Weekly review

The FTSE 100 ended the week 169.46 points higher, closing at 7,291.78 on Friday.

Equity view

Associated British Foods said Primark trading for the year to date was ahead of expectations with improved like-for-like sales compared to the final quarter of last year, but warned of increasing Covid cases hitting stores in Europe. The company on Friday added that it expected annual sales to be “significantly better” than the prior year when the Covid pandemic shut its stores for five months.

Food packaging business Hilton Food Group said on Friday that it has agreed to acquire smoked salmon producer Dutch Seafood Company as part of an effort to expand its presence in a growing protein category and enter the US, a new geography for the firm. In order to fund the bulk of the €90.0m acquisition, Hilton Food launched an equity placing aimed at raising approximately £75.0m, while the balance will be funded through a committed acquisition bridge facility.

Mining giant Anglo American forecast a stronger performance in 2022 than the current year, as it focused on its Quellaveco copper project in Peru. The company said it was set to deliver 35% growth over the next decade at margins of 50%, while forecasting capital expenditure of $6.2bn - $6.7bn for 2022.

Investment firm HgCapital Trust revealed on Friday that it has made an approximately £9.4m investment into post-trade automation and collateral management technology provider Pirum Systems. The terms of the transaction were not disclosed and the transaction remained subject to regulatory approval.

Cybersecurity group Avast has agreed to acquire US self-sovereign identity firm Evernym. Avast said on Thursday that the acquisition was expected to close in mid-December, with the general availability of products based on Evernym's technology set to follow in 2022.

Rolls-Royce said annual free cash flow would be better than expected after trading improved but sales at its civil aerospace were lower than forecast. The FTSE 100 engine maker said it also benefited from a delay to about £300m of outflows from 2021 to 2022. As a result, free cash outflow in 2021 is expected to be better than earlier guidance for £2bn.

DS Smith said financial performance would improve as the packaging company reported a sharp rise in first-half operating profit and an increase in the interim dividend. Adjusted operating profit rose 20%, or 26% excluding currency movements, to £276m in the six months to the end of October as reported revenue increased 16% to £3.36bn. Pretax profit rose 80% to £175m.

Watches of Switzerland posted a jump in first-half profit and revenue on Thursday as it hailed a "robust" performance in the UK and an "outstanding" one in the US. In the 26 weeks to the end of October, adjusted pre-tax profit rose 71.6% on the same period a year ago to £65.7m, with revenue up 41.5% at £586.2m.

Miniature wargames manufacturer Games Workshop said on Wednesday that pre-tax profits had slipped in the six months ended 28 November despite seeing sales moderately improve. Games Workshop now anticipates interim sales to be no less than £190.0m, up from £186.8m at the same time a year ago as a result of growth in both its retail and trade channels, while pre-tax profits were pegged to be approximately £86.0m, down from £91.6m.

Berkeley increased its guidance for the current year and beyond as the housebuilder reported a 26% increase in first-half profit fuelled by its investment in London and surrounding areas. Pretax profit for the six months to the end of October rose to £290.7m from £230.8m a year earlier as revenue increased 36.3% to £1.22bn.

The chief executive of Taylor Wimpey is to step down after more than 14 years in the role, the housebuilder said on Wednesday. Pete Redfern will leave the business once a replacement has been found and a full handover has taken place.

Upper Crust and Ritazza owner SSP reported a widening of its full-year losses on Wednesday as it took a hit from Covid-related restrictions. In the year to 30 September, underlying pre-tax losses widened to £393.1m from £371.8m in 2020, with revenue down 41.8% to £834.2m. Compared to 2019, revenue was 70.1% lower.

Ferguson said its expectations for annual results had increased after the plumbing and heating distributor reported a surge in first-quarter profit. Operating profit for the three months to the end of October rose 64.2% to $739m (£556m) as reported net sales increased 26.6% to $5.37bn. On an adjusted basis, operating profit rose 58.5% to $767m.

British American Tobacco maintained annual profit and sales guidance as more people switched to its vaping and oral nicotine products. The maker of Dunhill and Lucky Strike cigarettes on Tuesday said customers using its non-combustible products rose by 3.6 million, to 17.1 million.

Fund manager Liontrust Asset Management had entered into a conditional sale and purchase agreement to purchase British asset manager Majedie Asset Management for as much as £120.0m. Liontrust said on Tuesday that the Majedie proposition has "a well-established position" in the UK investment management market that will benefit from "the power, reach and engagement" of Liontrust's distribution and brand.

GlaxoSmithKline and Vir Biotechnology on Tuesday said their antibody Covid-19 treatment was effective against all mutations of the Omicron variant, according to early-stage studies. The preclinical data showed the sotrovimab treatment was effective against the 37 known mutations of the Omicron variant, GSK said in a statement.

Shipping broker Clarkson on Monday lifted annual profits guidance as the global economy recovers from the impact of Covid-19. The company said it now expected underlying profit before tax to be at least £65m, with performance strong across all divisions, especially in finance and broking.

Media company WPP said on Monday that it has acquired a majority stake in branding and design agency Made Thought for an undisclosed sum. WPP will integrate Made Thought into its AKQA business and join forces with the company's Universal Design Studio and Map Project Office to form The New Standard, a collective aimed at providing clients with "transformational design and creative thinking".

3i Infrastructure has bought a 92% stake in equipment rental company SRL Traffic Systems for £191m. Management has re-invested to buy the remaining 8% stake, while 3i provided a further £83m of debt financing to SRL with the intention of replacing this with third party debt “in due course”, the company said on Monday.

ContourGlobal upgraded its full-year earnings guidance on Monday following a stronger-than-expected performance from its natural gas fired power plant in Arrubal, Spain. The company, which also cited current trading as a reason for the upgrade, now expects FY 2021 adjusted EBITDA of between $810m and $840m, up from guidance of $780m to $810m given in October.

Economic news

The UK economy barely grew in October as the post-pandemic recovery stalled, according to figures released on Friday by the Office for National Statistics. GDP grew just 0.1%, coming in weaker than expectations for 0.4% growth and leaving the economy 0.5% below pre-pandemic February 2020 levels.

Renewed restrictions to combat Covid-19 threaten the fragile recovery of Britain's pubs, bars and restaurants and thousands of jobs, according to a survey. Sales at managed bars and eateries rose 2% in November compared with two years earlier, the Coffer CGA business tracker showed. Pubs and bars recorded 3% growth and restaurant takings rose 2%.

The Bank of England is still likely to hike interest rates by 15 basis points to 0.25% at its December meeting despite the rise in uncertainty around the Omicron variant, Deutsche Bank senior economist Sanjay Raja said on Thursday. Raja said Deutsche was sticking to its call because fundamentally, news of the Omicron variant has changed little on the medium-term economic outlook.

The government's renewed Covid-19 restrictions are a "hammer blow" to retail footfall that will halve visits to London stores compared with pre-pandemic levels, retail consultant Springboard predicted. On Wednesday evening Prime Minister Boris Johnson announced the adoption of "plan B" measures to limit infections of the Omicron variant. These included working from home where possible from Monday and more wearing of masks in public.

Senders and recipients of parcel deliveries are set to be treated “more fairly” by carriers under new protections proposed by the communications regulator Ofcom on Thursday, following an investigation into the sector. Ofcom said it had found that 64% of customers had experienced problems with deliveries in the last three months, with about a quarter of senders finding it difficult to make a complaint, or to contact parcel operators, when a delivery goes wrong.

House prices held steady in November, industry research showed on Thursday, as the number of people putting their homes on the market continued to ease. According to the latest Residential Market Survey from the Royal Institution of Chartered Surveyors, the net balance of surveyors reporting that house prices have risen over the past three months remained unchanged in November at +71, a touch above consensus for +70.

Food inflation pushed higher last month, industry data showed on Tuesday, with Christmas staples already costing more. According to research from retail consultancy Kantar, grocery prices rose 3.2% in the four weeks to 28 November, the highest rate of inflation since June 2020. For the 12 weeks to November end, grocery inflation stood at 2.2%.

UK house price growth has hit a 15-year high, industry research showed on Tuesday, fuelled by strong demand and a shortage of properties. According to the latest Halifax house price index, the value of an average property increased 1% in November, or by £2,808, to £272,992. Consensus had been for an increase of 0.6%. November is now the fifth consecutive month that house prices have risen.

UK retail sales jumped last month, industry data showed on Tuesday, as consumers sought out Black Friday deals and got a head start on Christmas shopping. According to the BRC-KPMG Retail Sales Monitor, total sales strengthened 5.0% last month, compared to growth of 0.9% a year previously.

A top Bank of England official said that the central bank's inflation forecast for the second quarter of 2022 may need to be raised. "The aggregate rate of inflation is likely to rise further over the next few months and the chances are that it will comfortably exceed 5% when the Ofgem (regulator) cap on retail energy prices is next adjusted, in April," BoE deputy governor, Ben Broadbent, said in a speech at the Leeds University Business School.

International events

American consumers' confidence had little changed at the start of December, but there were signs of a potential wage-price spiral taking form, the results of a closely-followed survey revealed. A preliminary reading on the University of Michigan's consumer confidence index for the month of December printed at 70.4, up from 67.4 in the month before and ahead of forecasts for a reading of 68.0.

US inflation surged to a 39-year high in November amid supply constraints, according to figures released on Friday by the Labor Department. Consumer prices rose 0.8% on the month, down from 0.9% growth in October and taking the annual rate to 6.8%, up from 6.2% the month before. This marked the biggest annual jump since 1982.

Initial jobless claims fell to a 52-year low in the week ended 4 December, according to the Labor Department, as the US jobs market continued to climb out of its Covid-19 pandemic-fuelled hole. First-time filings for unemployment came to 184,000 for the week, their lowest print since September of 1969 and better than the 211,000 expected by economists.

The European Union has published a series of proposals intended to bolster employment rights for gig workers. The package of reforms published on Thursday features a proposed directive on improving working conditions, including ensuring people working for digital platforms are given the correct legal employment status, and new rights for workers regarding the use of algorithms by apps.

The supply and demand imbalance in the US jobs market reached record proportions in October, the results of a closely-followed survey revealed. The supply and demand imbalance in the US jobs market reached record proportions in October, the results of a closely-followed survey revealed.

Three doses of the Covid-19 vaccine developed by Pfizer and BioNTech do neutralise the Omicron variant of Covid-19, the results of a preliminary study revealed. Two doses of the vaccine on the other hand revealed a "significant" reduction in neutralisation titers, the two companies said.

Strong domestic demand supported Eurozone economic growth in the third quarter, official data showed on Tuesday. Eurostat, the European Union’s statistical office, confirmed gross domestic product expanded at a quarter-on-quarter pace of 2.2% on a seasonally-adjusted basis, and by 2.1% across the wider EU, the same as in the second quarter and in line with its previous estimate.

German investor sentiment deteriorated in December amid Covid restrictions and supply issues, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim. The headline ZEW investor expectations index fell to 29.9 from 31.7 in November. Meanwhile, the current situation index declined to -7.4 in December from 12.5 the month before. This was the first time since June that the situation indicator has been in negative territory again.

German industrial production rose more than expected in October, according to figures released on Tuesday by Destatis. Industrial production was up 2.8% on the month following a 0.5% decline in September, beating expectations for a 0.8% increase. On the year, output fell 0.6% in October following a 0.4% drop the month before.

Chinese exports growth slowed marginally in November, official data showed on Tuesday, but imports unexpectedly surged. According to customs data, exports rose 22% year-on-year, slower than October’s rise of 27.1%. It was, however, ahead of consensus expectations for growth of around 20.3%.