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London open: Stocks gain as BP results impress
London stocks rose in early trade on Tuesday, underpinned by solid results from oil giant BP and well-received updates from SSE and Bellway.
At 0835 GMT, the FTSE 100 was up 0.6% at 7,615.77.
Investors were digesting a survey showing that retail sales jumped last month, as shoppers sought out purchases ranging from watches to furniture.
According to the latest BRC-KPMG Retail Sales Monitor, total sales increased by 11.9% in January, compared to a 1.3% decline in January 2021, when the UK was in lockdown. On a year-on-two-year basis, total retail sales grew by 7.5%.
On a like-for-like basis, sales increased 8.1% compared to January 2021, when they rose 7.1%.
The British Retail Consortium said household appliances, electronics and homeware had performed well, as had furniture. Footwear and clothing, along with jewellery and watches, also performed strongly.
In comparison, food sales were muted, as restrictions brought in to tackle the spread of the Omicron variant were eased and people started eating out again.
In the three months to January, food sales decreased by 0.5% on a like-for-basis and by 0.1% on a total basis. That was below the 12-month total average growth of 2.4%.
Helen Dickinson, chief executive of the BRC, said: “It is encouraging to see such strong sales in January, even once inflation has been accounted for. Furniture was the stand-out performance, after transport delays in the Christmas period began to ease.”
However, looking ahead she cautioned: “Retailers and consumers face challenges in the coming months.
“Retailers face competition from other spending opportunities, as the public flood back to restaurants, cafes and live events. Furthermore, rising inflation – driven by higher costs of production, higher energy and transport prices as well as other looming price hikes – will mean consumers will have to tighten their purse strings.”
In equity markets, SSE rallied after it upgraded its full-year earnings expectations.
BP gushed higher after saying it swung to a huge annual profit, driven by surging oil and gas prices, but warned of lower production and flat refining margins in the first quarter of the current year.
Housebuilder Bellway was also in the black as it reported a solid first-half trading performance and strong underlying demand.
On the downside, online supermarket Ocado slid after it said its annual loss grew as increased investment in its solutions business more than offset higher revenue.
Airtel Africa tumbled after funds managed by Warburg Pincus and Morningstar Investment sold 58m shares in the telecommunications group in a placing.
DCC lost ground even as it said third-quarter profit rose in line with expectations as the sales and marketing group’s energy and healthcare businesses grew.
Micro Focus slumped after the software company said it was on track to deliver its FY23 goals and posted a narrowing of its full-year losses but a decline in revenues.
Travel company Tui also fell despite saying it expects 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.
In broker note action, St James’s Place and M&G were both high risers after an upgrade to ‘overweight’ at Morgan Stanley.
BAE Systems was lifted by an initiation at ‘buy’ at Jefferies, while JD Sports was boosted by an upgrade at Exane BNP Paribas. However, retailers Marks & Spencer and WH Smith were both knocked lower by rating downgrades at Exane.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Carnival Plc | +2.45% | +34.80 | 1,453.80 |
| 2 |  |
St. James’s Place Plc | +2.44% | +37.00 | 1,556.00 |
| 3 |  |
Antofagasta Plc | +2.35% | +29.00 | 1,262.50 |
| 4 |  |
Rio Tinto Plc | +2.30% | +127.00 | 5,643.00 |
| 5 |  |
Anglo American Plc | +2.16% | +73.00 | 3,456.00 |
| 6 |  |
Glencore Plc | +2.12% | +8.65 | 416.45 |
| 7 |  |
Intercontinental Hotels Group Plc | +1.79% | +87.00 | 4,952.00 |
| 8 |  |
Ashtead Group Plc | +1.76% | +87.00 | 5,026.00 |
| 9 |  |
Halma Plc | +1.57% | +38.00 | 2,454.00 |
| 10 |  |
Bae Systems Plc | +1.53% | +8.80 | 585.20 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -8.49% | -119.50 | 1,287.50 |
| 2 |  |
Micro Focus International Plc | -5.36% | -24.50 | 432.60 |
| 3 |  |
Tui Ag | -1.96% | -5.10 | 255.10 |
| 4 |  |
Marks And Spencer Group Plc | -1.52% | -3.00 | 194.50 |
| 5 |  |
Dcc Plc | -1.08% | -70.00 | 6,390.00 |
| 6 |  |
Auto Trader Group Plc | -1.04% | -6.80 | 647.20 |
| 7 |  |
Rightmove Plc | -0.69% | -4.40 | 637.40 |
| 8 |  |
Admiral Group Plc | -0.47% | -14.00 | 2,985.00 |
| 9 |  |
Sage Group Plc | -0.42% | -3.00 | 706.60 |
| 10 |  |
Flutter Entertainment Plc | -0.41% | -45.00 | 10,960.00 |
Europe open: Shares defy expectations to make bright start as BP pleases
European shares beat expectations and opened brightly on Tuesday, despite persistent inflationary worries and no real economic data to drive sentiment.
The pan-European Stoxx 600 index was up by 0.67% in early deals with all regional bourses higher. Late losses on Wall Street, with further falls for Facebook owner Meta, dampened sentiment. Asia shares were mixed with Hong Kong’s Hang Seng down 1%.
In equity news, BP shares were higher as the oil and gas major recorded massive annual profits on the back of soaring commodity prices.
Holiday company TUI shares were down 3.3% despite an upbeat update that said summer travel bookings were hitting pre-COVID levels.
French care home company Orpea climbed 5% as investors picked up shares on the cheap after persistent sell-offs following allegations of malpractice in care homes.
Ocado shares plunged 8% after the British online supermarket disappointed in its earnings report before the bell, with core earnings weighed down by tech investment.
Housebuilder Bellway was also in the black as it reported a solid first-half trading performance and strong underlying demand.
US close: S&P 500 gives up some of last week’s gains
Wall Street stocks were mostly lower at the end of trading on Monday as traders awaited more earnings reports scheduled for later in the week.
At the close, the Dow Jones Industrial Average was flat at 35,091.13, while the S&P 500 was 0.37% weaker at 4,483.87 and the Nasdaq Composite saw out the session 0.58% softer at 14,015.67.
The Dow closed just 1.39 points higher on Monday, while the S&P 500 gave back some of the gains recorded in what was the best week for the index so far this year.
While Monday was relatively quiet in terms of market-moving headlines, investors were looking ahead to the Labor Department‘s January consumer price index data set to be published on Thursday. Economists expect the report to reveal that inflation rose at a 7.2% clip year-on-year, which, if accurate, would mark the fastest gain in 40 years.
The yield on the benchmark 10-year Treasury note was slightly higher at the close of trading on Monday and was most recently sitting at around 1.921%.
In the corporate space, Loews revealed that revenues had declined in its last quarter, while Hasbro posted strong quarterly growth in revenues, operating profits and earnings.
Still to come, Take-Two Interactive was slated to report its latest set of quarterly earnings after the close.
On the macro front, consumer credit increased by $18.9bn in December 2021, according to the Federal Reserve, easing from a downwardly revised $38.82bn jump in the previous month and below market expectations for a $22.0bn rise.
Tuesday newspaper round-up: Arm takeover, Motorola, Silentnight
Thousands of homes could soon be paid to halve their electricity usage for a couple of hours daily when the UK’s power demand is high under a new scheme to help reduce energy bills and create a zero carbon power supply system. From next week the trial by Octopus Energy and National Grid’s electricity system operator will offer the household supplier’s customers the chance to earn money by cutting their power use by between 40% and 60% below normal levels during a set two-hour period. – Guardian
The former owner of Norton Motorcycles faces up to two years in prison after pleading guilty to illegally investing millions of pounds of people’s retirement savings into his own businesses. Stuart Garner, who acquired the classic marque in 2008 and was feted by a series of UK government ministers including the MP Stephen Barclay, the prime minister’s new chief of staff since Saturday, admitted three offences at Derby magistrates court on Monday. – Guardian
The $40bn (£30bn) US takeover of Arm Holdings, one of Britain’s biggest tech firms, has collapsed in the face of opposition from regulators. Authorities in the UK, US and EU raised concerns over its impact on competition in the global semiconductor industry, the Financial Times reported. It also said that Arm, based in Cambridge, may face a management reshuffle. It is understood that Rene Haas, head of the company’s intellectual property unit, could replace chief executive Simon Segars. – Telegraph
Motorola has failed to block an investigation into concerns that it is “cashing in” on the mobile network used by Britain’s emergency services. The Competition and Markets Authority (CMA) is scrutinising the US telecoms giant, which is working on a much-delayed new system for the police, fire brigade and ambulance service, while still operating the old network. – Telegraph
The professional body for chartered accountants came under more pressure to hand £13.5 million of fine proceeds to the Silentnight pension scheme after it was estimated that the cheated members of the scheme would face 30 per cent cuts to their promised pensions. The Institute for Chartered Accountants in England and Wales has been asked to pay to the pension scheme the fines levied on KPMG for its part in leaving the 1,200 members short-changed. – The Times
