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London open: Mining M&A and earnings give UK markets a boost
UK stocks were back in uncharted territory on Thursday morning, on track for its third record closing high of the week after some profit taking the previous session.
The mood was lifted by M&A activity in the mining sector, after Australian giant BHP Group’s takeover proposal for Anglo American that could be worth more than £30bn, along with some well-received results from AstraZeneca and Barclays.
The FTSE 100 was up 0.5% at 8,079.22 by around the 0830 BST mark, hitting an early intraday high of 8,098.14, as it looks set to surpass the current all-time closing high of 8,044.81 reached on Tuesday.
Along with a barrage of corporate earnings in London, there will be yet more quarterly figures from America’s tech titans on Thursday, with Google, Microsoft and Intel all due to report today.
Markets gave a negative reaction to seemingly strong results from Meta after the closing bell in New York on Wednesday, as investors continue to question sky-high valuations following the strong performance of tech stocks so far this year.
“So far, we observe that the high expectations have played tricks on stock valuations and the first set of earnings reactions warn that even strong results from Big Tech may not suffice to send their stock prices higher – if we start seeing growth expectations level out (I am looking at you Microsoft and Nvidia),” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Traders will also be keeping their eyes on economic data on Thursday, with the first reading of US gross domestic product for the first quarter. Consensus is that the economy expanded at a quarterly annualised pace of 2.5%, down on 3.4% at the end of 2023.
Anglo jumps on BHP proposal
Anglo American rose 14% early on after confirming that it had received an unsolicited non-binding and highly conditional all-share takeover proposal from Australia’s BHP Group. Shareholders of the London-listed miner would receive 0.7097 BHP shares for each Anglo share, valuing the company at £31.1bn. Anglo said it was reviewing the proposal.
AstraZeneca was in demand after the drugmaker said first-quarter revenues were up 18% on the back of strong sales of its cancer drugs. Revenues came in at $12.7bn, beating the $11.9bn guidance, lifting shares up 5%.
Barclays was also up 4% despite reporting a 12% fall in first-quarter profit on lower income as customers shopped around for better savings rates and mortgage deals. Pre-tax profit for the first three months of the year fell to £2.2bn from £2.6bn a year earlier and slightly better than its own consensus forecast of £2.195bn.
Among the fallers was grocer Sainsbury despite delivering better-than-expected earnings for the year to 2 March. Underlying pre-tax profit rose 1.6% to £701m, beating Sainsbury’s own guidance of £670-700m.
Online ticketing platform Trainline shares were lower on the same day that the Labour Party pledged to renationalise Britain’s railways if it is elected. Labour said it would take five years to conclude the plan.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Anglo American Plc | +12.52% | +276.00 | 2,481.00 |
| 2 |  |
Unilever Plc | +5.38% | +208.00 | 4,071.00 |
| 3 |  |
Astrazeneca Plc | +5.27% | +598.00 | 11,950.00 |
| 4 |  |
Barclays Plc | +3.63% | +6.94 | 198.08 |
| 5 |  |
Antofagasta Plc | +2.95% | +64.00 | 2,230.00 |
| 6 |  |
Hikma Pharmaceuticals Plc | +2.10% | +38.00 | 1,851.00 |
| 7 |  |
Ashtead Group Plc | +1.33% | +76.00 | 5,810.00 |
| 8 |  |
Ocado Group Plc | +1.26% | +4.60 | 369.20 |
| 9 |  |
Croda International Plc | +1.22% | +57.00 | 4,711.00 |
| 10 |  |
Easyjet Plc | +1.12% | +6.00 | 542.20 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Legal & General Group Plc | -4.67% | -11.60 | 237.00 |
| 2 |  |
Bhp Group Limited | -2.88% | -68.00 | 2,296.00 |
| 3 |  |
St. James’s Place Plc | -2.75% | -12.20 | 431.80 |
| 4 |  |
Schroders Plc | -2.45% | -9.00 | 358.20 |
| 5 |  |
Rolls-royce Holdings Plc | -2.37% | -9.90 | 407.10 |
| 6 |  |
Bae Systems Plc | -2.20% | -30.00 | 1,333.50 |
| 7 |  |
Whitbread Plc | -1.99% | -62.00 | 3,050.00 |
| 8 |  |
Diageo Plc | -1.90% | -53.50 | 2,758.50 |
| 9 |  |
Sainsbury (j) Plc | -1.87% | -5.00 | 263.00 |
| 10 |  |
Rentokil Initial Plc | -1.84% | -7.70 | 410.60 |
US close: Stocks finish flat as investors digest earnings, rising bond yields
US stocks finished broadly flat on Wednesday after a turbulent trading session, with eyes firmly fixed on corporate results as earnings season gets into full swing.
“Wednesday saw a back-and-forth session for traders grappling with the challenge of rising US yields amid encouraging earnings reports,” said Stephen Innes, managing partner at SPI Asset Management.
All three Wall Street’s main indices were swinging between gains and losses for the majority of the day, with the Dow finishing down 0.11%, the S&P 500 edging 0.02% higher and the Nasdaq rising 0.10%.
Rising bond yields were also keeping a lid on stocks’ gains, with the 10-year US Treasury yield up 4 basis points at 4.646%, as it continues to teeter at levels not seen since November.
In economic news, US durable goods orders rose by slightly more than expected last month. According to the US Department of Commerce, in seasonally adjusted terms durable goods orders grew at a month-on-month pace of 2.6% in March (consensus: 2.5%). However, the prior month’s gains were revised lower, from a preliminary print of 1.4% to 0.7%.
Meanwhile, mortgage applications fell by 2.7% week-on-week in the seven days ended 19 April, trimming the 3.3% increase from halfway through the month to mark the sharpest weekly decline since early February, according to the Mortgage Bankers Association of America. Last week’s decline in mortgage applications came as mortgage rates jumped 11 basis points to 7.24% amid hotter-than-expected economic data and stubborn inflation led to sharp selling pressure for US Treasuries.
Earnings from social media heavyweight Meta were scheduled after the close, while numbers from Intel and Microsoft are out on Thursday evening. Also due out on Thursday will be on a first reading for US gross domestic product in the first quarter. Consensus is that the economy expanded at a quarterly annualised pace of 2.5%, down on 3.4% at the end of 2023.
“Investors are bracing for significant macroeconomic challenges ahead, particularly with the release of first-quarter GDP data on Thursday and March’s personal consumption expenditures on Friday. The unexpected surge in consumer price inflation for March has shifted expectations regarding the timing of potential interest rate cuts by the Fed,” Innes said.
Market movers
Earnings were again the main topic of conversation early on Wednesday after electric carmaker Tesla missed both top and bottom lines expectations last quarter but said it would now begin to focus more on “more affordable” vehicles, causing shares to surge 12%.
Boeing shares dropped 3% despite posting lower-than-expected losses and higher revenues, after revealing that it burned through $3.9bn in cash in the first quarter.
Toymaker Hasbro posted a smaller-than-expected drop in Q1 sales and easily beat profit estimates on the back of leaner inventories and steady digital gaming revenues, causing shares to jump 12%.
Chipmaker Texas Instruments surged 6% after smashing forecasts with earnings of $1.20 a share, compared with the $1.07 consensus estimate.
Thursday newspaper round-up: Matchesfashion, Burberry, Boeing
The UK competition watchdog has stepped up its scrutiny of big tech involvement in artificial intelligence startups, asking for comment on three deals by Microsoft and Amazon. The Competition and Markets Authority (CMA) announced that it was examining Microsoft’s investment in the French firm Mistral and the hiring of the DeepMind co-founder Mustafa Suleyman as head of the US company’s new AI division. The watchdog is also scrutinising Amazon’s $4bn (£3.2bn) investment in the US AI firm Anthropic. – Guardian
Designer brands including Gucci and Anya Hindmarch have been left millions of pounds out of pocket and some customers will not get refunds after online fashion site Matchesfashion collapsed owing more than £210m last month. Customers who bought designer items prior to the administration are not able to return items or get a refund, according to a report by administrators published on Wednesday. – Guardian
Burberry is at risk of a takeover, City analysts have warned, after losing a fifth of its value since the start of the year. A profit warning from Burberry’s Paris-listed rival Kering, which owns Gucci, triggered a slump in the British fashion brand’s shares on Wednesday. The 2.5pc drop means Burberry has lost almost 20pc of its value since the start of the year, leaving the business worth £4bn. – Telegraph
Some of London’s largest listed companies could see their valuations as much as double by moving to New York, according to a new analysis, underscoring the appeal for companies considering switching their listings away from the UK. Shell, Diageo and British American Tobacco could see their market capitalisations jump if their shares were priced based on the same earnings multiples as their New York-listed peers, AJ Bell, the funds platform, has found. – The Times
Boeing is burning through cash at an unprecedented rate — $3.9 billion in the first quarter or nearly $2 million an hour, as it counts the cost of the Boeing 737 Max crisis. Dave Calhoun, the company’s chief executive who is leaving later this year following the Alaska Airlines door panel blow-out, told employees that Boeing found itself in a “tough moment”. The latest set of production and safety problems and the intervention again of the Federal Aviation Administration (FAA) to ascertain whether Boeing is fit for purpose, has ripped into its financial performance. – The Times
