Weekly review

The FTSE 100 ended the week 147.4 points lower, closing at 7,513.62 on Friday.

Equity view

Real estate investment trust Segro hiked its full-year dividend on Friday as it said 2021 had been "a highly successful year" for the firm, with adjusted pre-tax profits and net asset value improving amid record levels of rental growth. Segro hiked its full-year dividend by 10% to 24.3p as it posted a 20% jump in pre-tax profits to £356.0m, a 15% increase in adjusted earnings per share to 29.1p and a 40% improvement in its adjusted net asset value per share to 1,137.0p, driven by portfolio valuation growth of 29%.

TBC Bank said annual profit more than doubled in 2021, driven by strong income and a recovery in the Georgian economy. Pre-tax profit for the 12 months to December 31 rose to 921m Georgian lari (£226m) from GEL 322.5m. Fourth-quarter profit more than doubled to GEL 225.4m compared with GEL 109.7m for the same period a year earlier.

Drugmaker GlaxoSmithKline has voluntarily paused enrolment and vaccination in the GRACE phase III trial evaluating its potential respiratory syncytial virus maternal vaccine candidate, as well as two other trials of the candidate in pregnant women. GlaxoSmithKline said on Friday that the decision was made following a recommendation from the Independent Data Monitoring Committee based on an observation from a routine safety assessment.

Industry watchdog the Competition and Markets Authority has opened an investigation into CVS Group's purchase of Quality Pet Care in December 2021, stating the merger raises competition concerns in Bristol, Nottingham, Portsmouth, Southampton and Warrington. The CMA said its investigation of CVS' acquisition of Quality Pet Care, which trades as the Vet, found that the combined businesses would account for "a significant proportion" of veterinary services in each of the five areas mentioned.

Property investment firm CLS Holdings has exchanged contracts to acquire a 9,168 square metre office building in Dusseldorf from Alstria Office REIT for €25.0m. CLS Holdings said on Thursday that the property was currently occupied by three tenants, including the anchor tenant Amevida, Kinderparadies, and ConSol, with a weighted average unexpired lease term of around eight years. The property currently has a net initial yield of 5.1% and a reversionary yield of 5.7%.

Packaging and paper group Mondi has agreed to offload its personal care components business to Nitto Denko for an enterprise value of €615.0m. Mondi said on Thursday that its strategic focus was to grow in packaging and given the "limited overlap" of the division with the rest of its business, it decided that the next phase of the unit's development would be better if "undertaken outside of the group".

Aveva reported solid growth in the third quarter and targeted faster revenue growth to come as the industrial software group left its guidance for the current year intact. The industrial software also unveiled a board update including a new chief financial officer.

Reckitt Benckiser suffered an £804m annual operating loss caused by the sale of its Chinese infant formula business but the consumer goods company was upbeat about growth. The FTSE 100 group swung to the loss under IFRS accounting rules for the year to the end of December from a profit of £2.16bn a year earlier. Net revenue fell 5.8% to £3.36bn.

Drugmaker AstraZeneca revealed on Wednesday that Saphnelo had received European Union approval as an add-on therapy for the treatment of adult patients with moderate-to-severe, active autoantibody-positive systemic lupus erythematosus. AstraZeneca said Saphnelo was the first biologic for SLE approved in Europe with an indication that was not restricted to patients with a high degree of disease activity. The FTSE 100-listed firm noted that the approval by the European Commission was based on results from Saphnelo's clinical development programme, including its TULIP Phase III trials and the MUSE Phase II trial.

Primary Health Properties lifted its dividend as it unveiled a rise in annual earnings, driven by demand for facilities to catch up on the backlog of delayed operations due to the Covid pandemic. The company on Wednesday posted adjusted earnings of £83.2m, up 13.8% on a 4.2% increase in net rental income to £136.7m. The dividend was increased to 6.2p a share from 5.8p.

Arbuthnot Banking said trading was successful in the final three months of 2021 and that profit would meet expectations. The private and commercial bank published a short trading update ahead of annual results scheduled for 24 March.

Real estate investment trust LondonMetric has disposed of a car showroom investment in Solihull for £15.0m, reflecting a net initial yield of 4.75%. LondonMetric said the 52,000 square foot asset was acquired as part of its Savills IM Fund acquisition in December 2021 and was currently let to Johnsons Cars, operating as Volkswagen, for a further 17 years, generating £800,000 in rent per year. Completion of the sale has been delayed until the end of April, which will result in an additional £200,000 of rental income.

Iron ore pellets exporter Ferrexpo tapped Jim North to take over as permanent chief executive officer on Tuesday, with immediate effect. North has held the position of acting CEO since May 2020, having previously been the group's chief operating officer since 2014.

Engineering services firm Babcock has entered into a sales and purchase agreement to acquire the remaining 50% interest in its Australian Naval Ship Management joint venture for AUD $60.0m (£32.0m). Babcock said on Tuesday that the acquisition will allow its Australasian arm to further strengthen the breadth of its support to the Australian Defence Force's maritime capability and provide additional capability for the nation's current and future maritime programmes.

BHP is handing back more than $7bn to shareholders in a record half-year dividend as soaring commodities helped the world’s biggest mining company post a jump in profits. The company said net profits rose to $9.4bn in the six months to December 31 from $3.9bn a year earlier. Underlying attributable profit of $9.7bn was up 57 per cent on revenue from continuing operations of $30.5bn and beat expectations of $8.96bn.

Pharmaceutical company AstraZeneca said on Tuesday that results from a recent study revealed that its Lynparza asset reduced the risk of first-line metastatic castration-resistant prostate cancer progression by 34% when used in combination with abiraterone. AstraZeneca stated the combination demonstrated "a statistically significant and clinically meaningful improvement" in radiographic progression-free survival versus current standard-of-care.

Real estate trust LXi said it had bought nine properties for £87m, funded by its recent £250m capital raise. The acquisitions, with seven different vendors/developers, reflect an accretive 5.1% net initial yield (net of purchase costs), versus the current portfolio valuation yield of 4.5%.

Chemical company Synthomer said it expected full year core earnings to double, in line with expectations, but cautioned that sales of latex gloves during the Covid pandemic had peaked. The company now sees core profits of £518.4m, compared with £259.4m a year earlier and £177.9m in pre-pandemic 2019.

IP Group said its portfolio company Bramble Energy had completed a £35m funding round to further develop and commercialise its fuel cell stack capabilities. The intellectual property investor said it committed around £10m to the round, adding that its 32.3% stake in Bramble would be valued at £20.7m, a gain of about £6.6m.

Apax Global Alpha announced on Monday that the Apax X fund, in which it is a limited partner, has signed a definitive agreement to acquire technology-led risk management and compliance specialist Alcumus. The FTSE 250 company said Apax X had also signed a definitive agreement to acquire a controlling stake in Ole Smoky Distillery - one of the fastest=growing spirits companies in the United States.

Economic news

UK retail sales bounced back in January as shoppers hit the high streets again, according to figures released on Friday by the Office for National Statistics. Sales rose 1.9% following a 4% slump in December, when Omicron took its toll. This was ahead of analyst expectations for a 1% increase and marked the strongest monthly jump since lockdown ended last Spring. It left sales volumes 3.6% above their pre-pandemic levels.

The average UK house price increased by 10.8% in the year to December, putting further pressure on buyers as interest rates and taxes rise. According to the latest UK house price index from the Office for National Statistics (ONS), house prices climbed from £27,000 to £275,000 in December. Price increased 0.8% from November.

UK inflation hit 5.5% in January as consumer prices hit their highest level since 1992, the Office for National Statistics said on Wednesday. The rise compared with December's 5.4% and forecasts of an unchanged figure is another sign of the increasing squeeze on household budgets. The ONS said there had been fewer January sales as retailers looked to pass on higher costs.

UK wages rose in the final quarter of 2021 as the Labour market withstood the end of furlough and the start of the Omicron wave, official figures showed. Average weekly earnings including bonuses increased 4.3% in the three months to the end of December, the Office for National Statistics said. Excluding bonuses, earnings rose 3.7%.

Footfall at UK retail destinations rose last week as workers continued to return to offices, according to figures released on Monday by retail analyst Springboard. Footfall increased 2.2% on the previous week, with footfall on high streets up 2.6%, while shopping centres and retail parks saw rises of 2.4% and 1.1%, respectively.

The cost of commuting is set to rise further in the capital, with Transport for London announcing its biggest fare increases in more than 10 years on Monday. Fares on TfL services will rise by 4.8% overall on 1 March, the local government body said, to help it reach “financial sustainability”.

International events

Sales of US existing homes unexpectedly rose in January, while housing inventory was at a record low, according to data released on Friday by the National Association of Realtors. Sales were up 6.7% from December to a seasonally-adjusted annual rate of 6.5m. Analysts had been expecting sales to fall 1% to 6.1m. Compared with a year earlier, sales were down 2.3%.

The number of Americans filing first-time unemployment claims registered their sharpest increase in four weeks, well ahead of market expectations for a print of 219,000. Initial jobless claims increased by 23,000 to 248,000 in the week ended 12 February, according to the Labor Department, while the four-week moving average decreased by 10,500 to 243,250 and continuing claims printed at 1.59m.

Passenger car registrations in the European Union fell further in January, according to fresh industry data on Thursday, with the ongoing semiconductor shortage still negatively affecting car sales across the region. The European Automobile Manufacturers Association (ACEA) said even though a new record for the lowest January total in terms of volume was set in 2021, registrations in the same month this year contracted by a further 6% to reach 682,596 units.

Euro area industrial production jumped past forecasts at the end of 2021 on the back of a surge in demand for capital goods. According to Eurostat, in seasonally adjusted terms, total output expanded at a month-on-month pace of 1.2% (consensus: 0.1%).

Chinese inflation eased in January as food prices fell and factory gate inflation slowed, official figures showed. Consumer inflation slowed to an annual rate of 0.9% from 1.5% a month earlier and was lower than the 1% average economists' estimate. Producer price inflation eased to 9.1% from 10.3%, undershooting expectations for a 9.5% reading.

Wholesale price inflation in the US continued rising at a brisk pace last month amid big gains both at the headline and core level. According to the Department of Labor, in seasonally adjusted terms, so-called final demand inflation jumped at a month-on-month pace of 1.0% in January, doubling the consensus forecast.

Employment growth in the single currency area slowed at the end of last year but nevertheless continued to grow at a steady clip in annual terms. According to Eurostat, in seasonally adjusted terms employment grew at a quarter-on-quarter pace of 0.5% over the three months to December, down from the 1.0% clip observed over the preceding three months.

German investor sentiment improved more than expected in February amid expectations that Covid restrictions would be eased, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim. The headline ZEW investor expectations index rose to 54.3 from 51.7 in January, coming in ahead of expectations for a reading of 53.5. Meanwhile, the current situation index improved to -8.1 in February from -10.2 the month before.

A top US central bank official laid out the case on Monday for front-loading the removal of central bank accommodation, although he believed that was possible without disrupting markets. "I do think we need to front-load more of our planned removal of accommodation than we would have previously. We've been surprised at the upside on inflation. This is a lot of inflation," the head of the Federal Reserve Bank of St.Louis, James Bullard, told broadcaster CNBC in an interview.

Goldman Sachs said on Monday that it remains "broadly pro risk" in its asset allocation, ‘overweight’ equities and commodities, and ‘underweight’ bonds, but upgraded cash to ‘overweight’ and downgraded credit to ‘underweight’, both for three and 12 months. "This reflects both a more challenging growth/inflation mix but also cash becoming more of a competitive asset class of its own with sharply rising front-end yields," the bank said in a note. "And credit needs to rebuild risk premium in the face of reduced policy support and worsening demand technicals."