Weekly review

The FTSE 100 ended the week 90.65 points higher, closing at 7,122.95 on Friday.

Equity view

Hikma Pharmaceuticals upgraded full-year guidance for its generics arm and reported a rise in first-half profit and revenue as it hailed a strong performance in both the generics and branded segments, and resilience in the injectables business. Reported pre-tax profit rose to $319m from $274m in the first half of 2020, with revenue up 7% at $1.2bn. Operating profit was 10% higher at $326m.

Sanne said on Friday that it remains in discussions with private equity firm Cinven about a possible offer for the company and that the offer deadline has been pushed back. The FTSE 250 fund administrator announced earlier in the week that it was in advanced talks with Apex about a possible offer at 920p per share in cash.

Real estate investment trust Civitas Social Housing said on Friday that rents were received "as normal" during the three months ended 30 June, with no Covid-19 impacts being felt during the quarter. Civitas reported an IFRS net asset value of 108.42p for the quarter, up slightly from the 108.30p registered in the first quarter of 2021. Ordinary net asset value came to £674.88m.

Power generation company ContourGlobal raised its full-year earnings guidance on Friday, after a strong first-half performance across its fleet of 115 power plants. The FTSE 250 firm said consolidated revenue was up 38% to $935m in the six months ended 30 June, as adjusted EBITDA rose 16% to $406m.

WPP upgraded its outlook and boosted shareholder returns as the advertising company swung back to profit in the first half of 2021. The FTSE 100 group reported a £394m pretax profit for the six months to the end of June compared with a £3.2bn loss a year earlier as reported revenue less pass-through costs rose 5% to £4.9bn and 11% on a like-for-like basis.

UK retail landlord Hammerson on Thursday reported a rise in half-year adjusted profit as shops reopened from Covid-19 lockdowns, but warned that footfall had not yet rebounded to pre-pandemic levels. Adjusted profit rose 14% to £20.1m for the six months to June 30. The company declared an interim dividend of 0.2p a share and said it would pay an enhanced scrip alternative of 2p a share as a normal dividend.

Glencore announced a special dividend and a $650m share buyback as the commodities trader and producer posted record first-half earnings supported by rising prices. Adjusted earnings before interest, tax, depreciation and amortisation jumped 79% to $8.7bn in the six months to the end of June from a year earlier as revenue rose 32% to $93.8bn.

Aircraft engine maker Rolls-Royce swung to an interim profit as it continued to cut costs and looked to turn cash-flow positive during the second half of the year. The company on Thursday reported pre-tax profits of £114m compared with a £5.2bn loss last year when the Covid-19 pandemic virtually grounded air passenger travel. Underlying operating profit came in at £307m from a £1.6bn loss in 2020.

Ryanair saw July passenger numbers more than double to 9.3m from 4.4m a year ago at the height of the Covid-19 pandemic. The budget airline on Wednesday said it carried 5.3m passengers in June and operated more than 61,000 flights in July with an 80% load factor.

Bricks and concrete group Ibstock lifted annual guidance on Wednesday after swinging to a profit as the UK construction sector recovered from the impact of the Covid-19 pandemic. Pre-tax profit for the six months to June 30 was £39m compared with a loss of £52m last year as revenue jumped 54% to £202m. An interim dividend of 2.5 pence was declared.

Ferrexpo reported a 74% increase in revenues in its first half on Wednesday, to $1.35bn, which it said reflected market conditions and investments in increasing pellet quality. The FTSE 250 company said its pellet production was down 1% year-on-year for the six months ended 30 June, at 5.56 million tonnes, while sales volumes were 9% lower at 5.57 million tonnes.

Construction and regeneration firm Morgan Sindall said on Wednesday that both interim profits and revenues had grown double-digits in the six months ended 30 June. Morgan Sindall posted a 14% year-on-year increase in first-half revenues to £1.55bn, while pre-tax profits surged 238% to £53.1m.

Standard Chartered reported a rise in first-half profits and said it was resuming dividends against an improving economic backdrop. The bank made pre-tax profits of $1.15bn in the second quarter, up 55% year on year and beating consensus analyst estimates of $1.1bn. For the first half of the year, StanChart reported pre-tax profits of $2.56bn, a 57% jump from the same period in 2020.

Greggs said on Tuesday that full-year profit was set to be "slightly ahead" of its previous expectations as it swung to a first-half profit, with sales picking up after Covid restrictions were eased. In the 26 weeks to 3 July, the FTSE 250 bakery chain swung to a statutory pre-tax profit of £55m from a loss of £64.5m in the same period a year prior, as total sales rose to £546.2m from £300.6m.

Fresnillo announced a jump in its interim dividend as the precious metals miner reported earnings up 59% in the first half supported by higher prices. Earnings before interest, tax, depreciation and amortisation rose to $747m in the six months to the end of June from $470m a year earlier as revenue increased 39% to $1.47bn.

Builders merchant Travis Perkins lifted full-year guidance and said it would pay a special dividend as it returned to profit after a recovery in its repairs, maintenance and improvement (RMI) markets. Pre-tax profit for the six months to June 30 came in at £145.7m from a loss of £94.5m last year. Revenue jumped to £2.3bn from £1.66bn. A 12p-a-share dividend was declared along with plans for a 35p special payout.

Volution Group said it had bought Energy Recovery Industries, a maker and supplier of low-carbon, energy efficient heat exchanger cells, for an initial €23.4m. The company said a further €12.4m could be paid based on stretching targets for the financial results for the year to December 31, 2023.

Derwent London on Monday said it had bought the outstanding seven-year head lease interest in the South West Wing of Bush House for £13.5m before costs. The group already owns the freehold of the office building facing the Strand and is buying the building with vacant possession. Combining the purchase and the December 2020 valuation of the group's freehold interest equates to £51.8m or c.£500 per sq ft, Derwent said.

Defence and aerospace engineer Meggitt said on Monday that it has agreed to be bought by US rival Parker-Hannifin for £6.3bn as it reported a decline in interim profit and revenue. Under the terms of the deal, Meggitt shareholders will receive 800p per share, which is a premium of around 70.5% to the closing share price on Friday.

SSE has agreed to sell its entire 33.3% stake in gas distribution operator Scotia Gas Networks (SGN) to a consortium comprising existing SGN shareholder Ontario Teachers' Pension Plan Board and Brookfield Super-Core Infrastructure Partners for £1.23bn. The FTSE 100 company said the transaction was based on an effective economic date of 31 March, with the consideration in cash.

Economic news

Britons face soaring energy prices from October after energy regulator Ofgem said it was lifting the cap on default tariffs by 12-13% just as the colder months approach. This means that the average dual fuel bill will climb to £1,277 from £1,138 for the 11 million households paying by direct debit, up by £139. For another 4 million homes using prepayment meters the average energy bill will climb by £153 to £1,309.

Annual house price growth eased in July, hitting its lowest level since March amid signs of a "cooling market" as the stamp duty holiday ended, according to the latest survey from Halifax. House prices rose 7.6% on the year, down from 8.7% growth in June. On the month, however, prices ticked up 0.4% in July to £261,221, having fallen 0.6% the month before.

New car registrations fell 29.5% across the UK in July as supply shortages weighed on the automotive sector's recovery. According to the Society of Motor Manufacturers and Traders, 123,296 new cars were registered last month as the industry recorded its weakest July performance since before the millennium.

Growth in the UK construction sector eased in July amid shortages of staff and supplies, according to a survey released on Thursday. The IHS Markit/CIPS construction purchasing managers’ index fell to 58.7 from June’s 24-year high of 66.3. This was below consensus expectations for a reading of 64.0 and signalled the slowest overall increase in construction output since February.

The Bank of England left monetary policy unchanged even as the central bank predicted inflation would rise higher than previously expected. The monetary policy committee voted unanimously to leave interest rates at their record low of 0.1% and voted 7-1 to maintain the £875bn target for government bond purchases.

Visits to UK stores flatlined at a level far below pre pandemic trends in July as Covid-19 restrictions were lifted, industry figures show. Retail footfall fell 0.4% percentage point from June and was 28% less than two years earlier, figures from the British Retail Consortium and Sensormatic IQ showed.

UK private-sector growth slowed sharply in July and inflationary pressures increased as supply-chain issues and enforced worker absences due to Covid-19 isolation rules hit the economy, a survey showed on Wednesday. The IHS Markit/CIPS services Purchasing Managers' Index (PMI) sank to 59.6 in July, its lowest reading since March, from 62.4 in June.

Private equity firm Carlyle said on Wednesday that it has been given more time to consider whether to go ahead with an offer for Vectura, after it agreed to be bought by US tobacco company Philip Morris in a £1bn deal. Carlyle had originally agreed with Vectura to hold meetings on the deal by 3 August. However, the PE firm has now been given a new deadline of 24 August as it mulls whether to sweeten its bid for the FTSE 250 inhaler maker or walk away.

Retail footfall worsened further compared to pre-pandemic numbers in July, a new survey revealed on Thursday, even after the number of shoppers improved between the second and third week of the month when restrictions were lifted in England. Retail analysts Springboard said footfall worsened over the month as a whole to -24.2% when compared to July 2019, from -22.2% in June.

UK manufacturing growth slowed in July amid supply chain issues and staff shortages, according to a survey released on Monday. The IHS Markit/CIPS manufacturing purchasing managers’ index fell to 60.4 from 63.9 in June and from May’s record high of 65.6. Nevertheless, the PMI has signalled expansion for 14 months.

International events

German industrial production unexpectedly fell again in June amid supply issues, according to figures released on Friday by Destatis. Industrial production declined 1.3% on the month following a 0.8% drop in May, and versus expectations for a 0.5% increase.

Hiring in the US picked up last month, maintaining the nearly 1.0m per month pace of gains seen in June. But economists appeared divided on the outlook due to the still low labour force participation rate and the pick up in Covid-19 infections due to the so-called Delta variant.

German factory orders rebounded in June as Europe's biggest economy revived from Coronavirus lockdowns, official figures showed Orders rose 4.1% from the previous month in June on a price, seasonally and calendar adjusted basis, Destatis said. The figures were a turnaround from May when there was a 3.2% month-on-month drop.

First time jobless claims in the US were little changed during the latest week, but so-called continuing claims registered a large drop. According to the US Department of Labor, in seasonally adjusted terms the number of initial unemployment claims fell by 14,000 to reach 385,000 over the week ending on 31 July.

China’s services sector was more than buoyant in July, with data released overnight on Wednesday blasting past market expectations. The Caixin/Markit services purchasing managers’ index (PMI) rocketed to 54.9 in July, from 50.3 in June, well above the consensus forecasts for a minimal rise to 50.5.

Eurozone business activity expanded at its fastest pace since 2006 but rising prices and the spread of the Covid Delta variant dampened sentiment, according to a survey published on Wednesday. IHS Markit’s final composite Purchasing Managers’ Index climbed to 60.2 last month from June’s 59.5, its highest level since June 2006 as the easing of Covid-19 curbs and rapid vaccine rollout boosted the bloc’s service industry.

Eurozone retail sales rose a little less than expected in June as stores reopened, according to figures released on Wednesday by Eurostat. Retail sales increased 1.5% on the month following a 4.1% jump in May, and versus expectations for growth of 1.7%.

Private sector employment in the US grew less than expected in July amid a shortage of workers, according to the latest figures from the ADP. Employment rose by 330,000 from June, versus expectations for a 695,000 increase. Meanwhile, the June total of jobs added was revised to 680,000 from 692,000.

Activity in America's services sector accelerated by much more than expected, led by a pick up in output and new orders, especially in new export orders. The Institute for Supply Management's manufacturing sector Purchasing Managers' Index jumped from a reading of 60.1 for June to 64.1 in July (consensus: 60.4).

China’s manufacturing growth slowed in July, partly due to higher product prices, according to figures released on Monday. The Caixin manufacturing purchasing managers’ index fell to 50.3 from 51.3 in June, missing expectations for a reading of 51.0. This marked the worst reading in 15 months.