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Last Week in the City

Henry Brennan, Investment Writer, looks at the market-moving events that have shaped the UK equity markets this week (August 7 to August 11, 2017).

The FTSE 100 fell 2.7% over the week by mid-session on Friday, amid geopolitical tension and a number of major companies announcing they would be going ex-dividend. Markets worldwide were shaken by growing tensions between the US and North Korea. The S&P 500 suffered its steepest decline since May on Thursday, down 1.5% by the close.


The UK’s trade deficit in goods and services climbed by £2 billion between May and June to reach £4.56 billion, according to figures from the Office for National Statistics (ONS). This was mainly due to an increase in imports of both goods and services of £1.7 billion.

Record low stock numbers, political uncertainty and the aftermath of tax changes are hindering the UK housing market, according to The Royal Institution of Chartered Surveyors (RICS). Price growth and sales activity in the UK were subdued during the month of July.

UK industrial production fell 0.4% in the three months to June, mainly due to a 0.6% drop in manufacturing output.


US President Donald Trump warned that the US was prepared to unleash “fire and fury like the world has never seen” on North Korea if the Hermit Kingdom continued to make threats against the US. North Korea in turn responded by outlining a plan to launch a missile strike against the island of Guam - a vital outpost of the US military. Trump clarified on Thursday that his initial rhetoric had not been “tough enough.”


Brent crude futures fell 1.2% over the week by mid-session on Friday. Commercial oil stocks fell below 2016 levels in the second quarter of the year, according to the International Energy Agency, but rebalancing the oil market is proving a “stubborn process.” Output from the Organization of Petroleum Exporting Countries (OPEC) last month rose for a third consecutive month, led by output increases in Saudi Arabia, Libya and Nigeria.

Premier Oil announced that Roy Franklin will join the company’s Board as Non-Executive Chairman from September 2017. He will succeed Mike Welton who, after eight years as Chairman, announced his departure in March.


Glencore released its half year report in which it showed that earnings before interest tax, depreciation and amortization (EBITDA) were up 68% over the first half of the year. Net debt fell a further $1.6 billion to $13.9 billion from end of 2016.

Gold was up 2.3% over the week by mid-session on Friday as the US and North Korea ramped up the rhetoric, which prompted investors to buy into safe haven assets


Asset manager Standard Life posted a set of interim numbers that were in line with consensus, but demonstrated lacklustre growth. The company’s assets under management (AUM) rose just 1% year-on-year at end-June, with positive movements in markets offset by net outflows of £3.7bn. This helped drive a 6% jump in pre-tax profits to £362m. Read more here.

Building society Nationwide reported a drop in pre-tax profits for the three months ending June. The group’s pre-tax profit for the second quarter was £322m, down from £401m in the first quarter. Management said in a statement that the majority of UK consumers expect Brexit to leave their ability to access credit unchanged.

The Co-operative Bank reported that half-year losses narrowed to £135.2m from £177m last year but said that 25,000 customers closed their current accounts over the six-month period.

Aldermore Group reported a 32% rise in pre-tax profits to £78m, up from £59m last year. The bank approved £1.6bn of new customer loans in the half year period, taking total lending to customers to more than £8.1bn


Estate agency group Savills reported pre-tax profits of £32.4m in the six months ending June, up from £25.5m last year. Management said that performance was driven by strong growth in Asia and a resilient UK market.


Fashion retailer New Look reported that underlying operating profit fell 60% to £12.1m in the second quarter of the year, down from £30.5m in the first three months of 2017. Chief executive officer Anders Kristiansen said the group expects the consumer economy to remain fragile and for challenging market conditions to persist into 2018.

Sofa chain DFS said that revenue in the second half of the year had been weaker than expected owing to significant declines in store footfall and customer orders across April, May and June. In a trading update, the group said that revenues for the second half were 4% lower than the prior year and that earnings would for the year would likely be in the low end of the range previously provided.


Asda, Morrisons, Sainsbury's and Waitrose all announced they would be withdrawing a number of products from shelves in the wake of an egg contamination scare. The Food Standards Agency reported that as many as 700,000 eggs from the Netherlands may have been contaminated with trace elements of chemical fipronil.


Broadband provider TalkTalk was fined £100,000 by the Information Commissioner’s Office (ICO) after it was ruled to have placed data from 21,000 customers at risk. An ICO investigation found TalkTalk breached the Data Protection Act because it allowed staff to have access to large quantities of customers’ data. Its lack of adequate security measures was said to have left the data open to exploitation by rogue employees.


Security group G4S posted a 7.6% rise in first-half profit and held its interim dividend payment at 3.59p, according to its interim numbers.  The majority of international regions saw growth, with the Middle East & India the only area where underlying profits fell. They were down 24.4% due to the effects of lower oil prices and regulatory changes on the subcontinent. Read more here

US Technology

Shares in Snap, which owns the Snapchat photo app, fell to a new all-time low after the firm reported $443m in quarterly losses. The group also reported slower growth in daily users than expected.

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