Weekly review

The FTSE 100 ended the week up 1.62%, closing Friday’s session at 6,969.73.

Equity view

Components maker Essentra said it expected annual results to be in line with expectations after a 11% rise in third-quarter like-for-like sales. The company on Friday said it had mitigated inflationary pressure through pricing, driving revenue growth and protecting profitability.

London Stock Exchange Group left its full-year targets unchanged on Friday, after posting a jump in quarterly income. The blue chip said it was "well positioned" for further growth, and that there was no change to guidance or targets, after third-quarter income rose by 16.2% - or by 5.9% on a constant currency basis - to £1.91bn. The figure was ahead of forecasts for around £1.88bn.

Property portal Rightmove backed its full-year expectations on Friday as it appointed Johan Svanström as its new chief executive officer, succeeding Peter Brooks-Johnson, who will retire after the full-year results. The company said Svanström brings "significant" experience of growing established business to business to consumer online marketplace businesses.

Japan's medicines regulator has agreed to review GSK's vaccine candidate for respiratory disease, the UK drugs group said on Friday. The blue chip confirmed that its application for its respiratory syncytial virus (RSV) older adult vaccine candidate has been accepted for review by the Japanese Ministry of Health, Labour and Welfare.

UK homewares retailer Dunelm reported a fall in first-quarter sales and maintained annual guidance despite a challenging macroeconomic environment. The company on Thursday said sales for the 13 weeks to October 1 fell 8% to £357m against a tough comparator last year when people spent more on home improvements during Covid lockdowns. Revenue rose 36% against pre-pandemic levels.

Dechra Pharmaceuticals said on Thursday it remained on course to meet full-year expectations, despite a slower start to the year. The veterinary drugs specialist said first quarter trading had, as expected, been below the same period a year earlier. The firm attributed the weaker performance to tough comparatives, after it saw notable growth during the pandemic - when pet ownership boomed - and prices increased.

Distribution and services group Bunzl said on Thursday that its "diversified and resilient business model" had delivered "strong growth", with Q3 group revenues up 18.8% at actual exchange rates and 8.7% at constant exchange rates. Bunzl said at constant exchange rates, underlying revenue growth was 6.1%, while acquisitions contributed further growth of 3.9% at constant exchange rates.

Polymer maker Synthomer said it had agreed a relaxation of loan covenants with its banks to provide it increased headroom through to the end of next year. The company, which last week lowered its profit outlook and scrapped the dividend, said bank debt covenants had been increased to 4x in December 2022, increasing to 4.75x in June 2023 and reverting to 4x in December 2023.

Payments processor Network International reiterated its full-year guidance on Wednesday as it posted a jump in third-quarter revenue. The Dubai-based company said total revenues rose 28% in Q3 versus the same period a year earlier, with merchant solutions revenues 39% higher, supported by strong consumer spending in the UAE.

Just Eat Takeaway said on Wednesday that it swung back to a profit in the third quarter, ahead of schedule, but warned of a "challenging" consumer backdrop. The company said it was adjusted EBITDA positive in Q3, "materially" ahead of prior guidance at the beginning of the year, and is on track to meet its long-term target margins. Just Eat said its focus on profitability delivered material improvements to revenue per order, delivery costs per order and overheads and opex.

Mining giant BHP Group on Wednesday reported a rise in first-quarter iron ore output, driven by better performance from Western Australian operations and despite lower prices. The company produced 72.1 million tonnes of iron ore in its first quarter, up 2% and left annual production and cost guidance unchanged.

Electronics manufacturer Spectris reiterated full year like-for-like sales growth guidance on Wednesday, citing "continued strong demand" for its products. Spectris said sales were up 10% on a like-for-like basis in both the third quarter and the year to date, underpinning expectations for "high single digit organic sales growth" for the full year.

Bookmaker 888 Holdings said on Tuesday that group revenues had slipped 7% year-on-year to £449.0m in the three months ended 30 September, primarily due to enhanced UK online player safety measures and the shuttering of its Dutch operations. Retail revenue was stable year-on-year at £124.0m, despite a £4.0m hit from three days of temporary closures and sporting fixture cancellations/postponements during the period of national mourning for Queen Elizabeth II, while total online revenues slumped 10% to £325.0m.

Mike Ashley’s Frasers Group on Tuesday said its offer for Australian retailer MySale was now unconditional after passing the 50% threshold. The company launched a 2p-a-share offer in August which MySale initially rejected, but last week advised shareholders to accept after Frasers secured commitments from the founding Jackson family to sell their shares.

Rio Tinto trimmed its full-year production guidance on Tuesday, as the weakening global economic outlook weighed on the third quarter. The Anglo-Australian miner said Pilbara operations produced 84.3m tonnes (mt) in the three months to September end, up 1% year-on-year, but shipments fell 1% to 82.9mt. Bauxite production fell 2% to 13.7mt, aluminium was down 2% at 759,000 tonnes while mined copper jumped 10% at 138,000 tonnes.

Japan’s SoftBank has agreed to sell its entire stake in e-commerce group THG to the Qatar Investment Authority and co-founder Matthew Moulding. SoftBank will sell just over 80.62m shares at 39p each, with the final settlement of the sale expected to take place on 20 October. QIA will buy just over 67.8m shares, while Moulding will acquire 12.82m through FIC Shareco.

Telecommunications giant Vodafone has created a new joint venture with French firm Altice to deploy fibre-to-the-home services to up to 7.0m German homes over a six-year period. Vodafone said on Monday that FibreCo, its 50/50 partnership with Altice, will offer wholesale access to telecommunications service providers in Germany. The creation of FibreCo is expected to be completed in the first half of 2023.

Hargreaves Lansdown reported a drop in first-quarter assets under administration on Monday as it announced the departure of chief executive Chris Hill, amid reports the company has been hit by a lawsuit over the failure of Neil Woodford's equity income fund. Hill has decided to retire after six years in the role. The investment platform said the board is undertaking a "thorough and extensive" search for his successor and Hill will remain in the role up to November 2023 to allow time for a handover.

E-commerce company Made.com said on Monday that it has received a number of non-binding indicative proposals, including possible offers for the issued and to be issued share capital of the company. Made.com stated that after having reviewed said proposals, it has invited "a select number of parties" to progress towards firm offers by the end of October, following a due diligence process.

Television company ITV was said to be reviewing its ITV Studio production arm, including whether or not to sell the unit as part of an effort to bolster the broadcaster's share price. According to the Financial Times, ITV has fielded expressions of interest in ITV Studios after chief executive Carolyn McCall was said to have been weighing options for the group's Studios wing, which has been estimated to potentially be worth more than its parent company's £2.5bn market capitalisation.

Economic news

Retail sales tumbled in September, official data showed on Friday, weighed down by soaring prices, the cost-of-living crisis and the state funeral of Queen Elizabeth II. According to the Office for National Statistics, retail sales volumes fell 1.4% in September, making them 1.3% below February 2020, pre-Covid. Analysts had been expecting a decline of around 0.5%.

UK consumer confidence edged higher in October, a closely-watched survey showed on Friday, although it remains at historic lows. The latest GfK Consumer Confidence Index increased by two points to -47, after three measures rose, including both the personal financial situation and general economic situation for the next 12 months. They rose by 6 points to -34, and by 7 points to -61, respectively.

A top Bank of England official called into doubt financial markets' expectations for interest rate hikes. In a speech delivered at Imperial College London, Ben Broadbent said that: "Whether official interest rates have to rise by quite as much as currently priced in financial markets remains to be seen."

Beleaguered UK Prime Minister Liz Truss on Wednesday pledged to keep the so-called “triple lock” guarantee on state pension increases, as she tried to re-establish her authority days after being publicly humiliated by the destruction of her signature economic growth plan. Truss, and new Finance Minister Jeremy Hunt had refused to say whether they would stick to the pledge to uprate the state pension in line with the formula of whichever is higher out of inflation, average earnings or 2.5%.

New chancellor Jeremy Hunt is considering upping the amount of tax paid by banks as he looks to plug funding gaps, it was reported on Wednesday. According to the Financial Times, citing allies of the chancellor, Hunt is considering introducing a windfall tax on bank profits as well as extending the energy profit levy on oil and gas producers beyond 2025.

UK house price growth eased in the year to September, according to figures released on Wednesday by the Office for National Statistics. Average house prices rose 13.6%, down from 16% growth in July. The average price of a house stood at £296,000 in August, up £36,000 on the same time a year earlier.

Soaring food prices helped push up inflation in September, official data showed on Wednesday, to a record 10.1%. According to the Office for National Statistics, the consumer price index rose by 10.1% in the 12 months to September, compared to August’s rate of 9.9%. The figure was largely in line with expectations, with most economists forecasting CPI of 10%.

The Bank of England appeared to deny reports on Tuesday that it wanted to delay selling billions of pounds of government bonds. The central bank acquired £838bn of gilts during its quantitative easing programme. It had intended to start selling them on 6 October, but the sale was delayed until the end of this month in light of the turmoil caused by the mini-budget.

Energy firms rallied on Monday as chancellor Jeremy Hunt announced in his emergency statement that energy support in the form of a freeze on bills will be reviewed in April. Prime minister Liz Truss announced in September that household energy bills would be capped at £2,500 for the next two years. She said at the time that the energy price cap would be fixed at £2,500 from 1 October, saving the average household around £1,000 a year. The move was in addition to the previously announced £400 energy bill discount.

Footfall across UK retail destinations ticked higher last week but consumers are increasingly cautious, according to retail experts Springboard. Footfall across destinations rose 0.8% from the week before, with footfall on high streets up 1.6%, mainly thanks to a bounce-back of 10% on Wednesday following a weak comparable due to rain. Excluding Wednesday, footfall last week was flat on the prior week.

Buyer demand softened over the last fortnight, a closely-watched survey of the UK housing market showed on Monday, as the spike in mortgage rates weighed heavily. According to the latest Rightmove House Price Index, buyer demand remains 20% higher than 2019, but fell 15% year-on-year over the last two weeks. Demand from first-time buyers was down 21% in the same fortnight.

A fund faced collapse if gilt yields had risen significantly as trading got underway this week, it was reported on Monday. According to Sky News, just a 0.5 percentage point rise in long-term government bond yields would have forced the unnamed fund to conduct a fire sale of government bonds. Sky News did not name the asset manager, and said it was "protecting" the identity of the fund.

International events

Second-hand home sales slipped last month weighed down by fast-rising mortgage rates, led by declines in the more expensive regions of the US. According to the National Association of Realtors, in seasonally adjusted terms, existing home sales shrank at a month-on-month clip of 1.5% to reach an annualised pace of 4.71m.

Manufacturing production in the Philadelphia region deteriorated more than expected in October, according to a survey released on Thursday. The Philadelphia Fed index for current manufacturing activity edged up one point to -8.7, coming in below expectations for a reading of -5.0. This marked the fourth negative reading in five months.

Americans lined up for first-time unemployment benefits at a decelerated pace in the week ended 15 October, according to the Department of Labor. New unemployment claims dropped by 12,000 to 214,000, well below market expectations for a print of 230,000, halting expectations of a loosening labour market.

The Federal Reserve's district banks reported increased caution on the part of economic agents when it came to the outlook for the country's economy and some signs that inflation was easing. "Several Districts reported a cooling in labor demand, with some noting that businesses were hesitant to add to payrolls amid increased concerns of an economic downturn," the Fed said in its latest Beige Book.

US housing starts fell 8.1% to an annualised rate of 1.43m in September, according to the Census Bureau, down from a revised 1.56m in August and well and truly shy of market consensus estimates for a print of 1.47m. Single-family housing starts dropped 4.7% to 892,000, the lowest level since May 2020, while the rate for units in buildings with five units or more decreased by 13.1% to 530,000.

German economic sentiment worsened significantly in October, a closely-watched survey showed on Tuesday. The ZEW economic research institute said its investor expectations index had increased slightly, by 2.7 points to -59.2. Analysts had been expecting it to fall to -65.7.

Manufacturing activity in the New York area contracted in October for the third month in a row, according to a survey released on Monday. The New York Fed’s Empire State general business conditions index fell eight points from September to -9.1.

China’s central bank sated market expectations on interest rates on Monday, standing pat on the medium-term lending facility at 2.75%. The People’s Bank of China confirmed it would keep the one-year rate on hold as it rolled over the lending facility, injecting CNY 500bn (£61.54bn) in the process.

Reporting by Josh White, Michele Maatouk, Frank Prenesti, Iain Gilbert, Abigail Townsend and Alexander Bueso at Sharecast.com.