Weekly review

Equity view

UK-based asset manager Schroders is reportedly looking to sell its Indonesian business as it considers exiting some sub-scale markets under new boss Richard Oldfield. After several disappointing results Oldfield is attempting to turn the company around by offloading underperforming units, the Reuters news agency reported citing two unnamed sources with knowledge of the matter.

Royal Mail has been fined £10.5m by the communications regulator Ofcom for failing to meet delivery targets for first and second-class mail in the 2023-2024 financial year. The penalty was nearly double last year’s fine of £5.6m for failing to meet obligations under the Universal Service Obligation. Under Ofcom's standards, International Distribution Services subsidiary Royal Mail is required to deliver 93% of first-class mail within one working day and 98.5% of second-class mail within three working days.

Boohoo’s board responded to the latest chapter in its dispute with Frasers Group on Friday, opposing the latter’s desired board appointments, citing what it called “irreconcilable conflicts of interest” and accusing Frasers of selectively addressing governance requirements. The online fashion retailer reiterated its willingness to grant Frasers a board seat if a suitable, independent candidate is proposed, but it categorically rejected the appointments of Mike Ashley and Mike Lennon.

Chapel Down Group announced the appointment of James Pennefather as its new chief executive officer on Friday, effective 1 February. The AIM-traded firm said Pennefather, a veteran of the premium drinks industry with more than 25 years of experience, most recently led the Lakes Distillery Company, overseeing its successful sale to the Nyetimber Group earlier this year.

Private equity firm TA Associates said it has agreed to sell its entire 12.6% stake in Auction Technology for £85.3m. TA will offload 15,337,625 shares in the online auction platform at £5.50 each. Completion of the sale is expected to take place on December 20. The US-based investor bought Auction Technology in 2020 and subsequently brought it to market via an IPO in February 2021.

Magners owner C&C Group said on Thursday that it has appointed the former head of AG Barr chief executive. Roger White, who will take up the role on 20 January, was head of the FTSE 250 owner of Irn Bru for over two decades before leaving in May 2024. Prior to joining AG Barr, he spent 15 years at Rank Hovis McDougall Group.

Heat treatment and specialist thermal processing specialist Bodycote unveiled a strategy to drive growth, operational performance and sustainability on Thursday. The FTSE 250 company, which was holding a capital markets event, said it had restructured its operations into two core divisions - specialist technologies, which includes differentiated offerings like hot isostatic pressing (HIP) and surface technologies; and precision heat treatment, focused on optimising global plant operations.

Electricals retailer Currys said on Thursday that it swung back into the black in the first half, with a solid performance in the UK and Ireland helping to offset weakness in the Nordics. In the half year to 26 October, the company swung to an adjusted pre-tax profit of £9m from a loss of £10m in the same period a year earlier, as revenue ticked up 1% to £3.9bn. Group like-for-like revenue was up 2%.

Volution reported a rise in revenue on Wednesday as it hailed a particularly strong performance in the UK residential market. In an update for the four months to the end of November ahead of its annual general meeting, the company said revenue rose 1.3% on the previous year to around £123m. Organic growth at constant currency was 2.5%. Volution said there was no inorganic growth in the period.

British American Tobacco reaffirmed its full-year guidance for 2024 on Wednesday, supported by a stronger second half driven by investments in its US commercial operations and innovation in its ‘New Categories’ portfolio. The FTSE 100 tobacco giant said it anticipated revenue and profit growth across both its combustibles and New Categories businesses in the latter half of the year.

Specialist motor and property financier S&U reported a mixed trading performance for the period between 1 August and 10 December on Wednesday, amid challenging conditions in the UK financial services sector. The London-listed company emphasised the resilience of its diversified business model, with strong growth at its property lending unit Aspen Finance partially offsetting weaker results from its motor finance arm Advantage.

Structural steel and construction safety solutions specialist Billington said in an update on Wednesday that it expects its profit before tax for the year ending 31 December to exceed current market expectations. The AIM-traded company cited strong trading performance across all business units, underpinned by improved manufacturing efficiencies and robust demand for its services.

Games Workshop on Tuesday said it had reached a final deal with Amazon to adapt its Warhammer 40,000 universe into films and television series, together with associated merchandising rights after agreeing creative guidelines. Under the terms of the agreement, Games Workshop also granted an option for Amazon to license equivalent rights in the Warhammer Fantasy universe following the release of any initial Warhammer 40,000 production. It added that guidance for the 2024/25 full year remained unchanged.

International equipment rental group Ashtead announced on Tuesday that it is planning to move to a primary listing to the US, where its management team, operational headquarters and vast majority of operations are already based. The news came as the company delivered a profit warning due to weaker local construction market dynamics in the US. Rental revenues are now expected to grow by just 3-5% over the full year, compared with earlier guidance of a 5-8% improvement, owing solely to a downgrade in US rental growth to 2-4% from 4-7% previously.

British Gas owner Centrica said it expects full-year profits to match analysts' estimates as it beefed up its share buyback programme by £300m. The company said it "remains committed to its disciplined capital allocation framework", increasing the size of its buyback since November 2022 to £1.5bn.

Prudential is reportedly considering options for its asset manager Eastspring Investments that include selling a minority stake to help broaden the business. Bloomberg cited people familiar with the matter as saying that the insurer is working with a financial adviser on a review of Eastspring. It was understood that a potential stake sale could value Singapore-based Eastspring at about $3bn.

GSK said the US Food and Drug Administration has agreed to look at data from its MATINEE study to support the regulatory review process to obtain a new use of its Nucala drug as an add-on maintenance treatment for patients with chronic obstructive pulmonary disease (COPD). The study met its primary endpoint with the addition of mepolizumab to inhaled maintenance therapy, achieving a “statistically significant and clinically meaningful reduction” in the annualised rate of moderate/severe exacerbations versus placebo with patients treated for 52-104 weeks.

Early-stage science investor IP Group plans to increase its share buyback plan after raising £15m from the sale of minority holdings in several portfolio companies. The company said it has agreed the sale of stakes of less than 10% each in nine portfolio companies across its balance sheet and managed funds to Lexham Partners.

Domino's Pizza Group, the UK master franchise of the American takeaway giant, on Monday announced a new "profitability and growth framework" with its franchise partners, that will see it invest an additional £3-4m per annum from next year. The news came as DPG reported a 5.3% increase in total orders across the first nine weeks of the fourth quarter, compared with 3.5% growth in the third quarter. Like-for-like sales growth picked up to 2.7%, from 0.7%.

Cell engineering technology specialist MaxCyte announced upgraded revenue guidance on Monday, following an operational review under its new chief executive officer Maher Masoud. The AIM-traded firm said the review, which focussed on optimising product development, manufacturing and resource allocation, led to a workforce reduction of 21 positions - approximately 15% of its global headcount, including those employed through third-party arrangements.

Economic news

The UK economy unexpectedly contracted in October, according to data released on Friday by the Office for National Statistics. The economy shrank by 0.1% following a 0.1% decline in September, and versus expectations for 0.1% growth. The figures showed that production output fell by 0.6% due to a decline in manufacturing and mining and quarrying output, following a fall of 0.5% in September.

UK consumer confidence nudged modestly higher in December, a long-running survey showed on Friday. The latest consumer confidence index from GfK was -17, up one point on November and continuing a run of modest increases. However, it was only five points stronger than December 2023, when the index was -22. The index for expectations about the economy over the next 12 months was unchanged at -26.

UK house prices climbed in November, industry research showed on Thursday, as the market continued to strengthen. According to the latest residential market survey from the Royal Institution of Chartered Surveyors, a net balance of 25% of respondents saw an increase in prices in November, a notable jump on October’s balance of 16. It is also the fourth consecutive month that the balance has strengthened.

House prices are set to rise by 4% next year, according to an industry forecast published on Thursday, as mortgage rates fall and demand remains strong. According to Rightmove, new seller average asking prices are likely to rise by 4% by the end of the year, as 1.15m homes change hands. Changes to stamp duty mean the first quarter is likely to be particularly busy, as buyers rush to complete before the changes come in on 1 April.

UK supermarket sales are set to surpass £13bn in December for the first time, according to fresh data from Kantar on Tuesday, as shoppers geared up for the Christmas season. Grocery spending over the four weeks to 1 December increased 2.5%, the industry data specialist said, with robust demand for premium lines and festive essentials. It said the rising cost of Christmas was a key factor, with the average cost of a Christmas dinner for four reaching £32.57, a 6.5% increase from last year.

The KPMG and Recruitment and Employment Confederation's, UK Report on Jobs survey, compiled by S&P Global, pointed to a further deterioration of British labour market conditions during November. Permanent placements continued to decline, down from -5.9 in October to -9.3 - the steepest pace seen since August 2023 as firms signalled reduced demand for staff. Temporary billings increased modestly from -3.2 to 2-2.7.

International events

German exports in October fell by a more-than-expected 2.8% and imports dropped 0.1% month on month on a seasonally adjusted basis, according to official data published on Friday. Exports also decreased by 2.8% from October 2023 while imports rose by 1.7%, the Federal statistics office Destatis added. Forecasters had expected a 2% fall on the month.

The Germany economy has been "treading water" for the past five years, according to the research firm the Ifo Institute, which predicted a contraction in GDP in 2024, followed by minimal growth over the next two years. German GDP is expected to shrink by 0.1% this year, with the export-oriented economy struggling with weak demand, while elevated interest rates and higher inflation have led to a loss of purchasing power domestically, the Ifo said.

The US producer price index rose 3% on an annualised basis and 0.4% month-on-month in November, according to the Bureau of Labor Statistics, stronger than expectations. On a monthly basis, the core PPI rose 0.4%, while the annual core rate, which strips out volatile food and energy prices, steadied at 3.4%, the same as October's upwardly revised reading and above expectations of 3.2%.

Americans lined up for unemployment benefits at an accelerated pace in the week ended 7 December, according to the Department of Labor.Initial jobless claims surged by 18,000 to 242,000, well and truly ahead of expectations for a drop of 4,000 from the prior week's upwardly revised reading to 220,000, marking the steepest new claims count since October.

The European Central Bank cut interest rates on Thursday by 25 basis points, as expected, to 3%. This marked the fourth cut this year. The ECB also ditched its reference for the need to keep monetary policy "restrictive", suggesting there are more rate cuts on the cards.

Switzerland's central bank has slashed its benchmark interest rate by more than expected amid a strengthening franc and tepid economic growth with inflation running lower than expected. The Swiss National Bank (SNB) cut the SNB policy rate by 50 basis points to 0.5%, its lowest level in two years and below the cut to 0.75% expected by the market.

Global oil supply is likely to "comfortably" meet demand next year, a leading energy body predicted on Thursday, even after Opec voted to delay planned output increases. Publishing its December oil market report, the Paris-based International Energy Agency said world oil demand growth was set to accelerate to 1.1m barrels per day (bpd) in 2025, from 840,000 bpd in 2024, lifting consumption to 103.9m bpd.

The cost of living in the States picked up slightly last month as food and vehicles became dearer, although increases in shelter prices eased. According to the Department of Labor, in seasonally adjusted terms, both the headline and core Consumer Price Index rose by 0.3% month-on-month in November.

US mortgage applications rose by 5.4% in the week ended 6 December, according to the Mortgage Bankers Association of America, up from the prior week's 2.8% increase. Applications to refinance a mortgage surged 30% week-on-week, while applications to purchase a home fell by 4%.

Labour cost growth in the States over the half year ending in September undershot economists' forecasts, likely signalling that a further reduction in inflation was on the cards. According to the US Department of Labor, in seasonally adjusted terms non-farm labour productivity increased at a quarterly annualised pace of 2.2% in the third quarter. That matched a preliminary estimate.

A survey measuring optimism among small businesses in the United States smashed expectations on Tuesday, jumping to its highest level in more than three years, as confidence among corporations surged in the aftermath of the presidential elections. The National Federation of Independent Business (NFIB) small business optimism index rose in November to 101.7, up from 93.7 in October and well ahead of the 94.2 level expected by analysts. This was the first time in 34 months that the indicator has broken the 50-year average of 98, and marked the highest reading since June 2021.

Trade data from China showed a fall in exports and imports last month, in a worrying sign for policy makers ahead of threatened tariffs from the incoming administration of US President-elect Donald Trump. Exports grew 6.7% in November, down from a 12.7% rise in October and missing estimates of an 8.5% increase. Imports contracted by 3.9% against forecasts of a 0.3% increase.

German inflation was confirmed at 2.2% in November, the federal statistics office said on Tuesday. The figure marked a rise from October’s 2%. Core inflation, which excludes volatile food and energy prices, was at 3% in November up from 2.9% in the previous month. Energy prices in Europe's biggest economy fell 3.7% compared with the previous year, while food prices were up 1.8% year-on-year in November.

The Reserve Bank of Australia on Tuesday held rates steady but raised hopes that there could be a cut on the way after policy makers said they had gained "some confidence" that inflation was heading back to target. In a widely expected decision, the cash rate was left at 4.35%. The RBA’s rate-setting board said “some of the upside risks to inflation appear to have eased” and ditched a longstanding line that it would not rule anything in or out on policy.