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London open: Stocks steady amid corporate deluge
London stocks were steady in early trade on Thursday amid a deluge of corporate news, as worries about the banking sector continued to play on investors’ minds.
At 0855 BST, the FTSE 100 was flat at 7,852.05, as market participants eyed the release of US GDP and initial jobless claims later in the day.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The FTSE 100 has opened lower, amid uncertainty about the trajectory for the US economy and the knock-on effect worldwide, particularly with banking woes causing so much concern.”
In equity markets, Barclays was the top performer on the FTSE 100 after saying it was on track to meet full-year guidance, as it posted a 16% jump in pre-tax profits driven by growth across all its businesses. The bank said group income rose 11% to £7.2bn, with pre-tax profit coming in at £2.6bn, generating a group return on tangible equity of 15% and earnings per share of 11.3p.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: “Barclays has posted a very solid first quarter, comfortably beating market consensus on profit amidst a turbulent tie for the broader banking sector.
“It’s still early doors for the major UK banks reporting cycle, but signs look promising that issues over the pond aren’t leaking into the wider ecosystem. Credit card defaults in the UK remain below pre-pandemic levels, highlighting the UK consumers’ resilience despite mounting costs.
“There are some signs of strain in the US, where credit card balances are building. That benefits Barclays, especially in a higher rate environment, but the flip side is higher default rates. It’s nothing to get too worried about for now, credit impairments were comfortably within target range, but worth keeping an eye on.”
Elsewhere, consumer goods giant Unilever gained as it said that underlying sales growth in the first quarter accelerated to 10.5%, versus analysts’ expectations of 7.5%.
AstraZeneca rallied after first-quarter results beat estimates, while London Stock Exchange Group, Lancashire Holdings and Inchcape also rose after Q1 updates.
On the downside, St James’s Place, Weir, Schroders, WPP and Capricorn Energy all fell after updates.
Howden Joinery was also in the red after an update, along with Molten Ventures, while Sainsbury’s nudged lower as it lifted guidance for the current fiscal year after posting a fall in 2022/23 profits.
Legal & General, Rightmove, Relx and Derwent London all lost ground as they traded without entitlement to the dividend.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Barclays Plc | +3.81% | +5.86 | 159.72 |
| 2 |  |
International Consolidated Airlines Group S.a. | +2.54% | +3.70 | 149.40 |
| 3 |  |
Prudential Plc | +2.06% | +23.00 | 1,141.50 |
| 4 |  |
Gsk Plc | +1.93% | +27.80 | 1,470.00 |
| 5 |  |
Vodafone Group Plc | +1.90% | +1.79 | 96.07 |
| 6 |  |
Bt Group Plc | +1.85% | +2.85 | 156.60 |
| 7 |  |
Easyjet Plc | +1.84% | +9.00 | 497.50 |
| 8 |  |
Unilever Plc | +1.51% | +66.00 | 4,437.50 |
| 9 |  |
Centrica Plc | +1.21% | +1.35 | 113.00 |
| 10 |  |
Rolls-royce Holdings Plc | +0.82% | +1.25 | 153.20 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Legal & General Group Plc | -6.13% | -15.50 | 237.50 |
| 2 |  |
St. James’s Place Plc | -5.00% | -62.00 | 1,177.50 |
| 3 |  |
Wpp Plc | -2.47% | -23.60 | 933.40 |
| 4 |  |
Ashtead Group Plc | -2.06% | -97.00 | 4,613.00 |
| 5 |  |
Relx Plc | -2.03% | -54.00 | 2,612.00 |
| 6 |  |
Schroders Plc | -1.89% | -9.10 | 472.20 |
| 7 |  |
Fresnillo Plc | -1.58% | -11.60 | 723.00 |
| 8 |  |
Intercontinental Hotels Group Plc | -1.52% | -84.00 | 5,452.00 |
| 9 |  |
Tui Ag | -1.50% | -7.80 | 510.80 |
| 10 |  |
Flutter Entertainment Plc | -1.34% | -215.00 | 15,825.00 |
US close: Stocks mixed amid strong tech earnings
Wall Street ended the trading day in a mixed state on Wednesday, as a continued decline in First Republic Bank’s shares fueled concerns about the banking sector.
Some solid earnings from major tech companies, however, helped to keep the Nasdaq Composite in positive territory.
The Dow Jones Industrial Average fell 0.68% to close at 33,301.87, and the S&P 500 declined 0.38% to finish at 4,055.99.
Going the other way, the Nasdaq Composite managed to stay above water, gaining 0.47% to end the day at 11,854.35.
On the currency markets, the dollar was in the red against both sterling and the euro, falling by 0.47% on the pound to trade at 80.21p, and 0.61% on the common currency to 90.58 euro cents.
The dollar also saw a slight decline against the yen, retreating 0.07% to change hands at JPY 133.67.
“Tuesday seemed to herald the beginning of a much bigger sell-off, but the numbers from Alphabet and Microsoft have steadied the ship for now,” said IG chief market analyst Chris Beauchamp.
“The question is now whether other big names this week can do the same, in which case equities might start May on the front foot.”
Mortgage market rebounds, durable goods orders surpass forecasts
On the economic front, the US mortgage market saw a rebound last week, with a 3.7% increase in applications in the week ended 21 April according to the Mortgage Bankers Association.
That was a significant improvement from the 8.8% drop in the previous week.
Applications for home purchases grew by 4.6%, while applications for refinancing increased by 1.7%.
Elsewhere, orders for durable goods in the US surpassed expectations in March, largely due to a surge in orders for jet aircraft.
The Commerce Department reported that durable goods orders rose by a seasonally-adjusted 3.2% month-on-month, reaching $276.41bn.
That was well ahead of the consensus forecast for 1.0%.
Excluding transportation, orders were up a more modest 0.3% from February.
The increase was driven by a huge 78.4% gain in orders for non-defence aircraft and parts, totaling $19.67bn.
Finally on data, the US trade deficit with the rest of the world shrank unexpectedly in March, contracting by a seasonally-adjusted 8.1% to reach $84.6bn, according to the Commerce Department.
That was better than economists’ projections for a $90bn deficit.
The visible trade deficit reduction was fueled by a 2.8% increase in exports, which reached $172.7bn, while imports were down by 1.0% to $257.3bn.
Chipotle sizzles, while Activision slides on CMA decision
In equities, Microsoft Corporation jumped 7.24% after announcing that it exceeded Wall Street’s expectations in its most recent trading quarter.
The computing giant said the increase in revenues from its intelligent cloud business segment contributed to the strong results.
Aircraft manufacturer Boeing saw a more modest gain of 0.42%, after reporting that its quarterly net losses had narrowed as revenues grew, driven by improved performance in its commercial aeroplane unit.
Tex-Mex takeaway operator Chipotle Mexican Grill sizzled with a 12.91% surge, as it beat Wall Street’s expectations in the first quarter, thanks to new restaurant openings and a drop in wholesale avocado prices.
On the downside, Activision Blizzard tumbled by 11.45% in afternoon trading after the UK’s Competition and Markets Authority (CMA) denied approval for Microsoft’s contentious $69bn acquisition of the video game developer.
Both companies said they were planning on appealing the decision.
Google parent Alphabet was also in the red by 0.15%, despite reporting better-than-anticipated revenues and maiden profits from its cloud unit.
Finally, hotel conglomerate Hilton Worldwide Holdings experienced a decline of 3.41% despite raising its full-year profit guidance amid robust travel demand throughout the first quarter.
Thursday newspaper round-up: Online casinos, Meta, PwC, Teck Resources
Britain’s poor record on health is costing the economy £43bn a year and cutting the annual incomes of individuals affected by long-term sickness by up to £2,200 a year on average, a report says. With official figures showing more days lost to sickness than at any time since 2004, the Institute for Public Policy Research said improving the country’s health was vital both for the economy and to boost the incomes of disadvantaged groups. – Guardian
Online casinos will face tougher restrictions under government proposals to overhaul Britain’s gambling laws, but the majority of measures will be subject to further consultation, signalling even more delay to long-awaited changes. A white paper, the result of a review launched in 2020, is due to be published on Thursday, after being postponed multiple times. – Guardian
Shares in Facebook’s parent company Meta soared last night as it broke a losing streak to post its first rise in sales in a year. The social media giant reported a 3pc increase in quarterly revenues to $28.6bn (£23bn), shrugging off Wall Street projections that it would post a fourth straight drop in revenue. – Telegraph
Demand for inflation-protected government bonds has hit a record high in a sign that investors are sceptical of the Bank of England pledge that falling inflation is “pretty much guaranteed”. A sale of inflation-linked gilts on Wednesday was more than ten times oversubscribed as pension funds and other long-term investors rushed to buy the products. – Telegraph
PwC has become the latest business to turn to artificial intelligence, announcing plans to invest $1 billion in the technology to automate parts of its audit, tax and consulting services in its American business over the next three years. The Big Four accountant will work with the Microsoft-backed OpenAI, the creator of ChatGPT, to develop generative AI that can make it more efficient. – The Times
The Canadian miner being targeted by Glencore has cancelled a shareholder vote on plans to split itself in two in a move that enables the FTSE 100 commodities group to continue its $23 billion takeover pursuit. Teck Resources had been seeking shareholder approval to spin off its steelmaking coal business and had flatly rejected a rival proposal from Glencore instead to merge the two companies and then demerge their combined coal businesses. – The Times
