London close: Stocks weaker as US GDP falls slightly short

Market Close Report
15:00, 29th April 2021

(Sharecast News) - London shares had reversed their earlier gains by the close on Thursday, as investors digested the latest GDP data out of the US, following a raft of corporate updates earlier.
The FTSE 100 ended the session down 0.03% at 6,961.48, and the FTSE 250 was 0.21% weaker at 22,392.94.

Sterling was stronger, meanwhile, last rising 0.09% on the dollar to trade at $1.3948, and gaining 0.18% against the euro to €1.1516.

"The US economic bounceback remains on track despite a marginally lower GDP reading for the first quarter," said IG senior market analyst Joshua Mahony.

"Today's annualised GDP reading of 6.4% fell short of estimates today, and markets evidently struggled with that fact.

"Declines throughout US markets at the open come despite a post-earnings surge from tech giant Facebook."

Mahony said that still, with real GDP rising to an annualised figure of $19.1trn, it was "highly likely" that the pre-pandemic peak of $19.3trn is topped by the end of the second quarter.

"The banking sector has certainly managed to take a more constructive approach than the wider market, with rising yields and a raft of strong earnings helping to drive the sector higher.

"NatWest can be added to a now long list of financial names that have managed to beat estimates, and it would come as no surprise to see a similar result when Barclays report their figures tomorrow morning."

America's economy roared ahead at the start of 2021, bolstered by the pandemic relief bills approved in December and March.

According to the Department of Commerce, US gross domestic product shot ahead at a quarterly annualised rate of 6.4%, just shy of consensus forecasts for 6.5% growth.

Driving the expansion was a 10.7% surge in household consumption which drove a 41% surge in purchases of durable goods.

Outlays on services however increased by a more restrained 4.6% due to the mobility restrictions in place.

Demand was such that companies struggled to keep the shelves properly stocked, with the resulting inventory drawdown subtracting 2.6 percentage points from the quarterly rate of GDP growth.

In equity markets, Standard Chartered was up 5.63% after it posted an 18% profit increase for the first quarter, as lower provisions for bad debts offset falling income.

The emerging markets-focused bank's underlying pretax profit rose to $1.45bn (£1bn) in the three months to the end of March from $1.22bn a year earlier.

Operating income fell 9% to €3.93bn as the bank's net interest margin was squeezed by low interest rates, but Standard Chartered predicted income would rise in the second half of 2021 as business momentum builds.

Unilever added 3.32% after announcing a €3bn (£2.2bn) share buyback, as the consumer goods company predicted first-half sales growth near the top of its target range.

Underlying sales rose 5.7% in the first quarter and turnover fell 0.9% to €12.3bn, the FTSE 100 group said in a trading update.

Turnover declined because of currency movements, the company added.

St. James's Place was ahead 1.62% after experiencing an "exceptional" start to the year, as investors piled their accumulated savings into longer-term investments.

Activity was further boosted by tax year-end planning, the asset manager said.

Medical products supplier Smith & Nephew leapt 5.59% after it reinstated full year guidance, following a rise in first quarter revenues driven by increased surgery volumes, acquisitions and new products.

Revenue for the three months to 3 April came in at $1.26bn, up 11.5% on a reported basis and 6.2% on an underlying basis and including a 3.4% boost from foreign exchange and 1.9% from acquisitions.

On the downside, oil and gas giant Shell was down 1.41% even after reporting higher first quarter earnings and lifting its dividend on the back of higher commodity prices and refining margins.

The company said adjusted earnings rose to $3.2bn from $393m in the fourth quarter of 2020 and $2.8bn a year earlier.

Its dividend was lifted 4% to 0.1735 cents a share.

NatWest lost 3.37% after its first-quarter operating pretax profit rose to £946m from £519m a year earlier, as it released money set aside for bad debts early in the pandemic.

Revenue dropped to £2.66bn in the three months to the end of March from £3.16bn, and the bank wrote back £102m of impairment charges.

Glencore slipped 0.94% after saying it was on track to deliver earnings at the top half of guidance on the back of rising commodities prices.

The company said it expected earnings before interest and tax to be in a range of $2.2bn - $3.2bn this year as it held production targets.

Evraz was 1.72% weaker after reporting a 1.7% fall in consolidated crude steel output quarter-on-quarter to 3.41 million tonnes, which it put down to unscheduled downtime of the sintering machine at ZSMK.

Market Movers

FTSE 100 (UKX) 6,961.48 -0.03%
FTSE 250 (MCX) 22,392.94 -0.21%
techMARK (TASX) 4,323.89 -0.23%

FTSE 100 - Risers

Standard Chartered (STAN) 521.60p 5.63%
Smith & Nephew (SN.) 1,568.00p 5.59%
Unilever (ULVR) 4,213.50p 3.32%
Hargreaves Lansdown (HL.) 1,664.50p 2.52%
Smurfit Kappa Group (CDI) (SKG) 3,564.00p 2.47%
BT Group (BT.A) 163.80p 2.47%
HSBC Holdings (HSBA) 454.30p 2.47%
Smith (DS) (SMDS) 424.00p 2.46%
Hikma Pharmaceuticals (HIK) 2,363.00p 1.72%
St James's Place (STJ) 1,346.00p 1.70%

FTSE 100 - Fallers

NATWEST GROUP PLC ORD 100P (NWG) 196.65p -3.37%
Relx plc (REL) 1,874.00p -2.78%
Flutter Entertainment (CDI) (FLTR) 15,340.00p -2.76%
Fresnillo (FRES) 830.40p -2.33%
Renishaw (RSW) 6,230.00p -2.19%
Johnson Matthey (JMAT) 3,231.00p -2.06%
British American Tobacco (BATS) 2,626.00p -2.03%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,463.00p -1.80%
Evraz (EVR) 651.20p -1.72%
Taylor Wimpey (TW.) 180.00p -1.61%

FTSE 250 - Risers

Tullow Oil (TLW) 56.68p 13.11%
Travis Perkins (TPK) 1,530.00p 8.13%
Lancashire Holdings Limited (LRE) 707.50p 4.41%
Oxford Instruments (OXIG) 2,085.00p 4.21%
Convatec Group (CTEC) 215.20p 3.66%
Diversified Gas & Oil (DGOC) 118.40p 3.50%
Dr. Martens (DOCS) 467.20p 3.13%
Beazley (BEZ) 336.50p 2.91%
Syncona Limited NPV (SYNC) 232.00p 2.88%
Investec (INVP) 285.90p 2.62%

FTSE 250 - Fallers

888 Holdings (888) 429.40p -4.09%
Morgan Advanced Materials (MGAM) 296.00p -4.05%
Restaurant Group (RTN) 121.80p -3.79%
WH Smith (SMWH) 1,819.50p -3.64%
FirstGroup (FGP) 74.80p -3.17%
Meggitt (MGGT) 453.00p -2.75%
TI Fluid Systems (TIFS) 299.00p -2.61%
Dixons Carphone (DC.) 143.00p -2.59%
National Express Group (NEX) 297.80p -2.57%
HGCapital Trust (HGT) 330.50p -2.51%

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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