Weekly review

The FTSE 100 ended the week up 126.45 points, or 1.73%, closing at 7,417.73 on Friday.

Equity view

Consumer electronics retailer Currys is selling its entire Greek and Cypriot division for €200 million (£175m) in a move that will simplify its business model and pay down its pension deficit. The sale of Dixons South East Europe, trading as Kotsovolos, to Public Power Corporation is still subject to approval by Currys’ shareholders.

DIY and building supplies retailer Wickes said it remains on track to meet full-year targets despite a slump in sales in the third quarter, as it warned some installation sales would be pushed into next year. Sales in the three months to 30 September were down 0.2%, reversing after 3% growth in the second quarter, as 1.1% growth in core sales was offset by a 4.4% drop in Do-It-For-Me (DIFM) sales.

Shares in Surface Transforms tanked over 40% on Friday morning after the brake disc manufacturer slashed its sales guidance due to ongoing challenges in production lines. Sales for the four months to 31 October were £3m, with October’s £1m being the best month of sales this year, albeit lower than previously budgeted.

Door and window fitting company Safestyle said on Friday that its directors would likely be required to place the group into liquidation. Safestyle said it would be put into liquidation in “due course” after its subsidiaries were placed under administration and it ceased to control and conduct substantially all of its business activities.

Smith & Nephew has said that sales growth is now expected to be at the top end of guidance after a solid third quarter, though it did warn that margins would likely not grow as much as hoped. The medical equipment manufacturing company said third-quarter revenues were up 7.7% on an underlying basis at $1.36bn.

Tobacco giant British American Tobacco said on Thursday that it is stealing back a BAT veteran from Diageo to serve as its new chief financial officer. Soraya Benchikh, currently serving as president of European operations at drinks group Diageo, will become BAT’s new CFO from May 2024.

BT Group said on Thursday that it was now expecting a full-year turnout at the top end of its guidance range after recording growth in revenue and earnings in the first half. The FTSE 100 telecoms giant said adjusted revenue for the six months ended 30 September reached £10.4bn, marking a 3% increase on a pro forma basis compared to the prior year.

Howden Joinery hailed continued resilient trading on Thursday. Still, it cautioned that full-year results were set to be towards the lower end of market expectations, as it pointed to a “more uncertain macroeconomic outlook”. In an update for the period to 28 October, the trade kitchen supplier said reported sales fell 2% on 2022 and were ahead 42.5% on 2019.

Mining engineering company Weir has reiterated its guidance for “strong growth” this year despite orders slipping in the third quarter. Orders from continuing operations totalled £636m in the three months to 30 September, down from £651m in the same period a year before.

Next boosted its full-year guidance on Wednesday after third-quarter trading beat internal expectations. The fashion retailer said full-price sales in the three months to 28 October rose 4% year-on-year, £23m ahead of earlier guidance for 2% growth.

AstraZeneca is to invest in French biopharma group Cellectis to use its gene-editing technologies to develop next-gen therapeutics in areas like oncology, immunology and rare diseases. The collaboration and investment agreement will see AstraZeneca pay Cellectis $25m upfront in the fourth quarter, as well as an $80m equity investment, representing a 22% stake.

John Wood Group said on Wednesday that it has appointed Arvind Balan as its chief financial officer and executive director with effect from 15 April 2024. Balan has been CFO of the civil aerospace business of Rolls-Royce for the last two years. Before this, he held several executive financial leadership roles at Shell, where he worked for 14 years across the UK, Singapore and China.

Precision instrumentation and controls company Spectris has said it expects full-year profits to be at the top end of forecasts despite a continued slowdown in sales growth in the third quarter. Like-for-like sales were up 11% year-on-year in the three months to September, though the impact of disposals and foreign exchange reduced the headline growth rate to 5%. Sales totalled £349.2m, up £16.6m on the year before.

Coca-Cola HBC reported a robust third quarter of organic growth on Tuesday, which it attributed to the continued implementation of its ‘24/7’ strategy. The FTSE 100 beverage bottler said organic revenue increased 15.3% for the quarter, with year-to-date organic revenue growth at 17%.

Speciality chemicals company Elementis said in its third-quarter update on Tuesday that, despite challenging market conditions, it maintained revenue at a level similar to that of the prior two quarters. However, when compared to the same period last year, revenue showed a 5% decline, or 7% at constant currency, across both of its business segments.

Refractory specialist RHI Magnesita hiked its full-year earnings expectations on Tuesday after its adjusted EBITA remained stable in the third quarter thanks to resilient pricing, strategic initiatives, and mergers and acquisitions. The FTSE 250 company said those factors counterbalanced lower sales volumes and under-absorption of fixed costs.

GSK reported encouraging outcomes from part one of the ‘RUBY’ phase three trial evaluating the efficacy of ‘Jemperli’, or dostarlimab, with standard chemotherapy for treating adult patients with advanced or recurrent endometrial cancer on Monday. The FTSE 100 pharmaceuticals giant said the trial achieved its primary endpoint of overall survival (OS), showing a statistically significant improvement in survival rates across the entire patient population.

Educational publishing giant Pearson has lifted its profit guidance for the full year by £20m despite a slowdown in revenue growth in the third quarter. The company said it is now expected to make an adjusted operating profit of £570-575m for the 2023 financial year, compared with the current consensus estimate of £552m.

Retail conglomerate Frasers Group has sold the Missguided fast-fashion brand to Shein and hinted at further potential collaborations with the Chinese e-commerce giant – which analysts say could represent a “transformational milestone” for the British company. The divestment, made for an undisclosed sum, marks Shein’s first acquisition of a British fashion brand.

Airtel Africa reported robust first-half growth in both operating key performance indicators (KPIs) on Monday, as its total customer base jumped 9.7% to 147.7 million customers. However, its financial figures were hit by the Nigerian central bank’s currency devaluation in the summer. The FTSE 100 company put the increase down to the growing popularity of mobile data and mobile money services, resulting in a 23% surge in data customers to 59.8 million and a 23.1% rise in mobile money customers to 36.5 million for the six months ended 30 September.

Economic news

The Competition and Markets Authority announced on Friday that it has separately secured commitments from two major tech giants, Amazon and Meta Platforms, to promote fair competition on their respective retail platforms. In the case of Amazon, the CMA said its efforts had resulted in commitments that seek to level the playing field for third-party Amazon Marketplace sellers and ensure that UK customers could access the best deals.

Retail footfall fell sharply in October, industry data showed on Friday, as heavy rainfall across the UK kept shoppers at home. According to the latest BRC-Sensormatic IQ Footfall Monitor, total UK footfall fell 5.7% year-on-year in October, compounding September’s 2.9% decline.

Retail sales jumped last week, industry data showed on Friday, as a surge in online shopping offset lacklustre in-store demand. According to the latest BDO High Street Sales Tracker, total like-for-like sales rose 6.31% in the week ending 29 October. Within that, in-store sales nudged only fractionally higher, up 0.32%. But non-store sales spiked 17.33%.

The UK service sector had a lacklustre October, a closely-watched survey showed on Friday, as cost of living pressures continued to weigh on demand. The latest S&P Global/CIPS UK Services PMI Business Activity Index came in at 49.5. That was up marginally on September’s 49.3 and ahead of the flash reading and consensus of 49.2.

The Bank of England stood pat on interest rates on Thursday, as widely expected. This marked the second meeting in a row that rates were left unchanged after the Bank hiked 14 meetings in a row from 0.1% in December 2021.

The UK construction sector continued to struggle in October, a closely-watched survey showed on Wednesday, with both output and new orders on the back foot. October’s S&P Global CIPS manufacturing purchasing managers’ index was 44.8, marginally up on September’s 44.3 but below both consensus and the earlier flash estimate for 45.2.

UK house prices unexpectedly rose in October amid “constrained” supply, according to a survey released on Wednesday. House prices ticked up 0.9% on the month following a 0.1% increase in September, beating expectations for a 0.4% decline.

Industry watchdog the Financial Conduct Authority said on Tuesday that there has been “a significant increase” in the use of buy-now-pay-later options. According to data from the FCA, 27% of British adults used BNPL at least once in the six months before January 2023, up from 17% in the preceding 12 months in May 2022. 

Shop price inflation fell in October to its lowest level since August 2022, according to figures released on Tuesday. The British Retail Consortium-NielsenIQ shop price index showed that annual inflation eased to 5.2% from 6.2% in September. This marked the fifth consecutive month of deceleration.

House prices fell across roughly 80% of the UK so far this year, according to property portal Zoopla, with the rising cost of borrowing and a squeeze on household incomes weighing on demand. All markets in London and the south and east of England registered price falls, and more than half of those in the rest of England and Wales. Scotland, on the other hand, saw just under two-fifths of its markets record price falls.

International events

The US economy added fewer jobs than expected in October, according to data released on Friday by the Bureau of Labor Statistics. Non-farm payrolls rose by 150,000 last month, coming in below expectations for a 180,000 jump. September’s figure was revised down to 297,000 from 336,000.

Unemployment in the Eurozone unexpectedly increased in September, with analysts expecting joblessness to rise further in the coming months. The number of unemployed people in the single-currency area grew by 69,000 from August’s record low to 11.02m, according to figures released Friday from Eurostat.

Fresh data on German trade released on Friday underscored the ongoing fragility faced by Europe’s top economy, coming in worse than expected. In September, exports from Germany registered a 2.4% month-over-month decline, surpassing the 2% drop pencilled in by economists surveyed by FactSet.

Activity in China’s services sector picked up less than expected in October, according to figures released on Friday. The Caixin services purchasing managers’ index rose to 50.4 from 50.2 in September, coming in below consensus expectations for a reading of 51.0.

The number of Americans filing for unemployment benefits rose last week, according to data released on Thursday by the Labor Department. Initial jobless claims increased by 5,000 from the previous week’s upwardly revised level to 217,000. Analysts had been expecting a level of 210,000.

The number of people out of work in Germany unexpectedly pushed higher in October, official data showed on Thursday. According to the Federal Labour Office, jobless claims jumped by 30,000 to 2.678m following a revised 10,000 increase in September and well above the consensus for a 15,000 rise.

Norway’s central bank left interest rates on hold on Thursday, as expected, but signalled a hike was on the cards for December. The Bank’s Monetary Policy and Financial Stability Committee unanimously decided to keep the policy rate at 4.25%.

Eurozone manufacturing saw another sharp decline in October, with the HCOB eurozone manufacturing purchasing managers’ index (PMI) seeing one of the sharpest drops on record. The index stood at 43.1 for the month, down from September’s 43.4 and reaching a three-month low, while the output index remained unchanged at 43.1.

The Federal Reserve held interest rates steady on Wednesday for the second straight meeting, with chair Jerome Powell saying that policymakers would be patient before making any further moves. The Federal Open Market Committee concluded its two-day meeting in Washington by leaving the federal funds rate between 5.25% and 5.5%.

China’s manufacturing industry contracted in October for the first time in three months, according to the Caixin-sponsored purchasing managers’ index released on Wednesday. The manufacturing PMI fell to 49.5 last month, from 50.6 in September, surprising analysts who had expected a pick-up to 50.8.