Weekly review

The FTSE 100 ended the week up 41.15 points, or 0.55%, closing at 7,529.35 on Friday.

Equity view

Rentokil Initial named Brad Paulsen as the new chief executive officer of the North America region on Friday. The FTSE 100 hygiene and pest control specialist said Paulsen would become a member of its executive leadership team and report directly to CEO Andy Ransom.

After several logistical challenges, drugmaker AstraZeneca has called off two phase III trials for its hyperkalaemia treatment. AstraZeneca said on Friday that its STABILIZE-CKD and DIALIZE-Outcomes trials on its drug Lokelma had been canned, principally due to extended timelines for patient enrolment and lower-than-expected occurrences of the conditions being studied.

Capricorn Energy said in a trading update on Friday that at the end of October, its working interest production across the four main concession areas in the Western Desert had averaged 30,600 barrels of oil equivalent per day (boepd), with oil accounting for 45% of total production for the year. The London-listed firm explained that, due to several project delays beyond those initially outlined during the first-half results announcement in September and lower-than-expected contributions from new wells, it anticipated that full-year 2023 production would average around 30,000 barrels of oil equivalent per day.

Commercial floor coverings group James Halstead said on Friday that it had experienced "improved output and profits" year-to-date. James Halstead stated that in the first five months of trading of the current financial year, it had seen both output and profits that were "materially ahead" of comparatives despite its major markets facing "strong competition".

Vending machine operator Me Group International said it expects to deliver annual revenues below guidance despite a record financial performance for the year. In a year-end trading update for the 12 months to 31 October, the company said revenues will be "marginally below" the lower end of the previous guidance range of £300m to £320m but no less than £298m. That's compared to revenues of £259.8m last year.

Metro Bank said on Thursday that it plans to axe around 20% of its staff and is reviewing its policy of keeping branches open seven days a week as it looks to save around £50m a year. The challenger bank, which was previously aiming to save around £30m a year, said it remains committed to stores and the high street but will transition "to a more cost-efficient business model, investing in automation for service and back-office operations and improving digital channels, particularly for deposits".

Luxury handbag maker Mulberry reported a widening of its half-year losses on Thursday as it pointed to additional investments and costs to support business growth. In the 26 weeks to 30 September, the underlying pre-tax loss widened to £12.3m from £2.8m in the same period a year earlier, while the reported pre-tax loss widened to £12.8m from £3.8m.

Shares in Mitchells & Butlers dropped on Thursday after the restaurants, pubs and bars group reported a big drop in annual profits due to significant cost headwinds and property valuation movements, which outweighed strong sales growth over the year. The All Bar One and Harvester owner said sales totalled £2.50bn in the 12 months to 30 September, up 13% on last year, helped by a 9.1% increase in like-for-like sales. Compared to the fiscal year ending 2019, the previous pre-Covid year, LFL sales have improved by 10.5%.

Hargreaves Lansdown has announced that chair Deanna Oppenheimer is to step down from the board after six years following mounting pressure from shareholders calling for her exit. Before the financial services firm's annual general meeting (AGM) on 8 December, speculation had risen that shareholders would vote against Oppenheimer's re-election. Some 33.5% of shareholders had already called for her to go at the 2022 AGM.

Oil and gas group Harbour Energy has held on to its full-year production and cost guidance as it expressed its interest in "a number of material M&A opportunities". The stock was up 4.2% at 227.5p in early deals.

Water utility Pennon Group reported a 5.4% increase in first-half underlying revenue on Wednesday, to £448.6m, driven by inflationary tariff adjustments moderated by regulatory measures to minimise the impact on customer bills. The FTSE 250 company said Pennon Water Services saw ongoing revenue growth from contract wins outside its wholesale supply regions.

Telecommunications testing company Spirent Communications has signed an agreement with an unnamed financial services organisation to automate its lab and testing capabilities. Spirent said on Wednesday that the deal was worth $15.0m, of which $12.0m has already been received, with the remainder for additional implementation services due in the new year.

IT infrastructure technology and services provider Softcat said in a trading update on Tuesday that it achieved substantial year-on-year growth in first-quarter gross profit, registering double-digit figures. The FTSE 250 company said the growth could be attributed to solid demand across diverse sectors.

Barclays is reportedly exploring a plan to drop thousands of clients at its investment bank as part of a strategic overhaul to boost profits and cut £1bn of costs. The Financial Times cited people briefed on the discussions as saying that Barclays executives have met several times this year to thrash out the restructuring, codenamed Minerva after the Roman goddess of wisdom.

Rolls-Royce unveiled its mid-term financial targets on Tuesday, aimed at ushering in a significant transformation in its performance. The FTSE 100 company said its targets included achieving an operating profit within the range of £2.5bn to £2.8bn, an operating margin of 13% to 15%, free cash flow between £2.8bn and £3.1bn, and a return on capital ranging from 16% to 18%.

Shares in Marlowe sank on Tuesday morning after the safety and compliance software group swung to a statutory loss of nearly £9m in the first half despite what it called a "resilient" performance. The company reported a pre-tax loss of £8.9m for the six months to 30 September, down from a profit of £1.7m the year before, which it put down to the non-cash increased amortisation of acquisition-related intangibles, movement in deferred consideration on historical acquisitions and a significant non-recurring investment in integration activities.

Aviva said on Monday that it has agreed to buy Optiom from Novacap and other minority shareholders for around £100m. Optiom, which operates as a managing general agent (MGA), provides vehicle replacement insurance in Canada and offers flexible payment options to customers.

Tyman said on Monday that it appointed Rutger Helbing as chief executive officer effective 2 January 2024. Rutger Helbing, a Dutch national, was the CEO of Devro between January 2018 and April 2023, having joined initially as group finance director in 2016. He spent his earlier career in commercial divisional finance roles in blue-chip global manufacturing businesses, including at Unilever, ICI and AkzoNobel.

West End landlord Shaftesbury Capital hailed a solid start to the Christmas trading period on Monday, with footfall "high" and sales tracking above the prior year. The company said customers reported sales up 12% on 2022 levels and 16% above 2019 levels.

Property portal Rightmove said in an update on Monday that since its interim results in July, its overall revenue growth had surpassed consensus expectations, primarily driven by higher-than-anticipated average revenue per advertiser (ARPA). The FTSE 100 company said both estate agent subscriptions and new home development listings remained stable.

Economic news

The ASLEF train drivers’ trade union has voted to continue strikes ahead of planned industrial action next week, saying that members are “in this for the long haul”. In its ongoing national dispute over pay, ASLEF is continuing with its week-long overtime ban starting Saturday after union members from 12 train operators were reballoted and voted overwhelmingly in favour of further strikes for the next six months.

The downturn in the UK manufacturing sector eased in November, according to a survey released on Friday. The S&P Global/CIPS manufacturing purchasing managers’ index rose to 47.2 from 44.8 in October. This marked the third monthly increase in a row and the highest since April. However, it remained below the 50.0 mark that separates contraction from expansion.

According to Nationwide’s survey released on Friday, UK house prices unexpectedly rose again last month. House prices were up 0.2% on the month following a 0.9% increase in October. This was the third monthly rise in a row and ahead of expectations for a 0.4% decline.

UK retail footfall stabilised in November, industry data showed on Friday, as shoppers snapped up Black Friday bargains. According to the latest BRC-Sensormatic IQ Footfall Monitor, footfall decreased by 0.7% in the four weeks to 25 November year-on-year, a notable improvement on October’s 5.7% decline.

The Court of Appeal has upheld the Competition and Markets Authority’s (CMA) decision to initiate a market investigation into mobile browsers and cloud gaming. In a unanimous decision, the court overturned a prior ruling by the Competition Appeal Tribunal (CAT) that suspended the CMA’s investigation due to an appeal filed by Apple.

Members of the RMT rail workers union have accepted a pay deal from the Rail Delivery Group (RDG), meaning that agreements have now been reached with three of the four unions involved in recent industrial disputes. RMT members overwhelmingly voted in favour of an offer which includes a 5% backdated pay rise for the 2022-23 year, along with guarantees over job security.

The number of homes sold in the UK fell sharply in October, official data showed on Thursday. According to the latest provisional statistics from HM Revenue & Customs, there were an estimated 90,920 residential transactions last month, 2% down on September and a 17% slide on October 2022.

The UK economy will grow this year and the next, a leading global organisation forecast on Wednesday, but only at a sluggish pace. According to the latest economic outlook from the Paris-based Organisation for Economic Co-operation and Development, UK GDP growth is projected to rise from 0.5% this year to 0.7% in 2024 and 1.2% in 2025.

Sentiment across the UK service sector softened in November, a closely-watched survey showed on Wednesday, as both volumes and profits fell. According to the latest service sector survey from the Confederation of British Industry, in the three months to November, sentiment across business and professional services providers dropped at the fastest pace since February, with a balance of -14. That compares to 3 in the three months to August.

London’s High Court has ruled in favour of the London Metal Exchange (LME) in a lawsuit over its decision to cancel billions of dollars of nickel trades. The suit, brought by hedge fund Elliott Associates and market maker Jane Street Global Trading, challenged the LME’s cancellation of nickel trades after a short squeeze in March last year.

International events

According to figures released on Friday, factory activity in China picked up in November. The Caixin/S&P Global manufacturing purchasing managers’ index rose to 50.7 in November from 49.5 in October. This was above the 50.0 level that separated contraction from expansion and marked the fastest expansion in three months.

US pending home sales dropped to a record low in October as mortgage rates rose sharply. According to the National Association of Realtors, pending home sales fell 1.5% month-on-month and 8.5% year-on-year, following an upwardly revised 11.2% drop in September.

OPEC+ members have reportedly agreed to cut oil production by a further one million barrels a day. In an online meeting, the cartel of oil-producing nations- led by Saudi Arabia - said the production cuts would begin early next year.

Saudi Arabia has reportedly won provisional backing for further oil production cuts by the Opec+ group, boosting oil prices to the highest three weeks ahead of a crucial cartel meeting. The Financial Times cited people close to the kingdom as saying that Saudi Arabia, the group’s most powerful member, has a provisional deal for further group-wide production cuts that will see other members agree to contribute after difficult discussions with countries more hesitant to cut supply.

According to the Labour Department, Americans filed unemployment claims at an accelerated clip in the week ended 25 November. Initial jobless claims rose by 7,000 to 218,000 last week, up from a revised figure of 211,000 for the previous week but short of market expectations for a print of 220,000.

US inflation eased as expected in October, according to data released Thursday by the Bureau of Economic Analysis (BEA), which will reassure the Federal Reserve that elevated interest rates are doing their job to cool economic growth and tame price pressures. The October personal consumption expenditures (PCE) index flatlined during the month after 0.4% growth in September, slightly below the 0.1% increase expected by analysts.

The number of those employed rose in Germany in October, albeit marginally, as seasonally adjusted figures showed a slight uptick in the number of those in work since the summer. In October, 46.1 million German residents were employed, according to provisional calculations from Destatis, the Federal Statistical Office.

Eurozone inflation slowed much more than expected in November, according to figures released Thursday by Eurostat, raising hopes that the European Central Bank (ECB) may move to cut interest rates sooner than predicted. The annual change in consumer prices slowed to just 2.4% this month, the lowest inflation rate since January 2021, closing in on the ECB’s target for headline inflation of 2%. This was down from 2.9% in October and below the 2.7% expected by economists.

China’s manufacturing sector continued to falter in November, official data showed on Thursday, despite government support. The manufacturing purchasing managers’ index, released by the National Bureau of Statistics, fell to 49.4 from 49.5 in October, below forecasts for 49.8 and the lowest reading since July.

According to figures out Thursday by Destatis, the federal statistics office, retail sales in Germany rose much more than expected in October. Retail sales rose by 1.1%, rebounding after a 0.8% decline in September and well ahead of the 0.4% gain expected by analysts.