slid more than 8% on a statutory basis. The FTSE 250 company saw a 3.2% rise in volumes and a 1% increase in revenue on a like-for-like basis, despite challenges from raw material price deflation in the Asia-Pacific region.

Luxury timepiece seller Watches of Switzerland said it was on track to meet annual guidance after trading for the first 18 weeks of the financial year had been in line with expectations. The company on Tuesday said demand for key luxury brands, particularly products on registration of interest lists, remained strong in both the UK and US markets, outstripping supply.

Hungary-based budget carrier Wizz Air reported a 1% rise in passenger numbers in August – setting a new record - although capacity fell due to continued groundings of aircraft using Pratt & Whitney GTF engines. Wizz carried 6.2 million passengers during the month at an improved load factor of 95.4% versus 94.1% last year despite operated seat capacity being down 0.4% year on year due to the groundings.

Packaging firm DS Smith said on Tuesday that overall trading for the current financial year was in line with management’s expectations. In a brief AGM trading statement, it said "the market and business trends described in the outlook statement contained in our financial results for the year 30 April 2024 have continued".

Budget airline Ryanair reported record passenger numbers for August on Tuesday, up 8%. Traffic rose to 20.5 million from 18.9m in the same month a year earlier, while the load factor - which gauges how full the planes are - was stable at 96%.

Australian real estate advertising company REA Group has confirmed speculation that it is considering a possible cash and share offer for UK property platform Rightmove. REA, majority owned by Rupert Murdoch's News Corp, said in a statement on Monday that it sees "clear similarities" between the two groups, but has not yet approached, nor had any discussions with, Rightmove regarding any potential offer.

LondonMetric, the FTSE 250-listed real estate group, has announced a shake-up of its portfolio which includes £70m of warehouse acquisitions and £50m of non-core disposals. The company said on Monday that it has bought seven warehouses, comprising a regional logistics warehouse in Avonmouth let to Farmfoods, an urban logistics park in Wednesbury, and five trade warehouses across England let to building materials tenants.

The share price of Vertu Motors was in reverse on Monday after the car dealer reported a weaker environment for new car sales, which it said was offset by resilient pricing in the used vehicle market. In a trading update for the first five months of its fiscal year, the company said full-year adjusted profits should be in line with current market forecasts.

Self-storage operator Big Yellow Group announced progress on two major London projects on Monday, securing planning consent for a total of 307,000 square feet of storage space across two locations. The FTSE 250 firm said it received approval at appeal for a 176,000-square-foot development adjacent to the Kensington Olympia events centre, which was currently undergoing a £1.3bn redevelopment.

Economic news

UK house prices edged up to a two-year high in August as confidence picked up amid easing interest rates, according to figures released by Halifax on Friday. Prices rose 0.3% on the month following a 0.9% increase in July.

The Competition and Markets Authority has launched an investigation into Ticketmaster following the sale of tickets for legendary British rock band Oasis' upcoming reunion tour, including just how the company's controversial "dynamic pricing" may have been used. The CMA will look into whether Ticketmaster's sale of Oasis tickets may have breached consumer protection law, with a particular focus on whether the company engaged in "unfair commercial practices", whether people were put under pressure to buy tickets within a short period of time and at a higher price than they understood they would have to pay, and whether people were given "clear and timely information" to explain that tickets could be subject to so-called "dynamic pricing" with prices changing depending on demand, and how this would operate.

New car registrations fell slightly across the UK in August, according to the Society of Motor Manufacturers and Traders, as buyers held off until next month's new number plates. The SMMT said new car registrations fell roughly 1.3% year-on-year to 84,575 last month and also cautioned that September car sales would be "critical", with this month seeing the release of the new 74 number plates.

The UK construction sector's recovery continued in August, a closely-watched survey showed on Thursday, although the rate of expansion eased. The latest S&P Global UK construction purchasing managers' index was 53.6, below forecasts for 54.9 but comfortably above the neutral 50.0 level. A reading below 50.0 suggests contraction, while one above it indicates growth.

The UK’s payments regulator has proposed slashing the maximum amount banks and fintechs would have to reimburse fraud victims after industry pressure to review the cap. Under current rules laid down by the Payment Systems Regulator (PSR) banks and fintechs have to reimburse victims of authorised push payment (APP) fraud up to a limit of £415,000 per claim from October 7.

Financial watchdog The Financial Conduct Authority has encouraged account providers to do more to support those who want a bank account but don't have one, such as working with homeless charities to tailor their support to the needs of customers in vulnerable circumstances. The FCA found that several providers could make it easier to apply for a simple account and has asked account providers to review their overall approach to denials and closures – and particularly to ensure that vulnerable consumers aren't losing out.

Business activity in the UK picked up in August at its fastest pace since April, according to a survey released on Wednesday. The S&P Global purchasing managers' index composite output index rose to 53.8 from 52.8 in July. Meanwhile, the services PMI business activity index came in at 53.7 in August, up from 52.5 the month before and above the neutral 50.0 mark that separates contraction from expansion for the tenth consecutive month.

Retail sales were higher than last year in August despite already strong comparatives in 2023, though growth was relatively subdued amid a "challenging" environment that's likely to last until the end of the year, according to a closely watched retail barometer released on Tuesday. The British Retail Consortium-KPMG Retail Sales Monitor for August showed a 1% year-on-year increase in UK retail sales, against an increase of 4.1% in August 2023.

UK manufacturing activity grew at its fastest pace in more than two years in August, according to a survey released on Monday. The S&P Global manufacturing purchasing managers’ index rose to a 26-month high of 52.5 from 52.1 in July, in line with the flash estimate. A reading above 50.0 indicates expansion, while a reading below signals contraction.

International events

The Eurozone economy expanded only marginally in the second quarter, official data showed on Friday, as growth struggled to take hold. According to Eurostat, the European Union’s statistical office, seasonally-adjusted GDP increased by just 0.2% in the second quarter in both the Eurozone and wider region.

German industrial production fell much more than expected in July, according to data released on Friday by Destatis. Production declined by 2.4% on the month, having risen 1.7% in June, and versus expectations for a 0.3% decline. On the year, industrial production fell 5.3% in July following a 3.7% decline the month before.

Americans lined up for unemployment benefits at a decelerated pace in the week ended 31 August, according to the Department of Labor. Initial unemployment claims dropped by 5,000 week-on-week to 227,000, a seven-week low and below market expectations for a reading of 230,000.

There was a surge in layoff announcements at US companies last month, while hiring plans were at their lowest ebb ever recorded, the results of a survey revealed. According to Challenger, Gray & Christmas, US companies made 75,891 job cut announcements during the month of August, nearly tripling July's tally. In comparison to a year before, layoff announcements were up by 1%, but 3.7% lower year-to-date.

Construction activity in the eurozone remained in the doldrums during August with a sharp fall in new orders and rising prices causing concern as employers laid off staff, according to a survey published on Thursday. The HCOB eurozone Construction purchasing managers index was unchanged from July's six-month low of 41.4, signalling a steep reduction in total construction activity across the single currency area - a mark below 50 indicates contraction. Activity has now fallen in each of the last 28 months.

The Bank of Canada cut its benchmark rate on Wednesday to 4.25% from 4.5%, in line with economists’ expectations, amid easing inflationary pressures. This marked the third rate cut since June. The Bank said it reflects the fact that headline and core inflation have continued to ease as expected and that as inflation gets closer to target, economic growth needs to pick up to absorb the slack in the economy so inflation returns "sustainably" to the 2% target.

The number of open job positions in the US slipped in July, but Americans were a tad more confident when it came to risking trying to change employers. According to the Department of Labor, in seasonally adjusted terms the number of job openings declined at a month-on-month pace of 3.0% to reach approximately 7.67m. Economists had projected a reading of about 8.1m.

America's shortfall on trade with the rest of the world worsened as expected in July as outlays on imports surged. According to the Department of Commerce, in seasonally adjusted terms the country's total trade deficit jumped by 7.9% month-on-month to reach -$78.8bn. Economists had forecast -$79.0bn of red ink.

The eurozone's private sector experienced its fastest growth in three months during August, driven by a stronger services sector, according to the latest Hamburg Commercial Bank (HCOB) eurozone composite purchasing managers’ index (PMI) on Wednesday. The composite PMI rose to 51.0, up from 50.2 in July, marking a slight expansion in economic activity.

China services sector activity showed slower growth last month as firms cut staffing in response to concerns about higher costs, according to a private survey published on Wednesday. The Caixin/S&P Global services purchasing managers' index (PMI) fell to 51.6 in August from 52.1 in July. A mark above 50 represents expansion.

Factory sector activity in the States shrank at a slightly lower pace in August, the results of a closely followed survey showed. But that was mostly due to rising levels of product inventory. The Institute for Supply Management's manufacturing sector Purchasing Managers' Index edged up from a reading of 46.8 for July to 47.2 in August. Economists had pencilled in a reading of 47.5.