Weekly review

The FTSE 100 ended the week down 113.79 points, closing at 7008.09 on Friday.

Equity view

DS Smith said it had sold its De Hoop paper mill in the Netherlands to De Jong Packaging for €50m (£43m). The proceeds will be used to partly offset enhanced investment in packaging capacity this year, with new greenfield corrugated box plants in Italy and Poland, and a significant expansion of the company’s Arnstadt packaging facility in Germany, Smith said on Friday.

Home repairs and improvements business HomeServe backed its full-year guidance on Friday ahead of its annual meeting. In an update on trading for the period from 1 April to 15 July, the company said that during this traditionally quieter period, product usage remains strong across the business, with claims frequencies in Membership and consumer usage in Home Experts still high.

Ascential said on Friday that it has bought a 51% majority stake in ASR, a digital content optimisation business that enables brands to grow sales through eCommerce marketplaces, for an initial consideration of $122m. The information, data and analytics company also has an option to buy two further 24.5% stakes in the business based on a predetermined multiple of trailing EBITDA between July 2022 and June 2025.

Sales and marketing firm DCC Group said on Friday that it had "traded very well" in the "seasonally less significant" first quarter of its financial year, building on the firm's strong performance in the year ended 31 March. DCC stated that operating profit growth was "well ahead" of the prior year and also modestly ahead of expectations, driven by "very strong organic profit growth" in its DCC Healthcare and DCC Technology units.

UK-based cybersecurity firm Avast on Thursday confirmed it was in advanced talks over a merger with NortonLifeLock. Any deal would be a cash-and-share offer, Avast said, but added there was no certainty a deal will be agreed.

Just Eat Takeaway said its losses had peaked and it expected to move back into profit after orders increased by more than half in the first six months of 2021. Combined orders for Just Eat and Grubhub rose 51% resulting in gross transaction value (GTV) of €14.1bn and annual GTV will be €28bn-€30bn, the company said. Losses, caused mainly by fee caps in North America and investment spending, have peaked and Just Eat will "trend back to profitability" , the food delivery group said.

Water utility Severn Trent maintained full-year guidance and said it was "confident" of achieving at least £40m positive net outperformance on customer outcome delivery incentives after a good start to the current fiscal year. In a short trading update, the company said it was on track to invest £550m - £650m during the year, including its Green Recovery projects.

Credit-checking firm Experian lifted its full-year guidance on Thursday as it reported a jump in first-quarter revenues, with all regions and segments delivering growth. In the three months to 30 June, total revenue grew 31% on the year. Revenue was up 78% in EMEA/Asia Pacific, 35% in the UK & Ireland, 33% in Latin America and 26% in North America.

AstraZeneca said on Wednesday that its proposed $39bn acquisition of US drug developer Alexion is expected to close on 21 July, after receiving clearance from the UK Competition and Markets Authority. The London-listed pharmaceuticals group first announced in December 2020 that it had agreed to buy Alexion.

Emerging markets-focussed asset manager Ashmore updated the market on its fourth quarter on Wednesday, reporting that assets under management increased by $4.5bn (£3.25bn) over the period, comprising net inflows of $1.1bn and positive investment performance of $3.4bn. The FTSE 250 company said net inflows in the three months ended 30 June were driven by institutional clients and included a combination of new mandates, particularly in the overlay, equities and external debt themes, and additional allocations to existing funds across the fixed income and equities investment themes.

Independent fund manager Liontrust Asset Management updated the market on its June quarter on Wednesday, reporting net inflows of £1bn in the three months period. The FTSE 250 company said assets under management and advice totalled £33.6bn at period end on 30 June, making for an increase of 8.5% over the quarter, while it improved further to £34bn by 12 July.

Exploration and production firm Tullow Oil said on Wednesday that it was expecting a full-year operating cash flow of $600.0m, broadly unchanged from 2020. Tullow said if oil prices, currently at around $76 a barrel, averages roughly $60 a barrel for the rest of the year, the target would be attainable, while if they average $70, operating cash flow would go up by $50.0m.

Howden Joinery said trading was strong in the first half and ahead of its expectations with revenue beating the same period in 2020 and 2019. Group revenue was almost £785m in the six months to the end of June compared with £465m a year earlier and £653m two years earlier, the kitchen maker said.

Commercial vehicle hire business Redde Northgate said it had bought Charged Electric Vehicles (ChargedEV), a charging equipment supply and installation specialist, for an undisclosed sum. ChargedEV operates nationally across the UK installing electric vehicle (EV) charging points. It has a team of around 20 EV experts, which is expected to expand over time as the transition to EVs gathers pace.

British Land said rent collection was improving and activity at its retail parks was close to pre-pandemic levels as lockdown restrictions were eased. The FTSE 100 property group said it collected 85% of rents due in June - 24 percentage points better than at the same point for the December quarter and 17 points ahead of the same point after the March quarter.

Drax Group has refinanced the Canadian dollar facilities it acquired as part of its acquisition of Pinnacle Renewable Energy in April, it announced on Tuesday. The FTSE 250 company said the new CAD 300m (£173.42M) term facility matures in 2024, with an option to extend by two years.

Online trading platform Plus500 reported a drop in first-half revenues and customer income on Monday as the market environment stabilised following a period of high volatility after the pandemic hit. In the six months to 30 June, customer income fell to $379.2m from $556.9m in the same period a year ago, but was up from $175m in the first half of 2019. For the second quarter, customer income came in at $157.7m versus $323.4m in 2020 and $93m in 2019.

LXI REIT reaffirmed its dividend target on Monday after it collected 100% of the rent due for the third quarter. "Following this level of rent collection, the board is pleased to reaffirm its intention to pay a quarterly dividend of 1.5p per ordinary share for the second quarter of the financial year, which is expected to be declared in November 2021 and fully covered by net rental income for the quarter," it said.

Pub and hotels group Young & Co’s Brewery said on Monday that it has agreed to sell most of its tenanted pubs estate for £53m in cash as it looks to focus on managed pubs and hotels. Young’s will sell 56 of the 63 pubs in the Ram Pub Company to Punch Pubs & Co. It will retain the remaining seven pubs for the long term.

Tate & Lyle on Monday said it had agreed to sell a controlling stake in its primary products business in North America and Latin America to private equity outfit KPS Capital Partners for $1.3bn. The deal, which effectively breaks up the food and drink ingredients maker, would also involve the sale of the company's interests in the Almidones Mexicanos and DuPont Tate & Lyle Bio-Products Company joint ventures.

Economic news

The number of employees on UK payrolls rose by 356,000 in June as the labour market continued to recover from the worst of the pandemic, official figures showed. The increase took the total of payroll employees to 28.9 million but the figure remains 206,000 less than before the crisis with many jobs preserved by government support, the Office for National Statistics said.

The Competition and Markets Authority has fined UK drug companies more than £260m for overcharging the NHS for hydrocortisone tablets. The competition watchdog said on Thursday that Auden Mckenzie and Actavis UK - now known as Accord-UK - charged the NHS "excessively high" prices for hydrocortisone tablets for nearly a decade. In addition, to protect its position as sole provider of the tablets, and enable it to continue to increase prices, Auden Mckenzie paid off would-be competitors AMCo, now known as Advanz Pharma, and Waymade to stay out of the market.

The Bank of England may need to take action to curb inflation earlier than expected after conditions for tightening monetary policy were met, a BoE rate setter said on Thursday. Michael Saunders, an external member of the BoE's monetary policy committee, said with the economy reviving and inflation above the MPC's 2% target the MPC may need to end its bond-buying programme in the next month or two rather than December and increase borrowing costs in 2022.

UK inflation hit its highest level in June since August 2018 as food and transport costs rose, putting pressure on the Bank of England to raise interest rates. Figures from the Office for National Statistics showed consumer price inflation increased to 2.5% from 2.1% in May, hitting its highest level in nearly three years and coming in above the BoE's 2% target for the second month in a row. It was also above consensus expectations of 2.2%.

New diesel and petrol lorries will be banned in the UK by 2040 as part of a new decarbonisation “greenprint” published by the government on Wednesday. The plan aims to decarbonise all types of transport by 2050 and includes the so-called “world-leading pledge” to end the sale of all polluting vehicles and move towards transport that generates zero emissions by 2040.

House prices strengthened in May, official figures showed on Tuesday, as they bounced back from April’s dip. UK average house prices rose 10.0% over the year to May, according to the Office for National Statistics' latest House Price Index, an improvement on both April’s figure of 9.6% and a 9.9% rise seen in March.

Two-thirds of UK adults have received both doses of a Covid-19 vaccine, reported the health secretary Sajid Javid on Wednesday. Sajid Javid said on Twitter: "Two-thirds of adults across the UK have now had two jabs. We have beaten our target by almost a week - this is a huge achievement. Thank you to everyone who has come forward. The vaccine is our wall of defence against the virus."

UK regulators need to act to avoid banks' reliance on a handful of outside cloud computing providers (CSPs) becoming a threat to financial stability, the Bank of England said on Tuesday. Banks and other financial firms are outsourcing key services to cloud computing companies such as Amazon, Microsoft and Google to improve efficiency and cut costs.

The Bank of England has removed restrictions on bank dividend payouts introduced in the wake of the Covid-19 pandemic as the sector remains "well-capitalised" and "resilient". In March 2020, the Bank told lenders such as HSBC, Barclays and Lloyds to suspend dividends and share buybacks until the end of 2020. It also recommended the scrapping of bonuses for senior staff.

An estimated 392,000 UK homes could be added to the 3m households already unable to pay energy bills in winter as prices rise by up to 10%. Millions of people across Britain are set to be hit with the highest fuel bills since a price cap was introduced, according to a new analysis of data published by the End Fuel Poverty Coalition.

International events

The Bank of Japan left monetary policy unchanged on Friday but downgraded its 2021 growth forecast. The BoJ left its policy balance rate and 10-year yield target unchanged at -0.1% and 0.0% respectively, in line with consensus expectations.

The single currency bloc's trade surplus in goods with the rest of the world narrowed in May due to a decline in exports. According to Eurostat, in seasonally adjusted terms, the euro area's foreign trade surplus in goods fell from €13.4bn for April to €9.4bn in May.

The cost of living in the Eurozone dipped last month as energy and services prices fell back. According to Eurostat, in seasonally adjusted terms, the annual rate of increase in the Eurozone's Consumer Price Index dipped from an upwardly revised 2.0% for May to 1.9% in June.

China's cybersecurity watchdog conducted an investigation of ride-hailing services app Didi's premises, sending the company's shares sharply lower before the start of trading in New York. Some observers described the move as Beijing's latest attempt to tighten controls over the country's technology giants and the data that they collect, which China deems of strategic interest.

US retail sales surprised to the upside in June, driven by increased demand for electronics, gasoline and fashion. According to the Department of Commerce, retail sales volumes grew at a 0.6% month-on-month pace to reach $621.3bn.

Economic growth in the People's Republic of China held up better than expected in June, although economists pointed to certain inconsistencies in the data. The Asian giant's gross domestic product expanded at an annual pace of 7.9% over the three months to June, down from the 18.3% clip observed during the first quarter (consensus: 8.0%).

First-time unemployment claims dropped to a new Covid-19 pandemic-era low of 360,000 in the week ended 19 June, a marked decrease when compared to the previous week's upwardly revised total of 386,000. According to the Labor Department, initial unemployment claims came in at their best number since 14 March, 2020 last week, while continuing claims also fell sharply, declining by 126,000 to 3.24m - another new low for the US jobs market. Sharp declines in claims in Texas and Georgia accounted for almost all the decline, indicating that the early end to benefits may have encouraged people to re-enter the workforce.

The price of goods purchased overseas rose roughly as expected last month despite a large increase in energy costs. According to the Department of Labor, in seasonally adjusted terms the US import price index jumped at a month-on-month pace of 1.0% (consensus: 1.2%).

Industrial output in the US grew more slowly than anticipated in June as a shortage of semiconductors kneecapped auto manufacturing. The Department of Commerce said that total industrial production rose by 0.4% month-on-month (consensus 0.6%) and revised down its estimates for February, April and May.

Manufacturing conditions in the Philadelphia region deteriorated more than expected in July, according to a survey released on Thursday. The Philadelphia Fed current manufacturing index fell to 21.9 from 30.7 in June, missing expectations for a reading of 28.0.