31st Jul 2024 09:06
(Alliance News) - Stock prices in London opened higher on Wednesday, with solid UK earnings and a rise in oil prices supporting the FTSE 100, with the next Federal Reserve interest rate decision hours away.
The FTSE 100 index shot up 93.67 points, or 1.1%, at 8,368.08 on Wednesday morning. But the FTSE 250 rose 194.53 points, 0.9%, at 21,627.04, while the AIM All-Share added 3.72 points, 0.5%, at 781.88.
The Cboe UK 100 was up 1.0% at 835.69, the Cboe UK 250 added 0.8% to 18,947.68, but the Cboe Small Companies slipped 0.1% to 17,286.42.
The CAC 40 in Paris rose 1.0%, while Frankfurt's DAX 40 traded 0.7% higher.
Stocks in New York ended mixed on Tuesday. The Dow Jones Industrial Average rose 0.5%, but the S&P 500 lost 0.5% and the Nasdaq Composite lost 1.3%.
Equities in Asia powered higher on Wednesday, however. In China, the Shanghai Composite ended up 2.1%, while the Hang Seng in Hong Kong traded up 2.3%. In Tokyo, the Nikkei 225 added 1.5%, while the S&P/ASX 200 in Sydney rose 1.8%.
Before the Fed, was the Bank of Japan, which lifted its benchmark rate.
The central bank said in a statement it had set an interest rate of 0.25% – up from around 0% to 0.1% – having ditched its maverick negative rate policy aimed at boosting economic growth in March.
"Moves to raise wages have been spreading" in Japan while "economic activity and prices have been developing generally in line with the bank's outlook", the BoJ said.
Pepperstone analyst Chris Weston commented: "The BoJ has pulled off another mini masterstroke in its approach to changes in monetary policy, and again its ability to communicate important changes to the market, and not cause any tightening in financial conditions, shows that while they have an incredible challenge ahead of them, the BoJ are managing the situation admirably.
"As the BoJ has detailed, Japan's real policy and real market rates are still negative, and until that dynamic changes we can say that policy is still accommodative and stimulatory, and with the current inflation dynamics in play, a move away from this setting is prudent and the market sees them in control and credible."
The pound was quoted at USD1.2842 early Wednesday, up from USD1.2829 at the time of the London equities close on Tuesday. The euro stood at USD1.0821, up from USD1.0808. Against the yen, the dollar was trading at JPY151.12, down markedly from JPY153.88.
The Fed is expected to stand pat. It announces its latest decision at 1900 BST.
Ebury analyst Matthew Ryan commented: "We do, however, expect the [Federal Open Market Committee] to convey to markets that it is on the cusp of lowering rates for the first time in the current cycle."
The Bank of England announces its latest interest rate decision on Thursday.
In London, HSBC shares rose 3.1%. It announced a share buyback programme of up to USD3 billion as it reported a slightly lower pretax profit after a fall in net interest income.
It posted a pretax profit of USD21.56 billion for the first half of 2024, down 0.5% from USD21.66 billion a year prior. The lender's net interest income fell 7.4% to USD16.91 billion from USD18.26 billion. Profit beat consensus of around USD20.5 billion, however.
Miners traded higher, with Anglo American up 4.1%, Antofagasta climbing 3.5% and Rio Tinto shares rising 1.2%.
Rio Tinto maintained its first-half payout after a "stable financial performance". Sales revenue during the first six months of the year edged up 0.5% to USD26.80 billion from USD26.67 billion a year prior. Pretax profit rose 17% to USD8.12 billion from USD6.93 billion.
"Rio Tinto is both consistently very profitable and growing. This is being driven by the disciplined investments we are making to strengthen our operations and progress major projects for profitable organic growth," CEO Jakob Stausholm said. "Our overall copper equivalent production is on track to grow by around 2% this year, and our ambition is to deliver around 3% of compound annual growth from 2024 to 2028 from existing operations and projects."
The CEO the firm is at an "inflection point", as it looks ahead to the future of its aluminium portfolio with confidence, and hails "consistent production at our Pilbara iron ore operations".
Rio Tinto maintained its interim dividend at 177.0 cents per share.
GSK struggled despite a guidance hike, as sales of one offering fell short. The stock traded down 2.8%.
The drugmaker now expects revenue will rise between 7% and 9% at constant currency for 2024, its view increased from its previous 5% to 7% range.
GSK had expected growth "towards the upper part" of that range.
Constant currency core operating profit growth of 11% to 13% is expected, as GSK raised its outlook from 9% and 11%.
Its guidance does not factor in its Covid-19 Solutions offering as it does not anticipate further "pandemic-related sales or operating profit" this year.
For the second-quarter of 2024, revenue rose 9.8% to GBP7.88 billion from GBP7.18 billion a year prior. Pretax profit, however, fell by a quarter year-on-year to GBP1.50 billion from GBP1.99 billion.
Core operating profit, which excludes items such as legal, restructuring and impairment costs from the equation, increased 16% to GBP2.51 billion from GBP2.17 billion.
"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. Q2 sales grew in all areas, with Specialty Medicines in particular benefitting from new product launches in oncology and HIV. In R&D, so far this year, we have secured approvals or filings for 10 major opportunities and reported positive data from 7 phase III trials," CEO Emma Walmsley said.
Shore Capital Markets noted sales of GSK's Shingrix "missed materially", falling short of consensus by 20%. Shingrix is a shingles vaccine.
Brent oil was quoted at USD79.38 a barrel early Wednesday, rising from USD78.51 at the time of the closing bell in London on Tuesday. Shell and BP rose 2.3% and 1.8%, tracking Brent higher.
Geopolitical tensions supported oil. Hamas political leader Ismail Haniyeh was killed in a strike in Tehran, Iran. China condemned the incident and warned it could lead to more instability in the Middle East.
Hamas said Haniyeh had been killed by an Israeli strike.
Back in London, Just Eat Takeaway jumped 10%. The food delivery firm announced a new share buyback of up to EUR150 million and backed yearly guidance.
Revenue in the first half of the year slipped 0.7% to EUR2.57 billion from EUR2.59 billion a year earlier. Its pretax loss stretched to EUR363 million from EUR317 million. However, adjusted earnings before interest, tax, depreciation and amortisation surged 42% to EUR203 million from EUR143 million a year prior.
Orders declined 4.9% to 446 million from 469 million and gross transaction value declined 1.5% to EUR13.2 million from EUR13.4 million.
For the full-year, JET still expects to achieve an adjusted Ebitda of EUR450 million.
It expects the EUR150 million buyback to conclude at the end of March.
Gold was quoted at USD2,419.30 an ounce early Wednesday in London, rising from USD2,384.97 at the time of the equities close on Tuesday.
Before the Fed decision, there is still a eurozone inflation reading to come at 1000 BST.
By Eric Cunha, Alliance News news editor
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