London close: Stocks rise amid raft of solid earnings

22nd Feb 2024 16:26

(Sharecast News) - London's stock markets finished in positive territory on Thursday, bolstered by upbeat performances from US AI chipmaker Nvidia and engine manufacturer Rolls-Royce.

The FTSE 100 index rose 0.29% to reach 7,684.49 points, while the FTSE 250 climbed 0.76% to settle at 19,263.50 points.

In currency markets, sterling was last up 0.01% on the dollar to trade at $1.2639, while the euro saw a slight increase of 0.03% to last change hands at €1.1685.

"Risk on sentiment following another set of bumper Nvidia earnings helped the Nikkei 225 overcome its 1989 peak and hit record highs, as did the French and German blue chip indices," said IG senior market analyst Axel Rudolph.

"They did so despite ECB officials agreeing that it is premature to talk about rate cuts and as the German PMI data showed that the economic downturn deepened.

"The French services sector contraction eased markedly, though, as did the eurozone private sector downturn which, although showing a ninth consecutive month of falling output, saw the weakest contraction since last June, as output stabilisation in the service sector offset a further steep downturn in manufacturing."

Rudolph added that Nvidia's 12% gains, and its Nasdaq 100 weighting, had pushed the index up by around 2% as risk-on sentiment returned.

"The near three-month rise in the US Treasury yield to 4.35% and much weaker-than-expected initial jobless claims haven't dampened the mood.

"The dollar reversed its initial post-FOMC minutes weakness on Thursday afternoon, putting an end to gold's six straight days of gains."

UK private sector activity jumps in February

In economic news, private-sector activity in the UK surged to a nine-month peak in February, driven by robust growth in the service sector, compensating for ongoing weaknesses in manufacturing.

The S&P Global/CIPS composite purchasing managers' index (PMI), a key indicator of economic activity encompassing both services and manufacturing, climbed to 53.3, surprising analysts who had anticipated no change from January's level of 52.9.

It marked the fourth consecutive month of expansion, denoted by any figure above 50, and the strongest reading since May last year.

S&P Global noted a significant uptick in customer demand, with the sharpest increase in new work in nine months.

Moreover, optimism about near-term business prospects reached its highest level since February 2022.

Although the services PMI remained steady at 54.3, surpassing the consensus estimate of 54.1, the manufacturing PMI rose slightly to 47.1 from 47.0, albeit missing economists' forecast of 47.5.

"UK economic growth has accelerated in February, with the early PMI survey data pointing to the largest rise in business activity for nine months," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"This is by no means a one-off improvement, as faster growth has now been recorded for four straight months after a brief spell of decline late last year.

"It's particularly encouraging to see that the upturn in growth has been accompanied by a surge in optimism about year-ahead prospects to the highest for two years, in turn encouraging a second month of increased employment."

In the eurozone, the downturn in the services sector exhibited signs of abating, while manufacturing remained sluggish, as per a closely monitored survey released on Thursday.

The HCOB PMI indicated that business activity in the euro area contracted at a slower pace in February, with the flash eurozone composite output index reaching 48.9, the highest in eight months.

Notably, the services PMI hit the pivotal 50 mark, indicating growth, and marked its best reading in seven months, rising from 48.4 in January.

Conversely, manufacturing slipped to 46.1 from 46.6, a two-month low.

Elsewhere, eurozone inflation dipped marginally last month, in line with expectations, according to data from Eurostat.

Annual inflation stood at 2.8% in January, down from December's 2.9%, aligning with both the initial estimate and consensus. A year earlier, inflation was recorded at 8.6%.

Across the broader EU bloc, inflation moderated to 3.1% in January from 3.4% in December.

Across the Atlantic, US private-sector activity growth eased slightly in February, revealed figures from S&P Global.

The composite purchasing managers' index (PMI) dipped to 51.4 this month, down from January's 52.0.

It still, however, remained the second-fastest rate of expansion since July 2023.

While the services PMI declined to 51.3 from 52.5, missing economists' expectations of 52.0, it signalled growth for the 13th consecutive month.

Conversely, the manufacturing PMI unexpectedly rose to a 17-month high of 51.5 from 50.7, surpassing the consensus forecast of 50.5, driven by increased production amid supply chain improvements following adverse weather conditions in January.

Rolls-Royce rises on results, WPP falls back

On London's equity markets, Rolls-Royce Holdings jumped 9.32% after reporting a remarkable increase in full-year profits for 2023, primarily driven by its civil aerospace segment.

The company's underlying operating profit more than doubled to £1.6bn, surpassing analyst expectations, with revenues climbing to £15.4bn.

Beazley surged by 8.93% after it upgraded its guidance for 2023, citing better-than-expected claims experience throughout the year.

Shareholders could also anticipate an additional capital return of around $300m along with the ordinary dividend.

Hikma Pharmaceuticals rose 4.28% following a nearly one-third increase in its dividend, attributed to double-digit growth in full-year core revenues and profits in 2023.

Lloyds Banking Group rebounded by 5.21% after reporting a 57% jump in full-year profits and announcing a £2bn share buyback.

However, the company set aside £450m for a regulatory probe into UK motor financing.

Anglo American saw a 3.03% increase despite halving its annual dividend due to profit declines in 2023, driven by impairments and market downturns in platinum and diamond sectors.

Mondi advanced by 1.8% despite reporting lower full-year profits due to weakened demand and prices, extending into the first quarter of 2024.

ME Group International surged by 20.03% on the back of record financial performance for the 12 months ended 31 October, with both revenues and profits witnessing growth.

Indivior spiked by 22.42% as the opioid addiction treatment maker deliberated on moving its primary listing to the US, while Jupiter Fund Management climbed by 10.67%, driven by a 36% rise in full-year underlying pre-tax profit.

On the downside, WPP declined by 6.38% despite meeting full-year expectations, while Hargreaves Lansdown dropped by 7.23% following a decline in net new business.

Safestore Holdings experienced a 3.7% decrease as quarterly revenues declined amid challenging economic conditions in the self-storage group sector.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,684.49 0.29%

FTSE 250 (MCX) 19,263.50 0.76%

techMARK (TASX) 4,395.06 0.90%

FTSE 100 - Risers

Beazley (BEZ) 634.00p 8.93%

Rolls-Royce Holdings (RR.) 356.80p 8.29%

Lloyds Banking Group (LLOY) 45.95p 6.16%

Scottish Mortgage Inv Trust (SMT) 797.00p 4.51%

Hikma Pharmaceuticals (HIK) 2,083.00p 4.28%

Intertek Group (ITRK) 4,639.00p 3.60%

Rightmove (RMV) 550.80p 3.42%

Sage Group (SGE) 1,212.00p 3.19%

Anglo American (AAL) 1,769.80p 3.03%

Ashtead Group (AHT) 5,524.00p 2.64%

FTSE 100 - Fallers

WPP (WPP) 730.60p -6.38%

Endeavour Mining (EDV) 1,256.00p -4.73%

Tesco (TSCO) 276.80p -3.05%

Land Securities Group (LAND) 629.60p -2.51%

Sainsbury (J) (SBRY) 254.10p -2.01%

SSE (SSE) 1,578.00p -1.96%

Glencore (GLEN) 379.90p -1.59%

Marks & Spencer Group (MKS) 239.20p -1.52%

Unilever (ULVR) 4,000.00p -1.34%

Severn Trent (SVT) 2,539.00p -1.32%

FTSE 250 - Risers

Indivior (INDV) 1,660.00p 22.42%

Me Group International (MEGP) 159.40p 20.03%

Jupiter Fund Management (JUP) 90.75p 10.67%

Close Brothers Group (CBG) 347.80p 7.54%

Lancashire Holdings Limited (LRE) 652.00p 5.50%

Carnival (CCL) 1,107.00p 4.93%

Moneysupermarket.com Group (MONY) 251.80p 4.57%

Wizz Air Holdings (WIZZ) 2,191.00p 4.47%

FDM Group (Holdings) (FDM) 418.00p 4.37%

Bank of Georgia Group (BGEO) 4,570.00p 4.22%

FTSE 250 - Fallers

Hargreaves Lansdown (HL.) 747.20p -7.23%

Tullow Oil (TLW) 28.50p -5.25%

W.A.G Payment Solutions (WPS) 82.40p -4.63%

Safestore Holdings (SAFE) 767.00p -3.70%

Domino's Pizza Group (DOM) 367.20p -3.22%

Victrex plc (VCT) 1,280.00p -3.10%

BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 122.40p -3.01%

PZ Cussons (PZC) 100.40p -2.52%

British Land Company (BLND) 360.60p -2.38%

IP Group (IPO) 49.00p -2.20%