Weekly review

By Oliver Haill

Date: Friday 12 Jan 2018

(ShareCast News) - The FTSE 100 finished the week 64.42 points or 0.83% higher at 7,778.64.
Equity view

Unite has urged the government to block what it called a "predatory" and "destructive" takeover bid for engineer GKN by turnaround specialist Melrose Industries.

Bovis Homes built a lower number of homes in 2017 but reported much improvement in its balance sheet and in customer satisfaction after the controversy over putting customers in faulty homes last year.

Howden Joinery Group has confirmed that chief executive designate Andrew Livingston will join on 29 January, as founder and current CEO Matthew Ingle retires.

Shares in GKN surged on Friday after the company said it has rejected a bid proposal from Melrose and appointed Anne Stevens as chief executive, as it announced plans to separate its aerospace and automotive businesses. GKN confirmed that it received a bid from Melrose on Monday at 405p per share, comprising 80% in new Melrose shares and 20% in cash.

Telit Communications said Italian tax authorities were appealing to the country's Supreme Court over its three year VAT assessment case.

Restaurant and pub chain owner Mitchells & Butlers said trading through the core three week festive season was "strong", with like-for-like sales growth of 3. 9%.

Smiths Group said the net impact of new US tax legislation on the group would be "favourable over the medium term".

Shares in AIM-listed oil and gas explorer Rockhopper received a boost on news that its Falklands project was closer to approval at the end of the year. Rockhopper has a 40% interest in the Sea Lion field in the North Falkland Basin, with Premier Oil holding the remaining 60%.

Card Factory shares slid on Thursday even as the company hailed a "solid" Christmas trading period, as it warned that continued margin pressure will limit any earnings growth for this year.

Fast fashion brand Boohoo.com bumped up its full-year sales forecast again on Thursday as it said revenues doubled in the four months to the end of December.

Marks & Spencer reported disappointing sales over the festive period, with UK like-for-like sales down 1.4%.

Tesco reported strong sales in the run-up to and including Christmas, though fell slightly short of City forecasts. For the third quarter of the 13 weeks to 25 November, Britain's largest grocery group increased like-for-like sales 2.3% in the UK and Ireland, and then for the six-week festive trading period to 6 January, saw LFL growth of 2.0%.

The outlook for miners remains "compelling", analysts at Barclays told clients, pointing to a raft of positive drivers for the sector. Included among those were the strengthening macroeconomic backdrop, limited capital outlays, volume and mergers and acquisitions responses to higher prices from companies, strong earnings momentum and cash generation.

Solo Oil said Aminex, the operator of its Ruvuma petroleum sharing contract, was progressing towards drilling a on the Ntorya gas field in Tanzania.

Retailer Mothercare has warned that profits are likely to be less than half the level expected as management held off from discounting as long as possible despite challenging UK and international trading.

Industrial LED lighting technology group Dialight announced on Monday that Michael Sutsko, the firm's chief executive, had stepped down from the board with immediate effect.

Economic news

Former UKIP leader and Brexit architect Nigel Farage called for a second referendum on EU membership on Thursday, claiming Britain would repeat its decision to leave.

Farage performed the swiftest of u-turns on Friday when he backtracked on his call for a second EU referendum.

A no-deal Brexit could cost the UK £54bn and up to half a million jobs by 2030, according to an assessment commissioned by London Mayor Sadiq Khan.

John Lewis said on Thursday that Black Friday 2017 was its most successful sales day in history, but the retailer also sounded a cautious note about the outlook and said trading was likely to be "volatile".

Trade union Unite warned the UK government on Wednesday that it was "raising the white flag" without much of a fight to save Bombardier jobs put at risk by the Canadian firm's ongoing spat with Boeing, demanding an urgent meeting between itself and the new secretary of state for Northern Ireland, Karen Bradley.

The EU will resist any renegotiation of fishing quotas in UK waters during any transition period after Brexit, the Guardian reported on Friday citing an unnamed EU diplomat. Current plans are for the UK to enter a two year transition period after leaving the EU in March 2019.

The EC's economic sentiment indicator for the UK increased to 112.4 in December from 108.8 in November, with an ESI of 100 representing the average between 1990 and 2016. The level in December was the higher for the UK since July.

Lidl is opening its largest UK warehouse in Luton as part of the German discounter's £1.45bn investment in growth to keep up its assault on the Big Four supermarkets.

International events

President Donald Trump rejected a bipartisan compromise to extend protections against deportations of young immigrants on Thursday and questioned why would he allow more immigrants coming from Haiti and "shithole countries" in Africa. On Friday the president denied having said the derogatory comments.

Canada has filed a complaint with the World Trade Organization against the US, claiming it has broken international trade rules. The complaint challenges the US government's use of anti-dumping and anti-subsidy duties as well as how it investigates products for subsidies and below-cost sales.

North Korea and South Korea are embracing talks aimed at improving relations between the two countries.

Chief executive of JP Morgan Chase, Jamie Dimon, offered a forecast for US economic growth that was comfortably ahead of even the most optimistic projections from economists.

Longer-term US Treasury yields jumped to near their 2017-highs on Wednesday following a report that Beijing might be looking to slow or stop its purchases of American government debt.

Google parent Alphabet has acquired a Cambridge startup that develops technology to turn surfaces, such as screens, into speakers.

The coalition government of Belgium was said to be at risk of collapse over a scandal regarding the forced repatriation of more than 100 Sudanese nationals.

Bitcoin's value dived 13.5% on Thursday after South Korean officials revealed the nation was planning to ban trading of the cryptocurrency.

JPMorgan Chase beat Wall Street's expectations for earnings in its fourth trading quarter, saying recent reforms to US tax laws would help boost profits, not only by cutting down the amount of tax the firm paid to the federal government but also by enticing more corporations to borrow further.

Chinese consumer prices fell short of forecasts in December alongside a drop in factory gate inflation in the Asian giant to a 13-month low, possibly opening the way up for looser central bank policy. According to the National Bureau of Statistics, the rate of gain in headline consumer prices edged up from a 1.7% clip year-on-year in November to 1.8% for December.

The euro snapped higher on Thursday after rate-setters in Frankfurt dropped a hint that they might harden their so-called 'guidance' for their policy settings.

The euro rose to a three-year high against the dollar on Friday as investors welcomed a breakthrough in German coalition talks.

The cost of living in the US jumped last month, pushed higher by a surge in the cost of used cars and trucks and medical care commodities. That saw the yield on the benchmark two-year US Treasury note tack on three basis points to 2.01%.

Volkswagen and Uber will introduce NVIDIA tech in their vehicles to create artificially intelligent self-driving cars and trucks.

The Democratic Republic of Congo has taken the first steps towards hiking taxes on cobalt exports by more than double, a move that could potentially increase the cost of a key material used in electric car batteries.

Romania's central bank surprised most forecasters on Monday, hiking its main policy rate at the turn of the year in a bid to dampen above-target inflation.


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