Weekly review
The FTSE 100 ended the week up 130.91 points, or 1.79%, closing at 7,464.54 on Friday.
Equity view
Diversified Energy on Friday reported increased half-year profits as its hedging policy and higher production offset weaker oil and gas prices. The company said adjusted core earnings rose 26% to $283m, despite a 48% revenue decline to $487m for the six months to June 30 as the average realised sales price fell 52%.
Japanese regulators are reviewing a new drug application for GSK's Nucala treatment to be used for the treatment of a form of adult sinusitis, the biopharma giant announced on Friday. The drug, otherwise known as mepolizumab, is already used in Japan to treat bronchial asthma and a rare form of vasculitis, but GSK's new application is hoped to see it approved as a treatment for chronic rhinosinusitis with nasal polyps.
Shares in Accsys Technologies plummeted on Friday after the high-performance wood products group delivered a profit warning on the back of weakness from construction markets in the UK, Europe and North America. The company, which makes wood-based building materials, said trading conditions in the building materials, construction and residential housing sectors have "continued to soften" as a result of rising interest rates, high inflation and slowing residential activity.
UK insurer Direct Line has agreed with regulators to review overcharging of existing motor and home policyholders in a move that could cost it £30m to fix. The company was forced into the move after intervention by the Financial Conduct Authority, marking the first time a formal requirement has been agreed with an insurer under the watchdog's motor and home insurance pricing rules.
Renold, the AIM-listed supplier of industrial chains, has announced it is spending AU$6m (£3.1m) to buy Melbourne-based high-quality conveyor chain (CVC) maker Davidson Chain. The acquisition will build on Renold's existing market position within the Australian CVC market, and provides opportunities for manufacturing synergies between the two companies.
Belfast-based IT services group Kainos has announced that full-year results are still expected to meet consensus forecasts despite an uncertain trading environment. In a brief trading update for the first half ending 30 September, the company said customers have maintained their investments in digital projects and trading during the period has been "good".
Swiss banking giant UBS delivered a record bottom line in its second quarter after booking a $29bn accounting gain from its takeover of Credit Suisse, but underlying profits still failed to meet analysts' forecasts. The company reported a pre-tax profit of $29.2bn, the largest ever quarterly profit for a bank, compared with $2.1bn a year earlier. These were the first results published since it officially took over Credit Suisse in June.
Mike Ashley’s Frasers Group lifted its stake in Boohoo on Thursday to 9.1% from 7.8%. The company - which owns House of Fraser, Sports Direct and Flannels, among others - now owns 115.4m shares in the fast-fashion retailer.
Kurdistan oil operator Gulf Keystone reported significant downturns across key financial indicators in its first half on Thursday. The London-listed firm said the poor performance was mainly attributed to the suspension of exports and delayed payments from the Kurdistan Regional Government (KRG).
Standard Chartered said on Thursday that chief financial officer Andy Halford has decided to retire. Halford will be succeeded by Diego De Giorgi, who will join the company on Friday as CFO designate. Subject to regulatory approval, De Giorgi will be appointed as CFO in the first quarter of next year.
Direct Line said it had appointed Adam Winslow as chief executive to succeed Jon Greenwood who has been acting CEO since January. Winslow, who will start with the insurance company in the first quarter of 2024, has led Aviva's UK and Ireland general insurance business. Prior to this he was CEO of Global Life at AIG Life and Retirement (now Corebridge) having held a number of general insurance and life insurance roles in his eight years at AIG.
Engineering giant Smiths Group is beefing up its US heating, ventilation and air conditioning (HVAC) operations with the purchase of Ohio-based Heating & Cooling Products. The unit was acquired for a total of $82m on a cash and debt-free basis from a private seller. The purchase price represented less than 7x forward EBITDA.
FTSE 100 mining group Anglo American has announced another large fall in diamond revenues from the latest sales cycle at subsidiary De Beers, saying that buyers were being "prudent" because of the macro environment. The company said its seventh sales cycle of 2023, between 14 and 29 August, generated just $370m in sales.
Fashion retailer Superdry announced on Wednesday that its full-year results aren't ready, meaning that shares have had to be temporarily suspended from trade in London. The company, which was required to publish audited results for the financial year ended 30 April by 29 August, said it has taken longer than expected for its auditor RSM UK Audit to complete the final technical points of the audit.
UK car dealership group Vertu Motors said it remains on track for the full year after a solid first half, despite used vehicle sales being hit by rising interest rates. The company, which runs a total network of 189 sales and aftersales outlets, said profits for the six months to 31 August are above last year, helped by last year's acquisition of West Country-based Helston Garages, which operates 28 sales outlets.
British-Australian mining giant Rio Tinto said its La Granja copper project in Peru is one step closer to development after the completion of a joint venture transaction with First Quantum Minerals. The joint venture, first announced back in March, has seen First Quantum acquire a 55% stake in the project for $105m.
IG Group said chief executive June Felix would step down at the end of September due to ill health. The company said it had appointed recruitment specialists Russell Reynolds to undertake a "comprehensive search process" and expects to appoint a permanent CEO in the coming months.
Self-storage group Big Yellow has received planning permission for a new 132,000 square-foot centre in a "rare" strategic location in Wapping, East London. The company announced on Monday it has obtained planning consent to build the self-storage centre, along with 114 flats, with demolition of the site's existing buildings to "commence shortly".
AIM-listed oil and gas group Pantheon Resources has received its third-party estimate for its Kodiak Field, which indicates nearly one million barrels of oil. The stock, which had fallen over 75% in the past six months, jumped 20% in early deals to 16.38p.
Fund manager Liontrust Asset Management declared its public offer for GAM Holding unsuccessful on Tuesday. The offer had been initially published on 13 June, and the extended main offer period ended on 23 August.
Economic news
The contraction in UK manufacturing activity reached its worst level in more than three years in August with demand hit by weaker domestic and export conditions. The S&P Global/CIPS UK manufacturing purchasing managers' index (PMI), where a reading below 50 signals a contraction in activity, slumped to 43 last month, down from 45.3 in July.
UK house prices suffered their sharpest year-on-year decline in 14 years in August, amid rising borrowing costs, according to data released on Friday by Nationwide. House prices fell 5.3% on the year following a 3.8% decline in July and versus expectations of a 3.9% drop. On the month, they were down 0.8% in August following a 0.3% dip the month before. Analysts were expecting a more modest 0.4% fall.
Poor weather and strong comparisons with last year meant that footfall across the UK retailing sector was down in August, according to stats out Friday from the British Retail Consortium. The BRC said that footfall across the UK fell by 1.6% last month when compared with August 2022, reversing the annual 1.8% increase experienced in July.
The UK government announced on Thursday that financial services firm Wise Payments had violated Russia sanctions regulations in June last year. According to the Office of Financial Sanctions Implementation (OFSI), Wise Payments had itself reported a suspected breach involving a cash withdrawal of £250.
UK car production marked its sixth consecutive month of growth in July, according to new data released by the Society of Motor Manufacturers and Traders (SMMT). The latest figures indicated a 31.6% surge in car production, with 76,451 units rolling off assembly lines in July.
Mortgage approvals and consumer lending both declined in July as elevated interest rates and the rising cost of living continue to wreak havoc with personal finances. Net mortgage approvals (meaning, approvals minus cancellations) fell to 49,400 last month, from 54,600 in June, the Bank of England reported on Wednesday in its monthly Money and Credit report. The figure was broadly in line with economists' expectations.
Job cuts for Wilko’s 12,500 staff were reportedly halted on Tuesday, amid ongoing discussions over the future of the troubled retailer. Sky News reported that administrators from PwC, who took charge of the business after it collapsed earlier in August, said in a meeting on Tuesday morning that no immediate layoffs would occur as a number of bids for the business were being considered.
Shop price inflation in the UK slowed to its lowest level in 10 months in August, according to new data out from the British Retail Consortium (BRC). The BRC-Nielsen Shop Price Index, which measured the price changes of 500 of the most commonly bought items between 1 and 7 August, eased to 6.9% this month, the lowest reading since October 2022 and down from 7.6% in July.
International events
The eurozone manufacturing sector continued its sustained contraction in August, according to the latest HCOB/S&P Global eurozone manufacturing purchasing managers’ index survey released on Friday. Despite slight upticks in the PMI and output indices, new orders were plummeting at one of the fastest rates in the survey's 26-year history.
Activity in China’s manufacturing sector unexpectedly grew in August, according to figures released on Friday. The Caixin manufacturing purchasing managers’ index rose to 51.0 from 49.2 the month before, coming in above the 50.0 that separates contraction from expansion.
Business activity in the Chicago area improved more than expected in August, according to figures released on Thursday. The MSN Chicago PMI rose 5.9 points to 48.7, coming in comfortably ahead of consensus expectations of 44.1. This marked the highest level since last summer.
The number of Americans filing for unemployment benefits fell slightly last week, according to data released on Thursday by the Labor Department. Initial jobless claims declined by 4,000 from the previous week’s revised level to 228,000. Economists were expecting a level of 235,000. The previous week’s level was revised up by 2,000.
US consumer spending rose more than expected and inflation picked up in July, according to the Bureau of Economic Analysis, which will likely raise more concerns that the Federal Reserve's strategy of raising interest rates is doing little to stop an overheating economy. Personal consumption expenditures in current dollar terms rose 0.8% in July, picking up from a revised 0.6% increase seen in June. The initial estimate for June was +0.5%.
Consumer prices in the eurozone area increased more than expected in August, raising concerns that the European Central Bank may act once again to bring down stubbornly high inflation with another interest-rate rise. Just two weeks ahead of the ECB's next policy meeting on 14 September, Eurostat announced that the consumer price index increased 5.3% on last August, in line with July's reading but ahead of the 5.1% level expected by economists.
The jobless rate in the Eurozone held stable at 6.4% in July, according to figures out Thursday from Eurostat. As expected by economists, the seasonally-adjusted unemployment rate was 6.4% last month – in line with June and down from 6.7% in July 2022.
German retail sales fell by 0.8% month-to-month in July, missing forecasts of a 0.3% increase, according to official data released on Thursday. On an annual basis, sales fell 2.2%, from a 1.6% decline in June, and below the consensus estimate of a 1.0% decrease.
Factory activity in China contracted in August for the fifth month in a row, according to data released on Thursday by the National Bureau of Statistics. The official manufacturing purchasing managers' index rose to 49.7 from 49.3 in July, remaining below the 50.0 mark that separates contraction from expansion. Economists were expecting a reading of 49.2.
German inflation recorded a slight fall in August, according to preliminary official data released on Wednesday. Non-harmonised inflation in Germany fell to 6.1% in August from July's 6.2%. Consumer prices, harmonised to compare with other European Union countries, increased by 6.4%.
US economic growth was less than expected in the second quarter of 2023, official revised estimates out on Wednesday showed. US gross domestic product expanded by just 2.1% between April and June, compared with the 'advance' estimate of 2.4% growth, according to the Bureau of Economic Analysis.
The US private sector added fewer jobs than expected in August, according to the ADP Research Institute, as recent strong growth tailed off to levels not seen since before the pandemic. The ADP's National Employment Report found that a net 177,000 jobs were created this month, down from 324,000 in July and 455,000 in June.
Reporting by staff and contributors for Sharecast.com.