Weekly review

The FTSE 100 ended the week down 16.05 points, or 0.21%, closing at 7,488.20 on Friday.

Equity view

Insurer and asset manager Legal & General said on Friday that it has agreed to a full buy-in of the Boots pension scheme for £4.8bn. The buy-in secures the benefits of all 53,000 retirees and deferred members of the scheme, making it the UK's largest single transaction of its kind by premium size and, for L&G, the largest single transaction by number of members.

Mothercare reported a rise in first-half profit on Friday, but sales fell due to pressures in the the Middle East and the retailer warned that more of its franchise stores could close. In the 26 weeks to 23 September, adjusted earnings before interest, tax, depreciation and amortisation rose 12% to £3.6m, reflecting tighter cost control, while adjusted pre-tax profit was up 17% at £3.4m.

Professional services firm JTC announced its intention to acquire UK-based boutique asset management company Blackheath on Friday. The FTSE 250 firm said Blackheath, established in 2010, specialises in providing investment funds management and regulatory oversight services.

Barclays is reportedly working on plans to save as much as £1bn, which could result in as many as 2,000 job losses, mainly in the bank's back office. Reuters cited a person with direct knowledge of the proposals as saying that managers at Barclays, led by chief executive C.S. Venkatakrishnan, are reviewing proposals to bolster its profitability.

Mining technology group Weir has announced it is buying SentianAI, a Sweden-based developer of AI tech that optimises minerals processing performance. The deal, made for an undisclosed amount, is hoped to accelerate Weir's digital capabilities to provide "enhanced productivity and sustainability offerings to customers".

Mitie backed its recently-lifted full-year guidance on Thursday as it hailed a "good" first-half performance, with profits and revenue higher. In the six months to the end of September, operating profit rose 24% to £85m, while revenue grew 11% to £2.1bn.

Product inspection, testing and certification company Intertek said it's on track to deliver on targets for 2023 after a solid third quarter, though currency movements were limiting growth more than expected. Like-for-like sales since the start of the year have improved by 6.3% and the company said it still expects to meet expectations of mid-single-digit LFL revenue growth this year.

Consumer goods giant PZ Cussons said in an update on Thursday that its trading performance remained consistent with the outlook provided at its full-year results in September. The FTSE 250 company, which was holding its annual general meeting, said that in terms of trading, it expected to report low-single-digit like-for-like revenue growth for the first half of the 2024 financial year.

Home improvement retail conglomerate Kingfisher has cut its profit guidance for the second time owing to continued market weakness in France. The company, which owns B&Q and Screwfix in the UK along with a host of other DIY brands across Europe, said adjusted pre-tax profit for the year ending January 2024 will now come in at around £560m, compared with £758m the year before.

Johnson Matthey raised the outlook for its full-year underlying operating performance on Wednesday despite posting a drop in first-half sales and profit due to lower precious metal market prices. For the year to the end of March 2024, the company now expects at least high single digit growth in operating performance at constant precious metal prices and constant currency, up from a previous forecast for at least mid single digit growth.

Medical tech giant Smith & Nephew has announced it is spending up to $330m to buy CartiHeal, which specialises in novel cartilage regeneration technology for sports medicine knee repair. The UK-listed firm said it will pay an initial cash consideration of $180m upon closing, with a further $150m based on the financial performance of the business.

Rio Tinto said on Wednesday that it has agreed to pay the US Securities and Exchange Commission $28m to settle a 2017 lawsuit related to the disclosure of the impairment of Rio Tinto Coal Mozambique (RTCM) in its 2012 year-end accounts. The miner will pay the penalty without admitting to or denying the SEC's allegations related to its books, records and reporting requirements, and will retain an independent consultant to advise on its current policies, procedures, and controls related to impairment, disclosures and project risk.

Business process outsourcing group Capita has announced that it is shedding another 900 jobs by ramping up its cost-saving programme. The company announced plans in August to double its operating profit margin over the medium term – from 2.9% in 2022 – with £40m of cost savings planned by the end of 2024.

London-focused office, industrial and workshop space provider Workspace swung to a big loss in the first half of the year as a result of a £178m reduction in valuations. The company reported a loss before tax of £147.9m for the six months to 30 September, compared with a profit of £35.8m profit the year before.

Shell Energy has been fined £1.4m by the UK’s telecoms regulator for failing to tell more than 70,000 mobile phone and broadband customers to review their contracts as they approached expiry. Ofcom said its investigation found the company broke consumer protection rules designed to ensure that customers get a fair deal for their communication services and also failed to provide information allowing people to find better deals.

Food producer Cranswick said on Tuesday that adjusted pre-tax profit for the year to the end of March was set to be at the upper end of market consensus as it posted a jump in interim profit and revenue amid "resilient" demand. Consensus expectations are for adjusted pre-tax profit of between £153.2m and £160.8m.

Catering giant Compass has hiked its final dividend by 27% after annual profits surged on the back of strong sales growth and margin improvement – though it predicts a substantial slowdown in organic growth in the coming year. Revenues totalled £31.3bn in the year ended 30 September, up 18.8% year-on-year on an organic basis. The company said net new business growth was 5%, ahead of the historic average of 3%.

Halma said on Monday that it has bought TeDan - a US supplier of surgical instruments - for up to $100m (£81m). TeDan, which is headquartered in Houstin, Texas and Moon Bay, California, comprises the separate companies of TeDan Surgical Innovations, West Coast Surgical, Axcess Surgical Innovations, and TeDan Surgical Innovations.

Senior backed its full-year guidance on Monday as it said trading has been in line with expectations, citing "robust" market demand. In an update for the 10 months to the end of October, the company said trading overall has been "positive", with group revenue up 15% year-on-year at constant currency, underpinned by a healthy book-to-bill ratio of 1.20.

Qinetiq Group said it's Avantus unit has won a five-year $170m contract with the US Department of Homeland Security for its Tethered Aerostat Radar System (TARS). TARS provides detection, tracking and monitoring capabilities in diverse environments at and beyond the US borders, Qinetiq said in a statement on Monday.

Economic news

Consumer confidence rebounded in November, a closely-watched survey showed on Thursday, as people started to look towards the festive season. The latest Consumer Confidence Barometer from GfK was -24, a six-point increase following October’s surprise nine-point slump to -30.

UK private sector output stabilised in November, a closely-watched survey showed on Thursday, driven by growth in services. The flash S&P Global/CIPS UK PMI composite output index nudged into growth, at 50.1, from October’s 48.7. It was the first time it rose above the neutral 50.0 level since July, and was ahead of forecasts for no change.

Energy bills will increase by 5% from January, it was confirmed on Thursday, in response to higher wholesale gas prices. Ofgem, which regulates how much energy providers can charge customers, said the price cap would rise to £1,928 from £1,834, a £94 rise for households who use a typical amount of gas and electricity and pay by Direct Debit.

The UK chancellor has announced plans to sell off part of the government's stake in high street lender NatWest to retail investors in the coming year. In his Autumn Budget delivered to Parliament on Wednesday, Jeremy Hunt said the Treasury will "explore options" regarding a potential sale, though any divestment is "subject to market conditions and achieving value for money".

The Chancellor has announced a raft of measures intended to boost business investment and grow the economy, including cutting business taxes and National Insurance. Delivering his Autumn Statement on Wednesday, Jeremy Hunt - citing the Office for Budget Responsibility - said the UK economy was set to grow by 0.6% this year, by 0.7% in 2024 and by 1.4% in 2025 before eventually reaching annual growth of 2% by 2027.

Manufacturing output fell sharply in November, industry data showed on Wednesday, as orders slid to their lowest level in nearly three years. According the latest monthly Industrial Trends Survey from the Confederation of British Industry, output volumes in the three months to November had a balance of -17, a sharp decline on October’s balance of -6.

UK public borrowing came in less than expected in the first seven months of the financial year, according to official data published on Tuesday, a day ahead of finance minister Jeremy Hunt's autumn budget. Government borrowing between April and October was £98.3bn, the Office for National Statistics (ONS) said, £22bn higher than a year ago but almost £17bn less than forecast by the Office for Budget Responsibility (OBR) in March.

Prime minister Rishi Sunak announced his intention to reduce taxes on Monday, after claiming success for his promise to halve inflation by the end of the year ahead of Wednesday’s autumn statement. According to Sky News, the move was in response to growing pressure within the Conservative Party to alleviate the tax burden, which currently stands at a 70-year high.

International events

German business sentiment improved again in November, albeit a little less than expected, according to a survey released on Friday by the Ifo Institute. The business climate index rose to 87.3 from 86.9 in October, a touch below consensus expectations of 87.5. This marked the third consecutive increase.

The German economy contracted a touch in the third quarter, as per the initial estimate, according to figures released on Friday by Destatis. GDP shrank by 0.1% on the previous quarter, following a 0.1% increase in Q2.

Turkey’s central bank hiked interest rates by 500 basis points on Thursday to 40%, but signalled it was getting close to the end of the tightening cycle. Economists were expecting a 250-basis point increase.

Sweden's central bank kept interest rates unchanged on Thursday but warned that monetary policy could be tightened if inflation doesn't come down quite enough. The Riksbank announced that it was maintaining its key policy rate at 4.0%, surprising analysts who had expected a rise to 4.25%.

The downturn across the eurozone's manufacturing and services sectors eased more than expected in November, data from S&P Global and Hamburg Commercial Bank (HCOB) revealed on Thursday, but the economy still looks set to enter a technical recession. The composite purchasing managers' index (PMI) for the single-currency region rose to a two-month high of 47.1, up from 46.5 in October. This was better than the consensus estimate of 46.9 but still firmly below the 50-point level which separates growth from contraction, showing the business activity in the region was still falling.

Americans' confidence in the economy worsened in November, offset by improved attitudes regarding their personal finances. But their expectations for inflation continued to move higher, the results of a closely followed survey revealed.

The U.S. jobs market tightened unexpectedly during the preceding week. According to the Department of Labor, in seasonally adjusted terms, the number of initial unemployment claims dropped by 24,000 over the week ending on 18 November to reach 209,000 (consensus: 226,000).

Sales of previously owned homes in the US dropped more than expected in October, according to data out Tuesday from the National Association of Realtors (NAR). Existing-home sales dropped by 4.1% last month to 3.79m, from 3.96m in September. Analysts were expecting a smaller fall to 3.90m.

Construction output in the eurozone rose 0.4% in September compared to the previous month, according European Union statistics agency Eurostat. On an annualised basis, output of the euro area fell 0.3%.

German producer prices fell 11% on an annual basis and in line with expectations in October, the federal statistics office Destatis said on Monday. A 27.9% yearly fall in energy prices was cited as the main reason for the decline. With energy prices excluded, prices were 0.2% higher than in October 2022, Destatis added.

China’s commercial lenders left benchmark lending rates unchanged on Monday, in line with expectations. The one-year loan prime rate was held at 3.45%,while the five-year rate, used for mortgages, was kept at 4.2%, according to the People’s Bank of China.