FTSE 100 Live 31 July: Blue-chips finish higher, Nvidia, AMD stocks surge, Microsoft sinks
Forecast-beating HSBC today stood out in the latest wave of blue-chip results.
GSK also raised guidance but its shares struggled in a much improved FTSE 100.
London’s rally came amid hopes the Federal Reserve will tonight signal an interest rate cut.
FTSE 100 Live Wednesday
HSBC unveils $3bn buyback
GSK lifts 2024 outlook
Taylor Wimpey profits down
FTSE makes gains, edges closer to record
16:51 , Simon Hunt
The FTSE 100 saw a strong performance today, with the index finishing the session higher by nearly 100 points to 8,368.
The rise brings the FTSE to within 100 points of its all-time record of 8,474, which it hit back in May.
A near-4% rally at one of the index’s biggest constituents, HSBC, helped the gains along after the bank posted a rise in profits and unveiled a new CFO.
Richard Hunter, Head of Markets at interactive investor, commented “The HSBC model is slightly different from that of its UK banking peers, leading not only to a strong set of numbers but also putting strong building blocks in place in order to continue its global significance.
“The bank is moving towards a business which has less of a slavish reliance on interest rate movements and levels, with increasing focus on the growth in affluent wealth, especially in Asia. The group has been investing heavily in this move, giving HSBC higher, but more diversified income streams.”
Metro Bank to return to profitability after heavy cuts
15:47 , Simon Hunt
Metro Bank has said it expects to return to profitability by the end of the year after heavy cost-cutting which saw the firm axe 1,000 jobs.
The high street lender saw shares rise in early trading after it reduced its losses for the past half-year.
The company reported an underlying pre-tax loss of £26.8 million for the six months to June, improving from a £33 million loss a year earlier.
The news came after Metro Bank launched a series of heavy cutbacks earlier this year, including shedding about 1,000 jobs.
AMD and Nvdia shares help lift Wall Street
14:44 , Simon Hunt
A surge in the share prices of chipmakers including AMD and Nvidia helped lift markets in the opening minutes of trade on Wall Street.
AMD shares rose 10.5%, while Nvidia climbed 9.1%, after the former raised its forecasts for AI chip related revenue.
Meanwhile Microsoft shares fell 2.3% after the AI giant upped its capital expenditure on AI to $56 billion.
The S&P 500 rose 69.2 points, or 1.27%, at the open to 5,505.59, while the Nasdaq Composite rose 351.8 points, or 2.05%, to 17,499.231 at the opening bell.
Wickes sales drop as Britons hold off big ticket purchases
13:26 , Simon Hunt
Sales have slipped at home improvements retailer Wickes as Britons continue to hold back on big ticket purchases.
The retail group said a sharp slump in trading in its design and installation business weighed on trading over the past half-year.
David Wood, chief executive of Wickes, said the company has nevertheless grown volumes in its retail business despite a “challenging trading backdrop”.
Total revenues dipped by 3.4% to £799.9 million over the six months to June 29, with like-for-like revenues down 3.9%.
HSBC shake-up at the top continues under Sir Mark Tucker
12:10 , Simon Hunt
HSBC chairman Sir Mark Tucker completed the shake-up of his top level management team today, bringing in Jon Bingham as chief financial officer, as least on an interim basis.
In April chief executive Noel Quinn unexpectedly said he would retire after five years in the job, promoting unconfirmed gossip of a clash over strategy with Tucker.
Quinn has been replaced by Georges Elhedery, himself a former CFO of HSBC, but signed off today with strong first half-results.
The appointment of finance chiefs as the top men reporting into Tucker is seen by the City of indicative of wider trends, with the money men – the finance departments – increasingly regarded as the decision makers, in many ways more influential than old style CEOs laying out strategy and looking for growth.
Euros coverage helps Reach profits rise as cost cutting offsets falling revenue
11:22 , Michael Hunter
Cost-cutting at newspaper and website publisher Reach helped its half-year profit rise today, as did demand for its coverage of England’s progress to the finals of the Euros.
The publisher of the Daily Mirror reported a rise of almost a quarter in operating profit of £44.5 million for the six months to the end of June. That came from revenue of £265 million, down by over 5%.
There have been controversial job cuts at the firm, which has centralised the production of stories that drive traffic to its portfolio of national and local websites. The changes followed similar moves made at its audio and video teams.
Nonetheless, after changes to the algorithms used by search engines, page view volumes dropped by a quarter. Reach said the fall came “due to ongoing impact of 2023's referrer deprioritisation of news”.
FTSE 100 up 1.4%, miners and Shell among strongest stocks
10:09 , Graeme Evans
A 1.4% bounce fuelled by a run of strong blue-chip earnings today left the FTSE 100 index back within sight of record territory.
Today’s rise of 114.69 points to 8389.10 was led by 4% gains for Anglo American and Antofagasta amid hopes of fresh support for China’s economy.
Iron ore specialist Rio Tinto rose 87.5p to 5023p after interim results included an unchanged dividend of 177 US cents a share, equivalent to 50% of earnings.
Other strong performers included Shell, which improved 2% or 56.5p to 2823p after the price of Brent crude returned above $80 a barrel.
The FTSE 250 index lagged the commodities-fuelled top flight but still rose by 0.7% or 139.20 to its highest level in over two years at 21,571.71.
Strong mid-cap performers included British Land, which put on 7.4p to extend gains for the past week to 7% at 414.2p.
Vaccine slip hurts GSK stock
09:31 , Simon Hunt
Pharma giant GSK today upped its revenue and profits forecasts after posting a jump in sales of its cancer and HIV treatments.
Turnover from the firm’s respiratory medicines rose 15% in the second quarter to top £2 billion, while demand for its HIV treatment rose 11%.
CEO Emma Walmsley cited “strong operational execution and the strengthening breadth of our portfolio to both prevent and treat disease,” along with completed investments to develop new mRNA vaccines.
But GSK’s shares took a knock over weaker than expected vaccine sales, which were down 1% in the second quarter. The stock slipped 2.2% to 1,508p.
The company’s shares have fallen as much as 13% since a US judge in Delaware allowed 70,000 lawsuits to go ahead alleging that its heartburn drug Zantac caused cancer. GSK said it disagreed with the ruling and would seek to appeal it.
HSBC and miners lead improved FTSE 100, GSK shares fall
08:34 , Graeme Evans
HSBC shares have risen 3% in a strong London session, with the FTSE 100 index up 1.2% or 103.29 points to 8377.70.
The banking giant’s results and $3 billion buyback plan fuelled an improvement of 21.2p to 698.1p, but GSK fell 40p to 1502.5p even though the drug maker raised 2024 guidance.
Mining stocks dominated the risers board, with Rio Tinto among them after it declared an unchanged half-year dividend of 177 US cents in interim results.
Rio’s shares lifted 52p to 4987p, while Glencore rose 11.9p to 428.5p and Antofagasta put on 3% or 68.5p to 2000p.
Among other companies reporting today, Taylor Wimpey added 2% or 3.3p to 161.85p and Just Eat Takeaway surged by 10% or 88p to 1002p.
GSK lifts 2024 guidance after strong quarter
07:55 , Graeme Evans
GSK today raised 2024 guidance alongside results showing a 13% rise in second quarter sales to £7.9 billion.
The pharmaceuticals company now expects turnover growth of between 7% and 9%, compared with 5% to 7% previously forecast.
Core operating profit growth is now seen in the range of 11% to 13%, up from 9% to 11%.
Chief executive Emma Walmsley said: "GSK's momentum this year continues with excellent second quarter performance, reflecting strong operational execution and the strengthening breadth of our portfolio to both prevent and treat disease.”
She announced a second quarter dividend of 15p a share and continues to expect 60p for the full year.
HSBC unveils $3bn buyback, lifts key 2025 target
07:30 , Graeme Evans
HSBC is to buy back $3 billion (£2.3 billion) of its shares over the next three months after second quarter profits rose 1% to $8.9 billion (£6.9 billion).
The half-year surplus of $21.6 billion (£16.8 billion) was broadly similar to last year’s record.
Chief executive Noel Quinn, who is stepping down later this year, said investment in HSBC’s Wealth division had resulted in higher, more diversified revenue.
He added: “We are confident that we have the right strategy and model to grow revenue, even in a lower interest rate environment, and are therefore providing new guidance of a mid-teens return on average tangible equity in 2025.”
For 2024 the bank is targeting net interest income of around $43 billion (£33.5 billion), which would be 20% higher than the figure reported for last year.
Just Eat sales slip on weak Southern Europe demand
07:25 , Simon Hunt
Revenues at Just Eat slipped 1% to 2.57 billion euros after a strong performance in Northern Europe was offset by weak sales in Southern Europe, North America and Australia & New Zealand.
The firm said it had seen an overall 6% decline in the number of active customers on its platform in the first half of the year.
Just Eat said the decline was “driven by our committed path to profitability in markets with highly competitive pressure and challenging performance in Israel.”
The firm recently announced plans to withdraw operations in France and New Zealand.
CEO Jitse Groen said: “We look very critically at our portfolio. The end of the pandemic has changed the horizon for some of the businesses. We are very focused on reducing our costs further going into the second half.”
Taylor Wimpey's half-year profit down over 58% to £99.7 million
07:22 , Michael Hunter
Taylor Wimpey, one of the UK’s biggest developers, revealed the impact of the slowdown in the country’s house market today and stood by plans to complete up to 10,000 homes this year.
The FTSE 100 firm said its half-year profit fell by over 58% to £187.7 million from revenue of £1.517 billion.
It stood by plans to complete between 9,500 and 10,000 homes this year, at the upper end of guidance.
Jennie Daly, chief executive pointed to the “high” level of “interest rates and mortgage rates” .
She added:
“Though it is early days for the new Government, we welcome their recognition that planning is a major barrier to economic growth, of which housebuilding is a significant component, and we look forward to working constructively with them to deliver much needed new homes across the UK.”
Microsoft shares fall as focus turns to Fed decision, Japan hikes base rate
07:14 , Graeme Evans
Futures are pointing to a stronger session as traders look ahead to tonight’s Federal Reserve announcement and review the latest corporate earnings.
Microsoft last night beat forecasts for fourth quarter revenues and earnings but disappointed Wall Street by reporting slower cloud services growth.
Its shares fell 3% in after-hours dealings, having declined 1% during regular trading when Nvidia lost 7% and the S&P 500 index closed 0.5% lower.
The focus is now on whether the US Federal Reserve signals a September rate cut at the conclusion of its policy meeting tonight.
In a busy week for central bank decision making, Japan has taken another step towards normalising its monetary policy by hiking interest rates to 0.25%.
The FTSE 100 index closed 0.2% lower last night, with London’s top flight seen 60 points higher at 8335 amid a wider improvement in risk appetite.
Recap: Yesterday's top headlines
06:53 , Simon Hunt
Good morning from the Standard City desk.
On Friday it will be the first anniversary of the last Bank of England hike in interests rates in a volley of increases that took the cost of borrowing from 0.1% all the way to 5.25%.
The day before that, the Bank’s rate setting Monetary Policy Committee will reveal whether they will start relieving the pressure on businesses and borrowers by starting the long march back down from the top of the interest rate hill.
City markets and commentators are pretty divided on whether they will. The new Labour government has just given the economy yet another adrenaline hit of spending power in the form of well-above-inflation pay awards for public sector workers, including 22% over two years for junior doctors. That follows the near 10% increase in the minimum wage back in the spring which is still working its way through the demand side of the economy.
Although food inflation has, thankfully, dropped dramatically since the painful peaks of 18 months ago there are some indications that the shockingly bad weather earlier in the year has disrupted fruit and vegetable production leading to wholesale prices starting to rise again.
Overall it just feels there is not yet enough overwhelmingly compelling evidence that inflation is fully back in its box to persuade three MPC hawks to discard their talons and convert to doves.
~
Here’s a summary of our top headlines from yesterday:
Ofgem accused of stifling competition in household energy sector after extending ban on cheaper tarrifs for new customers
Leading audit firms BDO and Forvis Mazars critcised by FRC for shoddy work
Diageo sales fall for the first time since 2020 after huge slump in Latin America adding more pressure on CEO Debra Crew
Greggs opens another 99 shops and targets 140 more as first half profits rise 16%
FCA gives firms more time to respond to the wave of complaints over car loans, as the biggest wave of consumer payouts since PPI looms, with handling complaints paused until December next year
BP quarterly profits up from $2.7 bn to $2.8 bn
Ex BT boss Philip Jansen to be new boss of WPP