Weekly review

The FTSE 100 ended the week 130.81 points lower, closing at 7,087.90 on Friday.

Equity view

The consortium led by Fortress Investment Group said it was "considering its options" over Morrisons after its takeover offer was trumped by rival private equity group Clayton, Dubilier & Rice (CD&R). It called on Morrisons' shareholders to "take no action" on CD&R's £7bn agreed bid, trumping its own £6.7bn offer for the UK supermarket chain.

Irish building materials group Kingspan reported a jump in first-half trading profit and revenue on Friday amid a recovery in the construction sector. In the six months to the end of June, trading profit rose 64% to €329m, with revenue up 41% at €2.9bn. Pre-tax profit came in at €297.2m, up from €177.5m in the first half of 2020.

Specialist property investor LXi announced a number of accretive acquisitions for a total cost of £80m on Friday, reflecting an accretive 5.25% average net initial yield, compared to a current portfolio value of 4.7%. The FTSE 250 real estate investment trust said the acquisitions benefited from a long weighted average unexpired lease term (WAULT) to the first break of 23 years, “high-quality” tenants, “robust” sectors and inflation-linked rental uplifts.

AstraZeneca announced on Friday that its rare disease division Alexion is discontinuing ‘CHAMPION-ALS’, the global phase 3 clinical trial of ‘Ultomiris’, or ravulizumab, in adults with amyotrophic lateral sclerosis (ALS). The FTSE 100 drugmaker said the decision was based on the recommendation of the independent data monitoring committee, following its review of data from a prespecified interim analysis.

UK Business Secretary Kwasi Kwarteng on Thursday ordered an inquiry into the proposed takeover of Ultra Electronics by Cobham Group. Kwarteng said he had instructed the Competitions & Markets Authority (CMA) to investigate the proposed £2.57bn deal to assess any national security concerns.

Landscape products company Marshalls lifted its expectations for 2021 and 2022 on Thursday as it reported strong growth in the first half amid supportive market conditions. In the six months to 30 June, pre-tax profit jumped to £38.9m from £1.6m in the first half of 2020 and £37.1m in the same period two years ago. Meanwhile, revenue was up 42% compared to 2020 at £298.1m, and 6% higher versus 2019.

Telecommunications infrastructure company Helios Towers said on Thursday that revenue rose in the first half of the year, but operating profit fell, partly due to increased deal costs. In the six months to 30 June, revenue was up 4% to $212.4m, driven by continued organic tenancy growth across the group and the addition of 1,264 tenancies through the acquisition of Free Senegal's passive infrastructure assets, which closed in the second quarter.

McBride shares tumbled on Thursday after the cleaning products maker cautioned that adjusted pre-tax profit for 2022 was set to slump due to "exceptional" price increases of raw materials. "Although only seven weeks into the new financial year, the previously highlighted raw material environment remains extremely challenging both in terms of exceptional price increases and supply availability," it said.

Payments company Network International said on Wednesday that it swung to a profit in the first half as revenue surged amid a recovery from the pandemic, as it backed its full-year expectations. In the six months to 30 June, the company swung to a pre-tax profit of $15m from a loss of $936,000 in the same period a year ago, with revenue up 16.5% at $156.4m. Network said the performance and KPIs across business lines and key regions showed an ongoing recovery from Covid-19.

Infrastructure group Balfour Beatty swung to profit and reinstated its dividend as it announced a withdrawal from fixed-price residential projects in London. Interim pre-tax profit was £35m for the six months to July 2, compared with a loss of £26m a year ago as revenue edged up 1% to £4.15bn. A 3p-a-share dividend was declared, up 43% from the pre-pandemic payout for 2019.

Real estate firm Sirius Real Estate said on Wednesday that it had acquired four business park assets and one land parcel for €84.8m. Sirius stated the park acquisitions were located in Oberhausen, Frankfurt, Heiligenhaus and Öhringen in Germany and provided over 150,000 square metres of lettable space, while the acquired land parcel is adjacent to the firm's existing asset in Neuruppin.

Industrial valve maker Rotork on Wednesday said it was buying back up to £50m of its shares. The company said the first tranche of the buyback - up to £20m - would start on Thursday and end no later than September 30.

BT Group said on Tuesday that it has poached the chairman of online fashion retailer Asos, Adam Crozier. Crozier will succeed Jan du Plessis as chairman. He will join the board as an independent non-executive director and chairman designate with effect from 1 November and will become chairman with effect from 1 December, when du Plessis retires from the board.

Water pipe and ventilation group Genuit lifted full-year guidance after reporting higher interim profits were boosted by acquisitions. Pre-tax profit rose 7.6% to £33.8m for the six months to June 30 as revenue increased 32.4% to £295.6m.

Online trading platform Plus500 posted a dip in interim earnings and revenue on Tuesday as trading levels normalised, but said revenue for the year was set to be "significantly ahead" of current market forecasts. In the six months to 30 June, earnings before interest, tax, depreciation and amortisation fell 48% from the same period a year ago to $187.6m, with revenue down 39% at $346.2m. However, the figures were still comfortably above pre-pandemic levels.

BHP declared a record final dividend of 200 US cents (145p) after a “strong” set of final results on Tuesday, as it also announced plans to merge its energy interests with Australia’s Woodside Petroleum. The FTSE 100 miner said “record volumes” were achieved at Western Australia Iron Ore (WAIO), Goonyella and Olympic Dam in the 12 months ended 30 June, with Escondida maintaining average concentrator throughput at record levels.

Future on Monday said it had bought consumer media company Dennis for around £300m in cash from Exponent Private Equity. Dennis publishes titles including Kiplinger, MoneyWeek, The Week and IT Pro. Future’s stable includes the Marie Claire, TechRadar and GoCompare titles.

LondonMetric Property has exchanged on the sale of its distribution warehouse in Thrapston, Northamptonshire, to EQT Exeter for £102m, it announced on Monday, reflecting a net initial yield of 4.1%. The FTSE 250 real estate investment trust said the 785,000 square foot warehouse was let to Primark for another 11 years at a rent of £4.4m per annum.

Just Group has sold a portfolio of lifetime mortgages to Rothesay Life for £334m. The retirement specialist announced with its interim results last week that it was in the process of selling a portfolio of LTMs with a loan value of more than £475m and an IFRS value as at 30 June 2021 of £493m.

Defence group Cobham on Monday said its £2.57bn offer for UK-based rival Ultra Electronics had been agreed. Cobham is offering £35 a share and “legally binding and enforceable commitments” to the UK government on national security matters.

Economic news

UK retail sales unexpectedly fell in July as people spent less on groceries and more on going out and as the boost from the Euros faded, according to figures released on Friday by the Office for National Statistics. Retail sales declined 2.5% on the month versus expectations for a 0.4% increase. Still, they were up 5.8% compared with their pre-pandemic levels in February 2020.

Public sector borrowing continued to slow last month, undershooting forecasts by a wide margin, but nevertheless remained near record highs. According to the Office for National Statistics, public sector net borrowing, excluding banks, reached £10.4bn in July (consensus: £11.9bn).

The Competition Appeal Tribunal has approved a £10.0bn class action against Mastercard that could entitle 46.0m British adults to roughly £300 each if successful. The CAT had been expected to certify the UK's first mass consumer class action, brought by former financial ombudsman Walter Merricks, after the Supreme Court overruled objections to it back in December 2020.

UK inflation fell more than expected in July, easing pressure on the Bank of England, according to figures released on Wednesday by the Office for National Statistics. Consumer price inflation declined to 2% from 2.5% in June, coming in line with the BoE’s 2% target and below expectations of 2.3%. This marked the first easing in inflation since February.

UK house prices rose at their fastest annual rate in June since 2004 as buyers rushed to beat the stamp duty deadline, according to figures released on Wednesday by the Office for National Statistics. House prices rose 13.2% in June from a year earlier to £265,668, up from a 9.8% jump in May. Compared with the previous month, house prices were up 4.5%.

UK job vacancies hit a record high in May to July amid staff shortages in many industries, according to figures released on Tuesday by the Office for National Statistics. Vacancies rose by 290,000 from the previous quarter to 953,000. This was a 168,000 increase compared to pre-pandemic levels between January and March 2020.

Grocery sales fell 4% year-on-year over the 12 weeks to 8 August, fresh data revealed on Tuesday, although sales were declining much more slowly in the shorter term, by 0.5% over the past four weeks. Data outlet Kantar said it was apparent that the Covid-19 pandemic was still having an impact on people’s spending as grocery sales remained 9.9% higher in the latest 12 weeks than in 2019.

Average asking prices for UK houses fell for the first time in 2021 during July following the conclusion of the primary phase of Downing Street's stamp duty holiday. Property prices had fallen an average of 0.3% since mid-July, according to data from Rightmove, principally driven by a cooling at the top end of the market, with the average asking price for a home across the UK slipping to £337,371.

The UK government has started a probe into renewable energy tariffs over concerns that providers are overstating environmental benefits. As more people switch to so-called “green” energy deals, the government said it would review how the sector markets these tariffs to consumers. Nine million households are on contracts branded “100% renewable”.

International events

Manufacturing activity in the US mid-Atlantic region slowed in August as firms ran down their inventory levels, the results of a closely-followed survey revealed. The Federal Reserve Bank of Philadelphia's factory sector index slipped from a reading of 21.9 for July to 19.4.

US housing starts fell by more than expected last month, pointing to a normalisation in demand for housing to pre-pandemic levels. According to the US Department of Commerce, housing starts fell 7.0% month-on-month to reach an annualised pace of approximately 1.53m (consensus: 1.61m).

The eurozone economy grew 2% in the second quarter as Covid restrictions eased, according to data released on Tuesday by Eurostat. This followed a 0.3% contraction in the first quarter and was in line with analysts’ expectations.

A majority of global investors continue to expect the rally in European equities to continue in 2022, the results of a closely-followed survey revealed. However, growth expectations had been cut "sharply", partly on the back of concerns about the Covid-19 Delta variant, making investors a tad more cautious.

Americans closed their purse strings unexpectedly last month, especially when it came to purchases of cars and trucks. According to the Department of Commerce, in seasonally adjusted terms, US retail sales volumes dropped at a month-on-month pace of 1.1% in July to reach $617.7bn.

US industrial production accelerated sharply last month, led by gains in manufacturing of motor vehicles, business equipment and defence and space equipment. According to the Department of Commerce, total output jumped at a month-on-month clip of 0.9% in July (consensus: 0.5%).

Growth in China’s industrial production and retail sales slowed sharply in July amid flooding and a rise in Covid cases, according to data released on Monday by the National Bureau of Statistics. Industrial production rose 6.4% on the year following an 8.3% increase in June, coming in below consensus expectations of 7.% growth.

Manufacturing activity in the New York area expanded more slowly in August, according to a survey released on Monday. The New York Fed’s Empire State index fell to 18.3 from July’s record 23.0, making the lowest reading since March and coming in below expectations for a reading of 28.5.