London close: Stocks head into bank holiday on a high note

Fri 29 Apr 2022

LONDON (SHARECAST) - (Sharecast News) - London stocks managed a positive finish heading into the long weekend on Friday, as investors ended the week wading through another flood of earnings reports.
The FTSE 100 ended the session up 0.47% at 7,544.55, and the FTSE 250 was 0.43% firmer at 20,708.71.

Sterling was also in positive territory, last gaining 0.87% on the dollar to $1.2656, and strengthening 0.51% against the euro to €1.1925.

"A gulf has opened between Europe and the US, as the former rallies while the latter drops back," said IG chief market analyst Chris Beauchamp.

"US stocks enjoyed such a strong day yesterday that some caution was inevitable, while the mixed picture following US tech earnings and the contraction in US GDP isn't helping sentiment on Wall Street.

"But higher commodity prices have helped stabilise industrial European stocks, and crucially the magic promise of Chinese stimulus has appeared, pushing up commodity prices and giving stocks across the continent a lift."

On the economic front, inflationary pressures on the US jobs market jumped by more than forecast last month, as benefits exploded.

According to the United States Department of Labor, the employment cost index increased at a quarter-on-quarter seasonally-adjusted pace of 1.4%, topping expectations for a 1.1% rise.

Costs grew more quickly in the private sector, where they were up by 1.4%, than in the public sector where they rose 1.1%.

Combined, benefits in the public and private sector increased by 1.8% on the quarter, and wages and salaries by 1.2%.

On home shores, a closely-watched survey showed UK house price growth slowing more than expected in April amid the ongoing squeeze on household incomes and rising interest rates.

According to lender Nationwide, house prices rose at a month-on-month pace of 0.3%, which marked their slowest clip since September.

That dragged the annual rate of increase down to 12.1% from 14.3% in March, below consensus expectations for 12.6%.

"Nevertheless, it is surprising that conditions have remained so buoyant, given mounting pressure on household budgets which has severely dented consumer confidence," said Nationwide chief economist Robert Gardner.

Gardner attributed that to the strikingly large proportion of Britons, 38%, who were either moving or planning to do so, as per the results of a separate survey conducted by Nationwide.

Elsewhere, industry research showed the number of shops standing empty fell in the first quarter, as the UK economy reopened following the worst of the pandemic.

According to the latest BRC-LDC Vacancy Monitor, the overall vacancy rate decreased to 14.1% in the first three months of the year, 0.3 percentage points down on the fourth quarter and only the second quarter of falling vacancy rates since the start of 2018.

All locations reported falls, with vacancies easing to 14.1% from 14.4% three months earlier on the high street and to 19.0% from 19.1% in shopping centres.

In retail parks, the number of empty shops eased by 0.7 percentage points to 10.6%.

"The economy has fully reopened, with more city workers back in the office and more tourists out on the streets," said Helen Dickinson, chief executive of the British Retail Consortium.

"This allowed some businesses to grow and invest in repurposing and reopening empty units, especially in retail parks and high streets."

Across the channel, the cost of living in the single currency bloc continued rising in April as inflationary pressures broadened out from energy.

According to Eurostat, the euro area consumer price index jumped at a month-on-month seasonally-adjusted pace of 0.6%.

That pushed the annual rate of increase to 7.5% in April from 7.4% in March, as markets had widely expected.

Data for Belgium, Germany and Spain on Thursday had led some economists to believe that a dip to 7.3% was possible, however.

In equities, Johnson Matthey rocketed 18.89% after reports that the Standard Investments arm of US firm Standard Industries had taken a 5.23% stake in the chemicals company.

Packaging specialist Smurfit Kappa was ahead 4.34% after reporting that both revenue and underlying earnings had grown by a third in the three months ended 31 March as a result of "significant, ongoing capital investment" it had made.

The firm said revenues were up 33% year-on-year at €3.02bn, while EBITDA had also grown 33% to €514.0m, with an EBITDA margin of 17% for the period.

Education publisher Pearson added 1.92% after saying it would receive a one-off tax boost this fiscal year as it maintained annual guidance.

The company said its effective tax rate would fall to 15-17% from 21% after the statute of limitations lapsed on a number of provisions.

In broker note action, Standard Chartered was up 0.77% after Berenberg hiked its target price on the stock to 750p from 640p, while Darktrace advanced 2.89% after Jefferies slapped the cybersecurity specialist with a 'buy' rating.

On the downside, building materials supplier Travis Perkins lost 3.04% after it said higher prices would form a higher proportion of sales growth this year due to inflation, as it posted a rise in first-quarter sales and maintained guidance.

Its total sales for the three months to 31 March were up 13.6%.

"The group's forecast for materials price inflation, which was originally expected to ease into the second half of the year, is now more uncertain with pricing likely to form a higher proportion of sales growth across the year than previously thought," the company said.

Hikma Pharmaceuticals plunged 7.17% after it reported headwinds at its generics business, which had been hit "by increased competition and a challenging pricing environment", resulting in a "slow" start to the year.

The firm said it continued to expect full-year generics revenue growth of 8% to 10%, weighted towards the second half.

NatWest closed down 2.2% after it reported soaring first quarter profit driven by a rise in interest rates and income.

The state-backed bank said pre-tax profits for the three months to 31 March rose 41% to 1.2bn, up from 885m the previous year, and ahead of the 755m average of analyst forecasts compiled by the bank.

Elsewhere, manufacturer Rotork was off 3.11% despite trading in line with internal expectations in the first quarter, with order intake growing "high-single digits" year-on-year on an organic constant currency basis, as a fresh wave of Covid cases in China led to the shuttering of its key Shanghai factory.

Computer services provider Computacenter slid 2.19% after it reported "strong top-line growth" in the first quarter, with growth in adjusted pre-tax profits at a more modest level due to a "very large volume customer" diluting overall margins.

Market Movers

FTSE 100 (UKX) 7,544.55 0.47%
FTSE 250 (MCX) 20,708.71 0.43%
techMARK (TASX) 4,373.45 0.30%

FTSE 100 - Risers

Aveva Group (AVV) 2,152.00p 5.89%
Smurfit Kappa Group (CDI) (SKG) 3,413.00p 4.34%
Anglo American (AAL) 3,586.00p 3.84%
Mondi (MNDI) 1,511.50p 3.35%
Scottish Mortgage Inv Trust (SMT) 914.00p 3.14%
Glencore (GLEN) 496.45p 2.88%
Sainsbury (J) (SBRY) 233.40p 2.01%
Pearson (PSON) 785.80p 1.92%
Entain (ENT) 1,518.50p 1.81%
Dechra Pharmaceuticals (DPH) 3,634.00p 1.79%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 1,887.00p -7.17%
Vodafone Group (VOD) 121.54p -4.33%
National Grid (NG.) 1,194.00p -2.57%
NATWEST GROUP PLC ORD 100P (NWG) 218.00p -2.20%
Hargreaves Lansdown (HL.) 917.20p -2.15%
Howden Joinery Group (HWDN) 761.80p -2.06%
Whitbread (WTB) 2,817.00p -2.02%
Airtel Africa (AAF) 146.60p -1.68%
SEGRO (SGRO) 1,342.50p -1.36%
Relx plc (REL) 2,388.00p -1.32%

FTSE 250 - Risers

Johnson Matthey (JMAT) 2,246.00p 18.89%
Biffa (BIFF) 348.80p 5.25%
Chemring Group (CHG) 351.50p 4.93%
Fidelity China Special Situations (FCSS) 250.50p 4.81%
Oxford Biomedica (OXB) 572.00p 4.59%
Coats Group (COA) 71.00p 4.57%
CMC Markets (CMCX) 290.00p 3.57%
RIT Capital Partners (RCP) 2,545.00p 3.27%
BlackRock World Mining Trust (BRWM) 723.00p 3.14%
International Public Partnerships Ltd. (INPP) 167.00p 3.09%

FTSE 250 - Fallers

Cranswick (CWK) 3,178.00p -7.67%
Indivior (INDV) 313.60p -5.26%
Currys (CURY) 93.30p -3.47%
Polymetal International (POLY) 248.10p -3.46%
Rotork (ROR) 292.80p -3.11%
Travis Perkins (TPK) 1,228.50p -3.04%
Moonpig Group (MOON) 193.00p -2.77%
WH Smith (SMWH) 1,449.50p -2.74%
FDM Group (Holdings) (FDM) 1,020.00p -2.49%
Wizz Air Holdings (WIZZ) 3,180.00p -2.49%
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