Weekly review

Equity view

Hiscox said on Friday that it had appointed senior independent director Colin Keogh as interim chair following the death of Jonathan Bloomer earlier in the week. Bloomer and his wife Judy died in the sinking of the Bayesian off the coast of Sicily on Monday. Five others have now been confirmed dead, including software millionaire and Autonomy founder Mike Lynch.

Direct Line Insurance Group announced a correction to its previously-reported Solvency Capital Ratio (SCR) for the year ending 2023 on Friday, after it identified a miscalculation. The FTSE 250 company said the error was related to the treatment of a whole account quota share reinsurance arrangement initiated on 1 January 2023, specifically in the translation of reinsurance debtors between International Financial Reporting Standards (IFRS) and Solvency II own funds.

William Hill owner Evoke announced the acquisition of New Gambling Solutions (NGS on Friday, which operates Winner.ro, Romania’s seventh-largest online betting and gaming platform. The London-listed firm said the move would see it merge its Romanian operations with Winner.ro, creating the fourth-largest betting and gaming group in the Romanian market with an estimated 7% market share.

Recruitment software supplier Dillistone Group warned on Friday that the market remained challenging and, if anything, had softened further in the second quarter and into Q3. Dillistone said its interim results would likely be in line with expectations, marking a "significant improvement" in operational profitability when compared to H123. It also stated that it was operationally cash-generative in the six months ended 30 June.

Sports apparel and footwear retailer JD Sports Fashion saw a return to like-for-like growth in its second quarter, with its store rollout programme in North America and Europe providing a boost while the UK market remains subdued. LFL sales were 2.4% higher in the three months to 3 August, following a 0.7% year-on-year decline in the first quarter, as comparatives with last year eased.

Bank of Georgia has announced a £21m share buyback programme as it unveiled its results for the second quarter, in which it delivered an 11% increase in profits as it incorporated Armenian bank Ameriabank into its P&L for the first time post-acquisition. The bank said the board has approved to repurchase GEL73.4m of shares consistent with its capital distribution policy to return 30% to 50% of annual profits to shareholders.

Recruiter Hays posted a decline in full-year profit on Thursday as it highlighted "a clear slowdown" in challenging markets. In the year to the end of June, pre-tax profit slid 92% to £14.7m, while operating profit was down 46% at £105.1m. Net fees fell 12% to £1.1.bn.

Serco has been awarded a $320m contract by the US Army Corps of Engineers (USACE), it announced on Thursday, to modernise the electrical infrastructure at the US Space Force's Pituffik Space Base in Greenland. The FTSE 250 outsourcing giant said the four-year contract was focussed on upgrading the base's backup electrical plant.

The competition authority has announced that the allowances made by Barratt Developments and Redrow in order to pave way for regulatory approval may just be enough to get the green light.The initial phase of a Competition and Markets Authority investigation revealed issues in one of the 400 local areas where the two companies overlap, prompting the housebuilders to agree on "suitable undertaking" to address these concerns.

Costain has announced a £10m share buyback programme as it reported higher profits for the first half on the back of improved margins and a better product mix. The British construction and engineering firm made an adjusted operating profit of £16.3m for the six months to 30 June, up 8.7% on last year, with the adjusted operating margin rising by 20 basis points to 2.5%.

Molten Ventures, a prominent venture capital firm known for investing in high-growth digital technology companies, announced a substantial increase in the valuation of its holding in fintech company Revolut on Wednesday. The FTSE 250 company said it followed a recent secondary share sale by Revolut, which valued the company at $45bn.

Mining tech group Weir has been awarded a £53m contract on the Reko Diq copper-gold project in Pakistan, a greenfield development part-owned by Barrick Gold Corporation that is said to be one of the largest mines of its kind in the world. During the first phase of the project, Weir will provide fine grinding, separation and tailings solutions, including its Enduron large-format high-pressure grinding rolls (HPGRs) and wet screens.

Copper miner Antofagasta reported a 7% drop in half-year profits as higher prices were offset by falling volumes and higher depreciation and amortisation, though the bottom line came in slightly ahead of market forecasts. Pre-tax profit totalled $712.6m, down from $764.5m the year before but above the consensus forecast of $710.6m.

Wood Group said on Tuesday that it swung to an operating loss in the first half as revenue fell, but the engineering firm backed its outlook for this year and the next. In the six months to the end of June, Wood Group swung to a statutory operating loss of $899m from a profit of $23m in the same period a year earlier, with revenue down 4.8% to $2.8bn.

Pharmaceutical giant GSK announced on Tuesday that the US Food and Drug Administration (FDA) has granted breakthrough therapy designation to its investigational drug, GSK5764227 (GSK'227), for the treatment of patients with extensive-stage small-cell lung cancer (ES-SCLC) who had experienced disease progression following platinum-based chemotherapy. The FTSE 100 company said the designation was intended to accelerate the development and review of treatments that could offer substantial improvements over existing options for serious conditions.

Caledonia Investments said it had paid £55m to buy a majority stake in Direct Tyre Management, a provider of outsourced tyre management services to fleet operators. The management team has reinvested alongside Caledonia to acquire 100% of the business from investors including Palatine Private Equity, Caledonia said on Monday.

AIM-listed cybersecurity software group Intercede has announced a new partnership with Microsoft which will allow customers to bring FIDO passkeys into their authentication solutions. Intercede said that a number of its customers have wanted to use FIDO passkeys on behalf of users on devices such as the Yubikey family of devices or smart phones.

A major environmental group in Australia said it was dropping a court challenge to stop Woodside Energy's $12.5bn Scarborough gas project in Western Australia. In June 2022, the Australian Conservation Foundation requested that the Federal Court halt Woodside's Scarborough gas project operations until an assessment of its potential impact on the Great Barrier Reef could be conducted.

Plus500 announced a strong set of interim results on Monday, with significant financial growth, as it lifted its full-year expectations. The FTSE 250 company reported an 8% increase in revenue year-on-year, reaching $398.2m, up from $368.5m in the first half 2023. That growth was fuelled by a rise in trading income and customer activity, with customer income climbing 8% to $329.4m.

Professional services firm JTC announced its proposed acquisition of the Buck UK and European Share Plan Administration and Trustee Businesses on Monday, from Arthur J Gallagher & Co. The FTSE 250 company said the move was set to bolster its Employer Solutions division by expanding its capabilities and client base.

Economic news

Water regulator Ofwat confirmed the immediate implementation of new measures on Friday, to address Thames Water's recent loss of its investment-grade credit ratings.The action followed a public consultation, and would involve several critical steps designed to improve the company's financial and operational stability.

UK household energy bills will rise by £149 in October as part of industry watchdog Ofgem's new price cap. Britons using an average amount of gas and electricity will pay £1,717 per year, a 10% year-on-year hike or roughly £12.42 per month, with Ofgem stating increased geopolitical tensions and extreme weather events had impacted the cost of wholesale electricity.

Consumer confidence in the UK remained stable in August, according to a closely watched GfK survey, as improving sentiment towards personal finances was offset by the first fall in economic expectations in six months. The GfK Consumer Confidence Barometer came in at -13 this month, in line with the July reading and up from -25 in August of last year.

Activity in the UK’s private sector hit a four-month high in August, according to a survey released on Thursday. The S&P Global flash PMI composite output index rose to 53.4 from 52.8 in July, hitting a four-month high and coming in above expectations for a reading of 52.9.

The Financial Conduct Authority (FCA) issued a warning to insurers and brokers on Wednesday, urging them to ensure that their products provided fair value and good outcomes for customers. It said that while there had been improvements in governance, oversight, and the management of insurance products, it had concerns that many firms could still not demonstrate how they were delivering value to consumers.

The Competition and Markets Authority (CMA) has closed its investigations into Google’s Play Store and Apple’s App Store, it announced on Wednesday, shifting its focus to the forthcoming digital markets competition regime. The CMA initiated the cases over concerns that Google and Apple were leveraging their dominant market positions to impose unfair terms on UK app developers, potentially stifling competition and limiting consumer choice.

Government borrowing was higher than expected in July, according to figures released on Wednesday by the Office for National Statistics. Borrowing came in at £3.1bn, up £1.8bn on July 2023 and £100m higher than the Office for Budget Responsibility was expecting. It was also above the £2.5bn expected by economists and marked the highest borrowing figure for July since 2021.

This month's interest rate cut has provided a much-needed catalyst to the UK housing market, with the number of buyers rising by nearly a fifth, according to Rightmove. The number of potential buyers contacting estate agents about homes for sales has risen 19% on last year since 1 August, with annual growth accelerating from 11% across the month of July.

International events

Existing home sales in the US rebounded slightly in July after a sharp drop the previous month, according to data out on Thursday from the National Association of Realtors. Some 3.95m houses were sold in July, a 1.3% increase over the month, snapping four straight monthly declines and a significant improvement from the revised 5.1% slump registered in June.

Boston Federal Reserve president Susan Collins suggested on Thursday that it would soon be appropriate for the Fed to initiate a cycle of interest rate cuts, indicating her likely support for a rate reduction at the central bank’s upcoming policy meeting. In an interview with Fox Business, Collins highlighted the significant progress in reducing inflation, which she believed was now on a sustainable downward trajectory.

Americans lined up for unemployment benefits at a slightly accelerated pace in the week ended 17 August, according to the Labor Department. Initial unemployment claims rose by 4,000 week-on-week to 232,000, a three-week high and slightly ahead of market expectations for a reading of 230,000, consolidating the trend of a softening labour market pointed to by last month's jobs report and a sizeable downward revision to nonfarm payrolls for the twelve months ended 31 March.

Economic activity in the euro area picked up unexpectedly last month, mainly due to the boost from the Olympics, the results of a closely followed survey revealed. But some economists were quite downbeat regarding the outlook, arguing that the Paris games would fade while the manufacturing sector was in "rapid decline".

China launched an anti-subsidy investigation into dairy products imported from the European Union on Wednesday, intensifying trade tensions between Beijing and Brussels. The move, announced on Wednesday by China’s commerce ministry, followed the European Union's decision to revise its proposed tariffs on Chinese electric vehicles (EVs), a change that Beijing had urged the EU to abandon.

Japan recorded a wider-than-expected trade deficit for July as imports surged on the back of rising prices, according to data released by the Finance Ministry on Wednesday. The trade balance for last month was -JPY622bn, compared with a surplus of JPY224bn in June and a deficit of JPY61bn in July 2023. The consensus forecast was for JPY331bn.

Gold prices hit a new all-time high on Tuesday amid growing expectations of US rate cuts in September and after the People’s Bank of China issued new import quotas. Spot gold jumped above $2,525 an ounce earlier in the day, surpassing Friday’s record high.

Construction output in the eurozone bounced back strongly in June after contracting the previous three months, according to figures released on Tuesday by Eurostat. Output increased by 1.7% over the month of June, following a 0.9% drop in May and 0.3% monthly declines in both April and March.

Core inflation in the eurozone officially held steady for the third straight month in July, according to final estimates published on Tuesday by Eurostat. The core harmonised index of consumer prices came in at 2.9% year-on-year last month, in line with preliminary data released two weeks ago and matching the inflation rate of both May and June.

Sweden’s Riksbank cut its benchmark rate by 25 basis points on Tuesday to 3.5%, as widely expected. The central bank said in a statement: "Over the year, inflation has deviated less and less from the target of 2%. At the same time, various indicators, such as producer prices and company pricing plans, have continued to imply that inflationary pressures are compatible with the target. All of this reinforces the picture of inflation stabilising close to the target and indicates that the risk of inflation becoming too high again has declined significantly.

Wholesale price deflation in Germany eased to its lowest level in 13 months in July, in line with economists' predictions. The producer price index fell at a year-on-year rate of 0.8% last month, according to data released by the Federal Statistical Office on Tuesday.

Federal Reserve Bank of Minneapolis president Neel Kashkari said on Monday that it was now time for the central bank to begin discussing potentially cutting US benchmark interest rates at its September meeting. Kashkari told the Wall Street Journal: "The balance of risks has shifted, so the debate about potentially cutting rates in September is an appropriate one to have."