27th Feb 2025 17:03
(Alliance News) - The FTSE 100 closed higher on Thursday, while the pound fell, amid a welter of earnings and more pronouncements on tariffs by Donald Trump.
The FTSE 100 index closed up 24.75 points, 0.3%, at 8,756.21. The FTSE 250 ended down 181.17 points, 0.9%, at 20,414.73, while the AIM All-Share closed down 3.78 points, 0.5%, at 707.72.
The Cboe UK 100 ended up 0.2% at 876.77, the Cboe UK 250 closed down 1.1% at 17,744.41, while the Cboe Small Companies fell 0.5% at 15,686.63.
In European equities on Thursday, the CAC 40 in Paris ended down 0.7%, while the DAX 40 in Frankfurt declined 1.1%.
US financial markets were mixed at the time of the London close. The DJIA was up 0.8%, the S&P 500 was 0.1% higher, but the Nasdaq Composite fell 0.5%.
US President Donald Trump said that tariffs on Mexico and Canada will go into effect on March 4, and that an additional 10% tariff will be charged on China.
The US president’s latest intervention comes as Keir Starmer, the UK prime minister, is set to visit the White House on Thursday. The UK is at risk of being hit by Trump’s "reciprocal" tariff plan, and trade is expected to be discussed during the meeting.
In response, the pound was quoted at USD1.2626 at the London equities close Thursday, lower than USD1.2692 at the close on Wednesday. The euro fell to USD1.0407 against USD1.0509.
Against the yen, the dollar was trading lower at JPY149.97 compared with JPY149.25 late Wednesday.
The dollar was also lifted on the back of numbers showing US inflation pressure was hotter-than-expected at the end of last year.
According to a second estimate from the Bureau of Economic Analysis, US real gross domestic product climbed 2.3% quarter-on-quarter on an annualised basis in the final three months of 2024. The reading was in line with the prior estimate. In the third quarter, the annualised on-quarter GDP growth rate was 3.1%, meaning the pace of growth slowed in the fourth quarter.
Inflation pressure was hotter than first thought, according to the BEA. The personal consumption expenditures index grew 2.4% in the fourth-quarter from the third. Growth of 2.3% was initially reported.
The core PCE index rose 2.7% on-quarter, topping the initially reported 2.5% rise.
Growth in the headline PCE index picked up from 1.5% in the third-quarter. The core reading accelerated from 2.2%.
Monthly figures for January's core PCE, the Fed's preferred inflation gauge, will be released on Friday.
Goldman Sachs expects the core PCE price index to have risen by 0.3% on-month in January, corresponding to a year-over-year rate of 2.5%. Goldman expects that the headline PCE price index increased by 0.3% from the prior month, corresponding to a year-over-year rate of 2.4%.
In London, Rolls-Royce was the star of the show, soaring 15%, and hitting an all-time high, after restoring the dividend, announcing a share buyback and saying it would hit financial targets two years earlier than planned.
Rolls-Royce expects to deliver GBP2.7 billion to GBP2.9 billion underlying operating profit in 2025 and GBP2.7 billion to GBP2.9 billion free cash flow, delivering the mid-term targets it had set out at a recent capital markets day two years earlier than planned.
Chief Executive Tufan Erginbilgic said the "significantly improved performance" and a stronger balance sheet gives confidence to reinstate shareholder dividends and announce a GBP1 billion share buyback in 2025.
"Rolls-Royce is delivering every bit of good news imaginable, and it's no wonder the share price has hit a new record high," said AJ Bell's Russ Mould.
On a busy day of earnings, London Stock Exchange Group rose 6.2% as analysts said "reassuring" earnings could prompt modest EPS upgrades.
The financial markets infrastructure and data provider said pretax profit for 2024 rose 5.3% to GBP1.26 billion from GBP1.20 billion the year prior. Total income, excluding recoveries, increased 6.1% on a reported basis to GBP8.49 billion from GBP8.01 billion.
Jefferies analyst Tom Mills said: "There was a building level of angst in the market heading into this print, so what LSEG has delivered should be well-received."
Aviva rose 4.2%. The insurer hailed its shift towards higher returning capital-light areas, as it raised the dividend and reiterated medium term guidance in strong 2024 results.
Aviva said the GBP3.7 billion takeover of car and home insurer Direct Line Insurance is progressing in line with expectations with completion anticipated in mid-2025.
Chief Executive Amanda Blanc said: "2024 was an excellent year, right across Aviva. We made clear strategic progress and delivered another set of very good numbers, with higher sales, higher operating profit and a higher dividend.
But WPP slumped 16% after guiding to flat to lower revenue in 2025, as it said "weaker client discretionary spend" in the fourth quarter of last year hurt its 2024 results.
"Though we remain cautious given the overall macro environment, we are confident in our medium-term targets," said Chief Executive Officer Mark Read.
Howden Joinery fell 5.8% after forecasting that the UK kitchen market would contract further in 2025, although it expects to gain more market share.
In addition, Howden said it faced inflationary pressures on costs, which it expects to continue in 2025, with increases in UK national insurance contributions and in the national minimum wage contributing to this.
Analysts at Stifel felt this "pessimistic" guidance may put some pressure on consensus.
Peel Hunt said the hoped-for bounce in market activity remains "elusive."
Elsewhere, Haleon slipped 3.6% after giving a surprise second-half weighting to guidance.
The Weybridge, England-based consumer products group owns Sensodyne toothpaste, Panadol and Advil painkillers, and Centrum multivitamins.
For 2025, Haleon expects organic revenue growth of 4% to 6%, organic operating profit growth ahead of organic revenue growth with both likely to be weighted towards the second half of the year.
The company expects a foreign exchange headwind of approximately 1.0% and 2.5% to negatively impact net revenue and adjusted operating profit.
Analysts at Barclays said while 2025 guidance is as expected, the second-half weighting is a "surprise".
"We were looking for 6.7% organic sales growth in the first quarter of 2025, but Haleon's commentary around destocking suggests this might be more like 3% to 4%," it noted.
On the FTSE 250, investors checked out of Ocado, which fell 17% after results, and Aston Martin reversed a further 12% after Wednesday's soft trading update.
Gold was quoted lower at USD2,873.26 an ounce at the London equities close on Thursday against USD2,912.10 at the close on Wednesday.
Brent oil was quoted at USD73.76 a barrel on Thursday, up from USD72.83 late Wednesday.
Friday's UK corporate calendar has full-year results from engineer IMI, educational publisher Pearson and online property portal, Rightmove.
Friday's global economic calendar has French, German and Italian CPI figures, a Canadian GDP print, and US personal consumption expenditures data.
By Jeremy Cutler, Alliance News reporter
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