Weekly review

The FTSE 100 ended the week down 42.96 points, or 0.56%, closing at 7,572.58 on Friday.

Equity view

Polymers group Victrex has announced a "soft start" in its first quarter as a result of continued end-market weakness and tough comparatives with the prior year, and said that making full-year guidance could be tricky. The company, which produces metal replacements and plastics for industrial applications, as well as things like pipes, films and tapes, said revenues in the three months to 31 December were down 22% year-on-year at £61.2m, with volumes falling 21% to 751 tonnes.

Bellway said in a trading update on Friday that its half-year housing revenue topped £1.25bn, consistent with its projections. The FTSE 250 housebuilder said that despite a decrease in total housing completions to 4,092 homes, the average selling price held firm at £309,300.

Specialist motor finance and bridging lender S&U warned on Friday that full-year profits were likely to be below expectations as poor consumer confidence, the cost-of-living crisis and continuing high interest rates take their toll. "The intemperate economic climate in Britain surrounding these unfortunately persists," it said. "Whilst we continue to invest in the receivables which drive our future profits, we do so with caution."

UK supermarket giant Tesco has sold most of its retail banking business to Barclays for £600m, the two companies said on Friday. The deal will see Tesco sell its existing banking operations in credit cards, loans and savings, removing £7.7bn of capital-intensive assets and £6.7bn of liabilities from its balance sheet. About 2,800 Tesco workers will transfer to Barclays.

Catering giant Compass said it delivered a strong start to its financial year with organic revenue growth currently running ahead of full-year guidance. The company, which is targeting a high single-digit increase in organic revenues for the 12 months to 30 September 2024, said first-quarter organic sales were up 11.7%.

Mining giant Anglo American has said that production volumes in the fourth quarter were down 7% year-on-year as a result of a deliberate slowdown at its South African iron ore operations and weaker ore at the Los Bronces copper mine in Chile. "Our fourth-quarter production was in line with our expectations and in line with the third quarter, despite the deliberate slowdown at Kumba to help draw down stock levels caused by poor third-party rail performance," said chief executive Duncan .

Watches of Switzerland reported a dip in third-quarter revenues on Thursday as it said consumers in the UK and Europe were choosing to spend their disposable income on other categories such as fashion and beauty. Group revenue nudged down 1% to £397m, with revenue in the UK and Europe 7% lower at £222m. The luxury watch retailer said challenging macroeconomic conditions in the UK had dented consumer spending in the luxury retail sector, impacting luxury watches and particularly non-branded jewellery, where there was an unusually high level of promotional activity.

Biopharma titan AstraZeneca delivered a 6% increase in sales in 2023 despite a $3.7bn decline in Covid-19 medicines revenues, as it guided to a strong pick-up in growth this year – though profits came in slightly under analysts' forecasts. Group revenues totalled $45.8bn last year, up 6% at constant exchange rates from the $44.4bn generated in 2022. Excluding Covid-19 medicines, growth would have been 15%.

Woodside Energy, the Australian oil and gas group with secondary listings in London and New York, has announced it has called off merger talks with smaller peer Santos that would have created an energy giant worth $52bn. The companies confirmed in December that they were in talks around a potential tie-up, but said on Wednesday they had now "ceased discussions".

PZ Cussons, the consumer products group behind brands like Carex and Imperial Leather, delivered a profit warning to shareholders on Wednesday and cut its interim dividend by nearly a half as a result of a significant slide in the Nigerian naira in the first half. The naira is currently 70% weaker than it was a year ago, the biggest drop in the currency's history, PZ Cussons chief executive Jonathan Myers said in a statement, plummeting 30% since the end of PZ Cussons' first half on 2 December.

International sales, marketing and support services group DCC said third-quarter operating profit was “modestly ahead” of the prior year, despite a volatile economic environment. The company on Wednesday said its energy division “delivered good operating profit growth, driven by the performance of Energy Solutions, despite mild weather conditions in most regions during the third quarter of the financial year”.

Residential property business Grainger said on Wednesday that it had seen "strong rental growth" in the four months ended 31 January. Total like-for-like rental growth was up 8.3% so far in the company's trading year, ahead of the 6.1% growth seen at the same time a year earlier, while PRS rental growth was up 8.4%, and regulated tenancy rental growth was 7.6%.

Banking group Virgin Money UK said it has delivered a first-quarter performance in line with guidance with growth in new accounts, deposits and target lending activities at stable margins. Mortgage lending was 0.7% lower over the three months to 31 December at £57.1bn, and down 2.2% compared with the first quarter of the previous year, but the company noted "improving sentiment" in the market as interest rates have peaked.

Customised electronics maker discoverIE Group held full-year guidance despite a fall in sales for the four months to January 31, as orders showed signs of improvement. Group sales in the period were 4% lower on a constant currency basis after two years of strong growth when sales rose by around 50%.

Renishaw has said that higher costs, pay inflation and currency movements hit margins in the first half, leading to a 23% slump in adjusted profits amid challenging market conditions, but said it expected things to pick up in the second half. The engineering group saw revenues fall 5% year-on-year in the six months to 31 December to £330.5m with falling sales in its biggest division, Manufacturing Technologies, as solid growth in Industrial Metrology was offset by continued weak demand for position encoders for semiconductor manufacturing equipment.

Shares in BP surged on Tuesday as the energy giant announced a $1.75bn share buyback despite a slump in annual profits as oil prices fell during 2023 from the spike caused by Russia's invasion of Ukraine. Full--year underlying replacement cost profit - the company's preferred earnings measure - halved to $13.8bn from $27.6bn a year earlier. Looking ahead, BP expects first quarter 2024 reported upstream production to be higher compared to the final three months of 2023.

Spreadbetting and CFD trading group CMC Markets is to cut 200 jobs following a cost-cutting programme expected to save £21m. The headcount reduction, which represents 17% of the total global workforce, will see the company merge support functions across multiple business lines, streamlining reporting lines and automating processes.

JPMorgan Cazenove cut its price target on Kingfisher on Monday to 180p from 190p as it placed the shares on ‘negative catalyst watch’ ahead of full-year results on 25 March. The bank said its analysis suggests that B&Q and Castorama owner Kingfisher will struggle to achieve an opex decline in FY25, even accounting for lower volumes and cost savings.

Telecoms giant Vodafone held full-year guidance as it reported a fall in third-quarter service revenues, driven largely by declines in Germany. The company on Monday said service revenues fell 1.4% to €9.3bn on a reported basis. Service revenue growth in Germany was down 0.3%.

Hipgnosis Songs Fund said in an update on Monday that it was looking for indemnity from its founder amid a legal battle with Hipgnosis Music. The music royalty investor said the lawsuit involved claims from Hipgnosis Music, a company Merck Mercuriadis was a director of, alleging an unlawful diversion of business opportunities to Hipgnosis Songs Fund and its investment advisor, Hipgnosis Songs Management.

Economic news

The Bank of England’s Jonathan Haskel warned on Friday more evidence that inflation was under control was needed before he would vote in favour of cutting interest rates. The external member of the rate-setting Monetary Policy Committee - who last week voted to up the cost of borrowing - told Reuters: "I’m not going to apologise for banging on about persistence, because I think we’re right to."

The number of UK mortgages in arrears increased by 7% in the fourth quarter of 2023, though the number houses taken into possession fell sharply. Some 93,680 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance between October and December, up from 87,930 in the third quarter.

The UK housing market continued to stabilise in January, industry research showed on Thursday, as hopes of a cut in interest rates boosted the outlook. According to the latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors, buyer demand, agreed sales and new instructions all strengthened last month.

UK house prices rose in January for the fourth month in a row as mortgage rates fell, according to figures released on Wednesday by Halifax. House prices were up 1.3% on the month following a 1.1% increase in December 2023.

The UK construction sector remained in contraction territory in January, but business optimism hit a two-year high amid expectations of rate cuts, according to a survey released on Tuesday. The S&P Global/CIPS construction purchasing managers’ index rose to 48.8 from 46.8 in December. This marked the highest reading since August 2023 and was above consensus expectations of 47.3.

The annual rate of UK retail sales growth slowed to its lowest level in 17 months in January as non-food sales dropped despite an easing of inflationary price pressures. Total retail sales were up by just 1.2% compared with January 2023, easing from the 1.7% year-on-year growth registered in December and the 2.7% annual increase seen in November, according to the British Retail Consortium-KPMG Retail Sales Monitor.

The UK services sector grew in January at its fastest pace in eight months, according to a survey released on Monday. The S&P Global services purchasing managers’ index ticked up to 54.3 from 53.4 in December, coming in above the 50 mark that separates contraction from expansion for the third month in a row. It was also above the first estimate and consensus expectations of 53.8.

Britain's new car market grew by 8.2% year-on-year in January, the highest rate of growth since 2020, according to data released by the Society of Motor Manufacturers and Traders (SMMT) on Monday. New car registrations totalled 142,876 last month, 10,882 units more than in January 2023, representing the 18th straight month of annual growth.

The Office for National Statistics has downwardly revised the UK unemployment rate for late last year after readjusting its estimates on the back of new population data. Monday's Labour Force Survey (LFS) showed that employment increased by 108,000 in the three months to November 2023, ahead of the 73,000 increase first predicted.

International events

German inflation fell to 2.9% in January in line with preliminary data, down from 3.7% in December, and driven by a sharp fall in energy costs, according to official data released on Friday. There was a sharp drop in energy inflation to -2.8% from 4.1% in December, despite the discontinuation of the brake on energy prices and the introduction of a higher carbon price, which affects the price of fossil fuels such as motor fuels, heating oil and natural gas.

Americans lined up for unemployment benefits at a decelerated clip in the week ended 2 February, according to the Labor Department. Initial jobless claims dropped by 9,000 to 218,000 from the prior week's upwardly revised value, slightly below estimates for a reading of 220,000 but firmly above the last two months' average and pointing to a slowing, yet, strong labour market.

Deflation in China accelerated at its fastest pace in 15 years, as weak demand continued to hamper Communist Party efforts to bolster the struggling economy. The consumer price index fell 0.8% year-on-year in January, according to data released on Thursday – faster than the 0.5% expected, the fourth straight month of declines and biggest contraction since the 2008 financial crisis.

China has removed the head of its stock market regulator, it was widely reported on Wednesday. The state-controlled Xinhua News Agency reported that Yi Huiman had been removed as chair of the China Securities Regulatory Commission, after around four years in the post.

German industrial production fell more than expected in December, down 1.6%, compared with expectations of a 0.4% decline, increasing the risk of a downward revision to fourth-quarter GDP. The figure compared with a 0.2% fall in November. On an annual basis, industrial production was down 3%.

German factory orders unexpectedly rose in December, according to data released by Destatis on Tuesday. Orders were up 8.9% on the month on a seasonally and calendar adjusted basis following a flat reading in November and versus expectations for them to be unchanged.

S&P Global's US services purchasing managers' index came in at 52.5 in January, down from a preliminary reading of 52.9 but still its strongest reading in seven months. New orders increased on the back of improved demand conditions in the domestic market and the biggest rise in new export orders since August.

The Organization for Economic Cooperation and Development (OECD) has lifted its outlook for global growth this year by 0.2 percentage points. The February interim report of the OECD Economic Outlook puts GDP expanding by 2.9% in 2024, down from 3.1% last year but ahead of the 2.7% predicted in November. The forecast for 3.0% growth in 2025 was left unchanged.

Investor sentiment in the eurozone rose in February for the fourth month in a row, according to a survey published on Monday. The Sentix economic index for the eurozone climbed 2.9 points to -12.9 points in February, better than expectations of -15.

The Eurozone economy hinted at early indications of recovery during January, according to Hamburg Commercial Bank and S&P Global, with growing inflationary pressures boosting the European Central Bank's case for holding interest rates steady at their current record highs. The bloc's composite PMI increased to 47.9 in January, up from 47.6 in December and in line with initial forecasts. The services PMI dipped to 48.4 from December's 48.8, while the HCOB Eurozone manufacturing PMI rose to 46.6, the highest reading in ten months.

Germany's trade surplus unexpectedly widened in December as imports dropped sharply over the month, according to the country's federal statistics office Destatis. Imports fell by 6.7% to €103.1bn after a revised 1.5% increase in November, much lower than the 1.5% decline expected by economists.

Reporting by Sharecast.com staff and contributors.