London close: FTSE finishes higher after tsunami of earnings

(Sharecast News) - London stocks finished in the green on Thursday as investors waded through an avalanche of earnings, with well-received results from Anglo American, Rentokil and Shell helping to underpin the mood.
The FTSE 100 ended the session up 0.88% at 7,078.42, and the FTSE 250 was 0.19% higher at 23,050.46.

Sterling was positive as well, last rising 0.47% on the dollar to $1.3968, and strengthening 0.11% against the euro to trade at €1.1753.

"We've seen an avalanche of earnings updates today, most of them greeted with positivity, helping to push European markets and the FTSE 100 to its second day of gains after a poor start to the week," said CMC Markets chief market analyst Michael Hewson.

"With the FTSE 250 already at record highs, the FTSE 100 has been very much the odd one out when it comes to record levels," he added, noting that it was currently well below the levels from just over three years ago, when it was at 7,900.

"With private equity companies already sniffing around some of the more undervalued sectors of the UK economy, maybe some of today's updates could raise optimism that there still remain a significant number of UK companies that may have further to go in terms of share price upside."

Data from across the pond showed US economic growth accelerating at a lower-than-expected pace in the second quarter, although it did reclaim its pre-pandemic level.

According to the Department of Labor, gross domestic product expanded at a quarterly annualised pace of 6.5%, up from 6.3% in the first quarter but below the 8.5% clip economists were anticipating.

Household consumption continued to race ahead, surging by 11.8%, but residential investment and federal government non-defence spending dragged on GDP, falling by 9.8% and 10.4%, respectively.

Paul Ashworth, chief US economist at Capital Economics, noted downwards revisions to the personal savings rate, which left it at 10.9% at quarter's end.

While still above 8.0%, where it was before the pandemic, there was now less margin left for Americans to keep running it down and thus support the economy.

"Overall, more evidence that stimulus provided surprisingly little bang-for-its-buck, with the economy quickly pushing against unexpected supply constraints instead, which have driven inflation higher," he said.

The US jobs market, meanwhile, improved a tad during the preceding week, with the Department of Labor reporting that over the week ending on 24 July initial unemployment claims fell by 24,000 to 400,000.

That improvement was less than the drop to 350,000 anticipated by economists at Barclays, but the difficulty of seasonally adjusting the data to take into account the carmakers' annual retooling over the summer likely meant the underlying picture was better.

On home shores, UK mortgage borrowing hit a record £17.9bn in June as homebuyers raced to complete purchases before the stamp duty holiday started to taper off.

The net figure from the Bank of England was well ahead of the previous record of £11.5bn set in March, and there was no large increase in the number of mortgage approvals in recent months, suggesting a shorter time between a lender approving a mortgage and completion.

Approvals for house purchases fell in June to 81,300 from 86,900 a month earlier, with June's figure the lowest since July 2020 when the housing market reopened and Chancellor Rishi Sunak announced a sharp, temporary cut in stamp duty for house purchases in England.

Sunak's cut, which finishes completely at the end of September, helped fuel a frenzy in the housing market as buyers scrambled to capitalise on the reduction.

Finally on data, UK commercial vehicle production rose for the fourth month running in June, although output was constrained by a shortage of components and workers caused by the pandemic.

The industry produced 5,808 vehicles, up 39.6% from a year earlier when the UK was in its first, most severe lockdown, the SMMT trade body said.

Production in the first half of 2021 was 20.9% lower than the average over the previous five years, affected by the lockdown in the first three months of 2020 and more recent disruption.

The SMMT said a shortage of semiconductors and an increase in workers having to self-isolate were affecting the industry.

"After a tough start to the year, commercial vehicle production is steadily recovering against a backdrop of increased demand, but still remains short of previous years," said Mike Hawes, the SMMT's chief executive.

In equity markets, earnings came in thick and fast earlier, with Anglo American rising 5.36% by the close after it posted record first-half results, and said it would return a total of $4.1bn to shareholders.

Rentokil Initial gained 6.75% after saying it expects market expectations for annual profit to increase as the pest control and hygiene company reported sharp rises in interim profit and its dividend.

Shell gushed 3.9% higher after the oil giant lifted its dividend, launched a $2bn buyback and posted a rise in second-quarter profits.

Caterer Compass Group advanced 3.67% after saying it expects trading to be around 80% to 85% of pre-Covid-pandemic levels in the fourth quarter as its larger markets reopened.

BAE Systems pushed up 2.18% after it increased its dividend and announced a £500m share buyback as the arms and aerospace company reported a 61% increase in first-half profit.

Opioid addiction treatment maker Indivior gained 6.88% after it said pre-tax profit jumped in the first half and announced a $100m share buyback.

Distilling giant Diageo reversed earlier losses to close 0.77% firmer, after it reported a sharp jump in annual profits but said it expects near-term volatility to remain.

On the downside, Smith & Nephew slumped 6.33% even as it posted a 48% increase in second-quarter revenues.

Lloyds Banking Group reversed earlier gains to close down 1.24%, even after it swung to an interim pre-tax profit of £3.9bn from a loss of £602m the year before.

The bank also released £837m set aside for bad debts amid the Covid pandemic, due to an improved UK economic outlook.

Telecoms and broadcasting group BT was 6.55% weaker despite reporting better-than-expected first-quarter core earnings as trading improved across most of its businesses.

Weir was also in the red by 5.96%, despite reinstating its dividend and hailing a "strong" first-half performance.

Iconic boot maker Dr. Martens lost 3.08% even after it said revenues surged in the first quarter, with trading "slightly" ahead of its expectations and growth across all regions.

Market Movers

FTSE 100 (UKX) 7,078.42 0.88%
FTSE 250 (MCX) 23,050.46 0.19%
techMARK (TASX) 4,468.53 -0.41%

FTSE 100 - Risers

Rentokil Initial (RTO) 563.00p 6.75%
Informa (INF) 511.80p 5.74%
Anglo American (AAL) 3,293.00p 5.36%
Royal Dutch Shell 'B' (RDSB) 1,438.00p 3.90%
Royal Dutch Shell 'A' (RDSA) 1,458.60p 3.77%
Compass Group (CPG) 1,556.00p 3.67%
Relx plc (REL) 2,100.00p 3.24%
Antofagasta (ANTO) 1,543.50p 2.99%
Rio Tinto (RIO) 6,286.00p 2.60%
Prudential (PRU) 1,374.50p 2.42%

FTSE 100 - Fallers

BT Group (BT.A) 171.90p -6.55%
Smith & Nephew (SN.) 1,464.50p -6.33%
Weir Group (WEIR) 1,790.00p -5.96%
SSE (SSE) 1,472.50p -3.98%
Royal Mail (RMG) 507.60p -3.13%
ITV (ITV) 114.15p -3.06%
Smurfit Kappa Group (CDI) (SKG) 4,030.00p -2.33%
B&M European Value Retail S.A. (DI) (BME) 553.60p -2.32%
Johnson Matthey (JMAT) 2,950.00p -2.25%
Ashtead Group (AHT) 5,458.00p -1.83%

FTSE 250 - Risers

Morgan Advanced Materials (MGAM) 402.00p 7.20%
Indivior (INDV) 158.50p 6.88%
Hochschild Mining (HOC) 163.50p 5.62%
Bytes Technology Group (BYIT) 489.80p 4.08%
Vesuvius (VSVS) 536.50p 3.96%
Aston Martin Lagonda Global Holdings (AML) 1,991.00p 3.73%
TI Fluid Systems (TIFS) 308.00p 3.70%
Just Group (JUST) 102.10p 3.65%
Capita (CPI) 36.97p 3.27%
Spectris (SXS) 3,545.00p 3.23%

FTSE 250 - Fallers

Pets at Home Group (PETS) 472.80p -5.67%
Syncona Limited NPV (SYNC) 206.50p -3.95%
Elementis (ELM) 141.70p -3.87%
Dr. Martens (DOCS) 440.00p -3.08%
Marks & Spencer Group (MKS) 138.10p -2.64%
Drax Group (DRX) 420.00p -2.33%
WH Smith (SMWH) 1,645.50p -2.26%
Rathbone Brothers (RAT) 1,866.00p -2.20%
PureTech Health (PRTC) 322.50p -2.12%
Centrica (CNA) 46.68p -2.04%