Weekly review

The FTSE 100 ended the week 144.06 points higher, closing at 7,661.02 on Friday.

Equity view

High-performance polymers group Victrex said on Friday that it had made "a solid start" to 2022, with first-quarter group revenues up 9% year-on-year at £74.6m and group sales volume 16% higher at 1,025 tonnes. Across its end-markets, Victrex said its electronics, energy and industrial, medical and value added reseller units saw "good year year-on-year growth". However, its automotive division's performance was modestly down year-on-year, reflecting current challenges in the industry.

British American Tobacco unveiled a £2bn share buyback as the FTSE 100 company reported higher annual profit boosted by sales of non-cigarette products. Operating profit for the year to the end of December rose to £10.23bn from £9.96bn a year earlier as revenue dipped 0.4% to £25.68bn. On an adjusted basis operating profit rose 5.2% to £11.15bn and revenue increased 6.9% to £25.68bn.

Independent hospital group Spire Healthcare revealed on Friday that chief financial officer Jitesh Sodha recently suffered an injury whilst cycling. Spire Healthcare said Sodha, who was "recovering well" in hospital after being in "a serious condition", would be covered by group financial controller Harbant Samra. Samra will report directly to chief executive Justin Ash.

Retailer Watches of Switzerland said on Thursday that both third-quarter and year-to-date revenues had grown, leading the firm to expect full-year revenues and profits to trend more towards the top end of guidance. Watches of Switzerland said third-quarter group revenues were up 27.9% at £348.1m, while year-to-date revenues were 38% stronger at £934.3m as demand for luxury watches continued to be "very strong" in both the UK and the US, consistently exceeding supply.

Cyber security firm Darktrace has signed a million-dollar deal with an unnamed global electronics corporation in order to ensure its business will be protected from "sophisticated and fast-moving" cyber-attacks. Darktrace said its client, which has over 250,000 employees across over 70 countries, had deployed its Darktrace Enterprise Immune System to defend the business from a growing level of advanced cyber-attacks.

Housebuilder Redrow posted a jump in interim profit on Thursday and record revenue amid strong demand, as it lifted its guidance for 2024. In the 27 weeks to 2 January, pre-tax profit rose 17% to £203m, on revenue of £1.05bn, up from £1.04bn in the same period a year prior. The interim dividend per share was lifted to 10p from 6p and the total order book grew to £1.5bn from £1.3bn.

Insurer Beazley said on Thursday that it swung to a full-year profit amid solid demand in the cyber market. In the year to the end of December 2021, the group swung to a pre-tax profit of $369.2m from a loss of $50.4m the year before, with gross premiums written up 30% to $4.6bn.

Customised electronics manufacturer DiscoverIE Group said on Wednesday that strong trading momentum seen in the first half had carried over into the four months ended 31 January, with a further strengthening of the firm's order book and significant year-on-year revenue growth. DiscoverIE stated it was on track to deliver full-year underlying earnings for continuing operations ahead of previous internal expectations, despite ongoing supply chain headwinds, as group orders were up 18% year-on-year in the four-month period and its order book hit a record level of £216.0m on 31 January. Group sales were 34% ahead of the prior year at constant currency.

Food and beverage ingredients supplier Tate & Lyle said on Wednesday that Dawn Allen had been appointed to the position of chief financial officer. Allen, who will take over the role on 16 May, joins the firm from Mars, where she has been the firm's global chief executive and Vice President of global transformation since 2020.

UK retailer Dunelm on Wednesday posted record first-half profit and declared a special dividend, as homeware and furniture sales continued to outperform the market but warned that cost pressures could see some price rises. The group said profits for the six months to December 25 rose 25.3% to £140.8m, in line with estimates. It lifted the interim dividend to 14p from 12p and declared a special dividend of 37p a share to return to leverage in line with published capital policy.

Real estate investment trust LondonMetric Property has acquired an urban logistics warehouse in Luton from Marcol Industrial for £15.5m. LondonMetric said on Wednesday that the 168,000 square foot property was located on Luton Enterprise Park and was currently let to two occupiers with a weighted average unexpired lease term of three years.

Energy company SSE upgraded its full-year adjusted earnings per share guidance from 83.0p to 90.0p on Tuesday, citing the "strength and stability" provided by its balanced mix of regulated and market-facing businesses. SSE stated a good financial performance from its flexible thermal and hydro plant was more than offsetting lower than planned renewables output and, as a result, now intends to recommend a full-year dividend of 81.0p per share plus RPI for the current trading year.

Residential property developer and housebuilder Bellway said on Tuesday that it had experienced "strong underlying demand" in the six months ended 31 January. Bellway stated it saw a 5.8% increase in overall reservation rates to 202 per week in the first half and a 3.8% increase in private reservation rates to 162 per week.

Travel company TUI on Tuesday said it expected pent up demand to drive summer holiday bookings towards pre-Covid pandemic levels as it narrowed losses and planned to repay some of the German state aid it received during the crisis. The Anglo-German company said first quarter revenue rose to €2.37bn (£2bn) from €468m (£395m). The quarterly loss fell 60% to €274m.

DCC said third quarter profit rose in line with expectations as the sales and marketing group's energy and healthcare businesses grew. The Dublin-based company said it had a good trading performance in the three months to the end of December, helped by acquisitions. DCC predicted operating profit would show a strong increase in the year to the end of March, in line with market expectations despite currency pressures and higher wholesale energy costs.

Taylor Wimpey said it had appointed Jennie Daly as chief executive, replacing Pete Redfern. Daly will take over after the house builder’s annual general meeting on April 26. She is currently the company’s group operations director and a board member, overseeing Taylor Wimpey's land, planning, design, technical, sustainability, production and supply chain functions, as well as managing the logistics business.

Real estate investment trust Great Portland Estates said on Monday that it had achieved record leasing since the start of the financial year. Great Portland Estates stated it signed 460,900 square feet of new lettings since the start of the financial year on 1 April 2021, generating a combined annual rent of £32.5m, with market lettings 9.8% ahead of March 2021's estimated rental value, surpassing its previous record leasing high of £31.8m in 2016 with two months of the financial year still remaining.

British pet care business Pets At Home has tapped Lyssa McGowan to take over as chief executive officer, with effect from 1 June. Pets At Home said on Monday that McGowan, who will succeed outgoing CEO Peter Pritchard, will join the firm from Sky UK, where she has worked for 11 years and currently serves as its chief consumer officer. She was also a non-executive director of Wm Morrison Supermarkets until its recent sale.

Bodycote said on Monday that chief financial officer Dominique Yates plans to retire once a successor has been appointed and an orderly handover of duties has been completed. Yates has been on the board for more than five years, having been appointed in November 2016, and will now pursue non-executive opportunities.

Investment company BBGI Global Infrastructure said on Monday that it had completed an investment in InPower BC General Partnership, the entity responsible for delivering the John Hart Generating Station Replacement project on the Campbell River in British Columbia. BBGI Global Infrastructure, which made the investment made through its existing strategic partnership with SNC-Lavalin Group, said the public-private partnership project consists of the design, construction, financing, maintenance, and rehabilitation of a new three-turbine, 132-megawatt hydroelectric power generation station.

Economic news

The Competition and Markets Authority announced “legally binding commitments” from Google on Friday, to address competition concerns over its Privacy Sandbox product. It said it was now moving to the next phase of its oversight, where it would supervise the Alphabet subsidiary to ensure the Privacy Sandbox was developed in a way that benefited consumers.

The UK economy shrank less than expected in December as activity to combat the Omicron variant helped offset the virus’s impact on services, official figures showed. Output fell 0.2% from November to December in the largest contraction since January 2021, the Office for National Statistics said. The drop was smaller than the 0.6% average decline forecast by economists in a Reuters poll.

The UK housing market got off to a strong start in 2022, industry research showed on Thursday. According to the latest residential market survey from the Royal Institution of Chartered Surveyors, a net balance of 74% respondents saw an increase in house prices in January, an improvement on December’s reading of 69%. The consensus was for no change.

Households’ confidence in their financial outlook has slumped to its lowest level in more than eight years, research published on Wednesday showed. According to polling firm YouGov and consultancy Centre for Business and Economic Research, households’ expectations for their financial situation in 12-months’ time fell 4.5 points in January to 79.1, the lowest since October 2013.

UK rents have hit a 13-year high, industry research showed on Wednesday, further compounding a growing cost of living crisis. According to the quarterly Rental Market Report from Zoopla, the real estate portal, rents rose 8.3% in the fourth quarter of 2021, to £969 per month, £62 more per month than at the start of the pandemic and a 13-year high.

Ofgem has accepted it should have toughed up financial oversight of the energy market much earlier, a week after it announced household bills would spike by 54% this year. Chief executive Jonathan Brearley said the regulator had been too focused on increasing competition in the retail energy market rather than the financial resilience of the smaller suppliers entering the market.

British house prices are expected to slow “considerably” over the next 12 months as households face a cost-of-living squeeze, mortgage lender Halifax said on Monday. Prices in January rose 0.3% month on month, the slowest pace since last June, in a further confirmation that the post-Covid pandemic recovery is running out of steam as soaring consumer prices dampen sentiment. Year on year, prices were 9.7% higher.

International events

Following Thursday’s strong US inflation print, Goldman Sachs now expects the US Federal Reserve to lift interest rates seven times this year, up from a previous forecast for five rate hikes. Goldman expects the US central bank to raise rates by 25 basis points each time. In addition, it continues to expect the FOMC to hike three more times at a gradual once-per-quarter pace in 2023 Q1-Q3 and to reach the same terminal rate of 2.5-2.75%, but earlier.

Oil supplies from OPEC+ over the course of 2022 could undershoot the producer alliance's own goals by 1.0bn barrels unless those member countries who have spare capacity on hand increase their output, the world's oil watchdog said. Underinvestment by members of oil cartel OPEC and its allies, which together are known as OPEC+, means that some countries are incapable of meeting their individual production quotas under existing agreements.

The 'rates shock' that has sideswiped Wall Street is close to being priced-in but a negative 'growth shock' is only beginning, cautioned equity strategists at Bank of America. Among other things, they noted that the odds of an intra-meeting interest rate hike by the Federal Reserve over the next three weeks was now at 25%.

The cost of living in the US picked up more quickly than expected at the start of 2022 amid broad-based gains among the various categories of goods and services. According to the US Department of Labor, in seasonally adjusted terms, the Consumer Price Index advanced at a month-on-month pace of 0.6% (consensus: 0.5%) in January.

The European Commission has cut its economic growth forecasts for 2022, after the year got off to a weaker-than-expected start. The Commission now expects the European Union and Eurozone to both grow by 4.0% in 2022, and by 2.8% and 2.7% respectively in 2023. Last autumn it predicted the Eurozone and wider bloc would grow by 4.3% in 2022.

The number of Americans filing for unemployment claims for the first time decreased by a bit more than anticipated last week. According to the US Department of Labor, in seasonally adjusted terms, initial jobless claims fell by 16,000 over the week ending on 5 February to reach 223,000.

Interest rates in the single currency bloc may need to go higher as soon as 2022 as the costs of acting too slowly could be "significantly" higher, the new head of the German central bank said. In an interview with Die Zeit, Joachim Nagel said: "If the (inflation) picture remains unchanged in March, I will be in favour of normalising monetary policy.

German exports rose unexpectedly at the end of 2021, official data showed on Wednesday. According to Destatis, the country’s Federal Statistical Office, exports rose 0.9% in December on a calendar and seasonally-adjusted basis compared to November, when they increased by 1.8%, and by 15.6% year-on-year. For the year as a whole, exports rose 14.0% to €1,375.5bn.

US small business confidence fell to an 11-month low in January, according to the National Federation of Independent Business, as ongoing worker shortages and increased prices for raw materials weighed on sentiment. The NFIB's small business optimism index fell 1.8 points to 97.1 last month for its lowest reading since February 2021, with half of the 1,504 small businesses participating in the poll reportedly raising staff compensation - the highest reading for that particular metric in 48 years.

German scientists have shown that the human immune system creates an abundant amount of high quality antibodies capable of neutralising Omicron once it has encountered the virus's spike protein three times. The results of the study conducted by researchers from Ludwig-Maximilians-Universitaet, Munich's Technical University and Munich Helmholtz were reported by Spanish daily El Mundo.

The European Union is in discussions with the US and other potential suppliers about securing more gas deliveries to Europe in the face of “growing evidence” Russia is using exports as political leverage, said EU Commission President Ursula von der Leyen. Speaking at a conference, she said Russian state-owned energy company Gazprom was exporting historically low supplies of gas to the EU despite “peak prices and exuberant demand” in what she called “very strange business behaviour”.

Investor sentiment strengthened across the Eurozone in February, a closely-watched survey showed, beating expectations. The headline Sentix Economic Index came in at 16.6 compared to 14.9 in January and well above consensus expectations of 15.2. It was also the highest reading since November.