Weekly review

The FTSE 100 ended the week 86.1 points lower, closing at 7,043.61 on Friday.

Equity view

Private equity firm Cinven said its approach to fund administration services provider Sanne about a possible takeover at 830p a share had been rejected. Cinven confirmed it had put the proposal, worth £1.3bn, to Sanne on May 4 and was now considering its position. The offer is a premium to Thursday's closing share price of 603p.

Sage said it expected annual organic revenue growth to be near the top of guidance after investment in its cloud operation prompted a decline in first half profit. Underlying operating profit fell 11% to £191m in the six months to the end of March from a year earlier as organic recurring revenue rose 4.4% to £811m. Statutory operating profit dropped 30% to £203m as statutory revenue fell 4% to £937m.

Sabre Insurance said first-quarter volumes were in line with expectations and that volumes in April were higher than a year earlier. The motor insurance underwriter predicted a strong result for the year and an attractive annual dividend.

LondonMetric Property has bought three urban logistics warehouses for £18.7m. The company said on Friday that the acquisitions of the warehouses in Croydon, Dunstable and Warrington, reflect a blended net initial yield of 4.3%. The warehouses have been bought in separate transactions and have a weighted average unexpired lease term (WAULT) of five years.

Hargreaves Lansdown achieved record new business in the first four months of 2021 as people invested savings amassed during the pandemic into the stock market. Net new business was £4.6bn in the four months to the end of April compared with £4bn a year earlier and £7.9bn in the 10 months to that date, Hargreaves said in a trading update. Revenue rose to £232.2m from £190.2m driven by record dealing including an increase in trading in US shares. Revenue in the year to date rose 19% to £532.7m.

Specialty chemicals company Elementis said on Thursday that its full-year performance is set to be towards the top end of consensus expectations amid an improvement in demand. Current market forecasts are for 2021 adjusted operating profit of between $92m and $103m.

Infrastructure company Balfour Beatty on Thursday said its earnings-based businesses were on track to deliver underlying profit from operations of £172m for 2021, in line with 2019. The firm's order book stood at £15.7bn at the end of March. Balfour said it was well placed to continue growth in its core construction divisions.

Grainger maintained its dividend as the residential landlord reported an increase in profit and predicted a strengthening rental market. Pre-tax profit for the six months to the end of March rose 1% to £50.3m from a year earlier as net rental income fell 6% to £34.7m. Adjusted earnings rose 11% to £37.5m, driven by a 30% increase in sales profits.

Diageo has restarted its £4.5bn plan to return capital to shareholders after the drinks maker's business continued to recover in the second half of its financial year. The drinks maker said trading picked up across all regions since the end of December and it expected organic operating growth of at least 14% in the year to the end of June. Cash generation is strong, it said in a trading update.

Flutter Entertainment said the boss of its US FanDuel operation had resigned and that his departure would affect the timing of a potential listing for the business in the US. The FTSE 100 gambling group said Matt King had agreed to stay on while it looked for a replacement. He is leaving after four years in which FanDuel became the US market leader for online sports betting and gaming, Flutter said.

Spirax‐Sarco Engineering said margins in the four months to April 30 were higher than expected after a rise in sales. The company on Wednesday said its Watson-Marlow unit continued to experience “exceptional” Covid-19 vaccine-related demand from customers in the pharmaceutical and biotechnology sector.

Media platform Future said it had bought Marie Claire US, a joint venture between Marie Claire Album SAS and Hearst Magazines Media, for an undisclosed sum. Future said it had signed a five-year license agreement with Marie Claire Album to operate in the US and Canada.

Outsourcer Capita has appointed Tim Weller as its new chief financial officer with effect from Wednesday. Weller joins from security services firm G4S, where he has been CFO since 2016 and on the board since 2013. He has 19 years of experience as a CFO with G4S, Innogy, RWE Thames Water, United Utilities, Cable & Wireless Worldwide and Petrofac.

UK supermarket Morrisons reported a marked slowdown in quarter-on-quarter sales but reiterated guidance for full-year profits growth and lower debt. The company on Tuesday said like-for-like sales excluding fuel rose 2.7% in the 14 weeks to May 9, but lower than the fourth quarter’s 9% as the third Covid-19 lockdown was imposed by the government.

Real estate investment trust Civitas Social Housing said on Tuesday that it had delivered a "strong financial and operational performance" in the year ended 31 March, in line with expectations. Annual rent roll increased from £48.4m to £50.4m and Civitas said 99% of rents due and payable for the full year had been received across its 619 properties, with the remaining balance expected shortly.

Amigo Holdings said on Tuesday that most of its creditors have voted in favour of a rescue scheme that will see them get less compensation for misselling than they are owed, but the Financial Conduct Authority looks set to oppose it on the basis that it’s not fair. The subprime lender has already said it will go bust due to misselling compensation if the plan does not go through, leaving claimants with nothing at all.

British Gas owner Centrica said it continued to expect year-on-year operating cost savings of more than £100m this year as part of its restructure plans. The company on Monday said first-quarter electricity demand from its UK business customers was negatively impacted by around 15%, residential boiler installations were down 11% and non-essential service visits were postponed due to Covid-19.

Safestore reported an 11.2% improvement in group revenue at constant exchange rates for the second quarter on Monday, to £43.7m, as it revised its earnings guidance upwards. The FTSE 250 company said group like-for-like storage revenue in the quarter was ahead 10.5% at constant currency to £34.7m, with like-for-like total revenue 9.9% higher at £41.9m.

Dignity's profit jumped by more than a third in the first quarter as a sharp increase in the number of deaths caused by Covid-19 more than offset lower revenue per funeral and market share. Underlying operating profit jumped 35% to £26.1m in the three months to 26 March as underlying revenue rose 14% to £94.7m, the funeral operator said in a trading update.

Greggs said annual profit could be similar to 2019 and was likely to materially beat its expectations after sales returned to growth following the relaxation of Covid-19 restrictions. The food on-the-go group said like-for-like sales fell 3.9% in the eight weeks to 8 May from two years earlier and by 13.5% in the 18 weeks to that date. Like-for-like sales rose after non-essential retailers reopened on 12 April.

Economic news

UK vaccines minister Nadhim Zahawi said on Friday that the government was gearing up to "flex" its inoculation program in order to tackle the new coronavirus variant first detected in India. Local lockdowns in areas where that variant was most present were another possibility, although for now the next phase for easing restrictions in England, which was due to start from 17 May, was still set to go ahead, he added.

The UK economy contracted in the first quarter as Covid restrictions and the third lockdown weighed, but rebounded in March, according to figures released on Wednesday by the Office for National Statistics. The economy shrank 1.5%, which was a touch better than the 1.6% decline forecast by economists, and is now 8.7% lower than its pre-pandemic level.

UK house price growth accelerated in April because of a shortage of homes in a market boosted by the response to the Covid-19 crisis, a survey showed on Thursday. Demand from new buyers was broadly unchanged with a net balance of +44% in April with demand positive in all regions for the first time in 2021, the Royal Institution of Chartered Surveyors said. But supply dropped sharply to -4% from +21% a month earlier.

The latest study from the Office of National Statistics revealed that younger people were hit hard by the pandemic, and early in the crisis, employment among 16-24-year-olds fell faster than for any other age group. According to the data from ONS, overall in 2020, the employment rate among those aged 16-24 fell 2.6 percentage points to 51.9%, while unemployment rose 2.3 percentage points to 14.4%.

House prices smashed March's record highs during April, with the property market continuing to maintain its recent momentum. According to Halifax's monthly house price index, the average UK property was worth £258,204 in April, up 1.4% month-on-month and 8.2% year-on-year, the highest annual growth rate in five years.

Sterling rallied to a near three-month high on Monday, as the last of the election results were confirmed and the loosening of lockdown restrictions remained on track. As at 1015 GMT, sterling was trading at $1.41, and at €1.16 against the Euro. This is the first time since late February sterling has breached $1.40.

Wet weather dampened the number of shoppers visiting British high streets last week, industry data showed on Monday. According to Springboard, in the week beginning 2 May footfall declined 4.1% week-on-week. Within that, high streets reported a 6.6% drop, retail parks saw footfall ease 1.3% and shopping centres were down 1.5%.

The National Institute of Economic and Social Research has upped its growth forecasts for the UK, the influential think-tank confirmed on Monday. Niesr believes the UK economy will expand by 5.7% this year, up from its earlier forecast in February of 3.4%. Its prediction of 4.5% GDP growth in 2022 is unchanged.

UK retail sales rose 7.3% in April, boosted by strong demand after non-essential stores reopened, industry figures showed. The rate of growth from April 2019 was above the three-month average of 6% as pent-up demand and increased confidence enticed shoppers back to stores after more than three months of lockdown, the British Retail Consortium said.

Analysts at Citi believe the results of the Scottish elections during the previous week's will see some of the more acute near-term risks ease. Key to that judgement were the SNP's failure to obtain an outright majority and the UK government's decision not to rule out a second referendum.

International events

Dogecoin soared more than 40% to a price of 55 cents on Friday according to Coin Metrics data, immediately after Tesla CEO Elon Musk tweeted about the cryptocurrency. Musk tweeted that he was working with dogecoin developers to improve the efficiency of transactions.

Airbnb’s value of holiday bookings soared by 52% year-on-year in the first quarter of 2021 to reach $10.3bn as some countries eased their coronavirus restrictions. Bookings rose most notably for locations outside city centres and rural areas as people wished to travel but were still reticent to visit mass populated areas.

Jobless claims fell yet again in the week ended 8 May, according to the Labor Department, slipping from January's peak of about 900,000 to a new pandemic-era low of 473,000. The figure marks the lowest level for initial claims since 14 March 2020 when it was 256,000.

The US Department of Defence announced it would remove Chinese tech company Xiaomi from a government blacklist. According to the court filing seen by Reuters, the two parties had agreed to resolve the ongoing litigation without further contest, clearing the way for potential future American investment in the smartphone maker.

Industrial production nudged only marginally higher in the Eurozone at the end of the first quarter, coming in well below forecasts, official data showed on Wednesday. According to Eurostat, the European Union’s statistics office, industrial production rose by just 0.1% in the Eurozone in March month-on-month, and by 10.9% year-on-year.

China's money supply growth slowed quickly last month as economic authorities tightened monetary and fiscal policy. The annual rate of growth in so-called 'narrow' money supply, denoted as M1, slowed from 7.1% in March to 6.2% for April.

German investor sentiment improved significantly in May as the third wave of coronavirus eased, hitting its best level in more than 20 years, according to the latest survey from the ZEW Center for European Economic Research in Mannheim. The headline ZEW investor expectations index rose to 84.4 from 70.7 the month before, coming in ahead of expectations for a reading of 72.0. This marked the best level since the start of the Covid-19 pandemic and the highest level since February 2000.

Factory prices continued to push higher in China, rising at their fastest rate since October 2017, official data showed on Tuesday. The producer price index rose 6.8% in April year-on-year, China’s National Bureau of Statistics said, a significant increase on March’s 4.4% jump and marginally above forecast. Most analysts were looking for growth of around 6.5%.

Investor confidence in the Eurozone has surged to a three-year high, a closely-watched survey showed on Monday, as the economy continued to recover from the worst of the Covid-19 pandemic. The Sentix Economic Index recorded its third consecutive increase in May, jumping to 21.0 from 13.1 in April. It was the highest reading since March 2018 and well above the consensus forecast of 15.0.

An official for the Chinese foreign ministry, Hua Chunying, said on Monday that the use of the United Nations as a platform for a virtual event on the repression of Uyghur Muslims and other minorities in Xinjiang was an insult. China also urged UN member states not to attend the virtual event that was planned by Germany, the United States and Britain, Reuters reported.

India’s coronavirus cases and deaths stayed close to record daily highs on Monday as calls for the government to impose a national lockdown piled on. Prime Minister Narendra Modi is under pressure to shut down the country after 366,161 daily new infections and 3,754 deaths were recorded at the weekend. That took India’s total tally to 22.66m infections and 246,116 deaths with experts warning that the real figures were likely higher.