- FTSE 100 closes 39 points lower
- Nasdaq holds firm, but Dow Jones lower
- StanChart gains as results top expectations
4.50pm: FTSE finishes lower
At the close, the FTSE 100 was down 0.5% to finish at 7,856 points.
Housebuilders were one area of strength for the FTSE 100, says Chris Beauchamp, chief market analyst at online trading platform IG.
“Steep losses for pharma stocks in London ahead of AstraZeneca’s earnings tomorrow have kept the FTSE 100 in the red, despite a rise for housebuilders," Beauchamp said.
"Persimmon’s update this morning pointed towards a cautious recovery in activity, though the big worry is that the ongoing battle with inflation will force the BoE into more hikes than previously expected.”
4.00pm: Broad-based weakness
The FTSE 100 index entered the final half-hour of trading on Wednesday near its lows for the session as Wall Street turned more mixed, with investors assessing a mixed bag of results in New York and London.
Michael Hewson, chief market analyst at CMC Markets UK, noted that the weakness is very much broad-based across various sectors, with defensives feeling the pressure along with cyclicals, and health care a particular drag.
He said: "This looks to be down to disappointment over GSK’s guidance which has been perceived as a little cautious, keeping the full-year outlook unchanged, despite reporting Q1 numbers that came in ahead of forecasts. Q1 revenue came in at £6.95bn, which while lower than last year, was higher than expected. There was some outperformance across the various businesses. Vaccine sales came in at £2.04bn, while specialty medicines saw £2.24bn. The weakness in GSK appears to be spilling over into AstraZeneca which is also under pressure."
Hewson added: "Persimmon shares are the best performers despite fairly downbeat Q1 trading update which saw home completions fall 42% to 1,136 from a year ago. Net private sales per outlet fell 37% to 0.62, while forward sales were down 30% to £1.7bn.
"It is clear that the rise in interest rates is starting to hit demand for housing, however, while the slowdown from 12 months ago appears stark, the trend from the end of last year when the net sales rate was 0.30 per outlet, does point to a pick-up and it is this that appears to be driving the shares to 6-week highs. Barratt Developments and Taylor Wimpey shares are also higher."
3.35pm: RBG rises
Looking at another small-cap riser, RBG Holdings shares jumped 12% higher on the back of strong full-year 2022 results
The legal services and professional services firm saw group revenue - including gains on litigation assets - rise by 25.6% to £54.1mln (2021: £43.1mln), with adjusted EBITDA up 54.2% to £15.8mln (2021: £10.3mln).
Keith Hamill, RBG chairman commented: "Through their successful integration, our leading law firm brands, Rosenblatt and Memery Crystal have strengthened performance capability within the Group. Deal origination in Convex Capital remains positive in 2023, with a growing pipeline of potential opportunities."
Analysts at Singers Capital Markets reiterated a 'Buy' recommendation on RBG shares with a target price of 103p. In late afternoon trading, RBG stock was 12.2% higher at 50.50p.
3.15pm: Oil pressures
Energy issues were a drag, with blue chips Shell and BP lower as oil prices have fallen sharply, with Brent crude dropping below the $80 a barrel level for the first time since the end of March, while WTI also hit fresh lows for the month beneath $76.
Fawad Razaqzada, market analyst at FOREX.com noted that both oil contracts have finally closed the price gaps that were formed at the start of the month when OPEC+ agreed to cut oil production significantly in a surprise decision.
He asked: "With the gaps now closed, can oil stage a big comeback? I wouldn’t bet against (it), even if recession concerns might be on the rise."
The analyst pointed out that crude oil has come under pressure due to a handful of reasons in recent week.
"First and foremost," he said, "it is concerns about recession and therefore weaker demand causing investors to largely ignore the upside risks stemming from the OPEC+ deal."
"Secondly, many traders have undoubtedly booked profit on their long positions after prices formed those big breakaway gaps at the start of the month. By squaring their positions, they effectively sold oil at the market, thus creating downward pressure.
"Thirdly, a lot of would-be buyers on the futures markets have probably stayed on the side lines, waiting for the gaps to close, as they often do. So now that this condition has been met, watch out for signs of a bullish reversal.
"Finally, it looks like Russia might not be complying with the OPEC+ cuts completely. An average of 3.4 million barrels of oil per day were flowing from Russian ports, unchanged after the previous week’s recovery, according to tanker-tracking data compiled by Bloomberg," Razaqzada concluded.
2.50pm: US tech lift
The FTSE 100 index stayed lower as Wall Street kicked off in positive territory, with strong results from tech giants Microsoft and Alphabet boosting investor sentiment ahead of the release of Meta’s earnings after the closing bell.
Around 20 minutes after the New York market open, the Dow Jones Industrials Average was up 24 points or 0.1% at 33,555, while the broader S&P 500 was ahead 0.2%, but the tech-heavy Nasdaq Composite jumped 0.9%.
“While tech stocks are bounding higher, lingering banking concerns weigh on the broader S&P 500 and the Dow Jones,” noted FOREX.com market analyst Fiona Cincotta.
First Republic Bank continued to tumble following its dismal earnings, down another 15% after shedding about 50% on Wednesday.
But following its after-hours earnings reports, Microsoft shares jumped 7% at the open although Activision Blizzard shares fell 9% after the UK’s competition watchdog blocked Microsoft’s proposed $69bn acquisition of the cloud gaming company.
2.30pm: Call of Duty game over?
The Nasdaq Composite index is expected to lead Wall Street higher today after well-received results overnight from big tech, including Microsoft shares in which rose strongly after-hours.
But the software giant's stock were more subdued in New York pre-market trading as investors assessed the implications of the UK Competition and Market Authority (CMA) decision to block Microsoft’s long-awaited strategic acquisition of game-maker Activision Blizzard.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown commented: "The CMA has concerns that the deal could undermine fair competition in cloud gaming if the Xbox maker decides to make Activision’s games exclusive to its cloud gaming platform. Cutting alternative distribution off at the knees is seen as a step too far for the UK authorities.
"Scepticism among shareholders about the proposed takeover was already rife, the CMA is not the only regulatory body to be sniffing around the deal. Microsoft has plenty of financial resource to appeal the decision, with over $50bn of net cash languishing on the balance sheet.
She added: "There’s no guarantee that the CMA will bend on this one, but a compromise is possible. This could see Microsoft take on some areas of Activision and not others, but ultimately the final shape of the deal is hard to map. Microsoft needs this deal to help stoke growth in the wake of disappointing personal computer sales, with the gaming market a far more high-growth area, which would supplement the group’s leading AI position. Activision’s incredible haul of intellectual property is a big factor in this situation, but more broadly, as cloud gaming continues to grow and regulators learn as they go, tougher regulations and frustrating corporate outcomes are likely.”
2.15pm: Boeing gains altitude
Boeing has reaffirmed its guidance to deliver 400 to 450 airplanes in 2023 and said it plans to increase production to 38 units per month later in the year despite production issues, sending its shares close to 4% higher in New York pre-market trading.
Reporting first-quarter results, the US airplane manufacturer delivered a 28% increase in revenue to $17.9bn, reflecting 130 commercial deliveries. The growth beat consensus Wall Street estimates for $17.6bn in revenue. Its net loss narrowed to $425mln from $1.24bn, resulting in a loss per share of $0.69 from $2.06 previously.
"We delivered a solid first quarter and are focused on driving stability for our customers," Boeing president and CEO said Dave Calhoun said in a statement.
1.30pm: A look at some top risers and fallers on the junior market
Trifast (LSE:TRI) shares jumped 13% higher as the nuts, bolts and screws maker said its profits in the year to March 2023 would exceed earlier expectations due to organic growth and ‘pricing actions’.
Image Scan Holdings PLC (AIM:IGE) swung into profit at the half-year, boosted by a surge in revenue sending shares sharply higher. Shares jumped nearly 8% to 2.1p as a result.
Warpaint London PLC (AIM:W7L) saw its shares gain over 7% after the cosmetics company reported record sales and a surge in profits for 2022.
Totally PLC (AIM:TLY) shares rose over 3% as the frontline healthcare services provider revealed it has won a further new insourcing contract for the delivery of urology services for the Saolta University Health Care Group in Ireland.
James Fisher & Sons PLC (LSE:FSJ), the shipbroker, edged out of its recent doldrums as investors welcomed a new £210mln lending facility. Shares rose 6%% to 298p with investors reassured also by a positive trading update.
Narf Industries PLC (LSE:NARF) tumbled 18% after the cybersecurity firm said its shares would be suspended due to an audit delay.
It’s hard to tell what the market didn’t like about the latest trading update from Biome Technologies PLC (AIM:BIOM), with shares off 15%, wrote Proactive’s Ian Lyall. “Perhaps there was some profit-taking on an investment that has grown 69% in value in the year to date,” he said.
1.03pm: Wait, now the market mood seems to be improving
Wall Street futures are pointing a likely to higher open, with stocks in London not yet lifted by this potential improvement in the mood.
Microsoft seems to be driving the optimism, with a near-8% rise in pre-market trading after its quarterly results overnight offsetting the UK blocking its big gaming deal. Last night, its Q1 results and those of fellow tech colossus Alphabet both beat expectations.
On the back of the news from the two trillion-dollar titans, contracts for the Nasdaq 100 are up 0.7%, while futures for the Dow Jones Industrials Average (DJIA) and the broader S&P 500 index are up either side of 0.1%.
Yesterday's narrative was defined by the 50% plunge for First Republic Bank (NYSE:FRC), down 93% in the year to date, with concerns reigniting about the health of regional banks amid unprecedented deposit outflows.
The future of FRC is in the spotlight after reports regulators in Washington and financiers on Wall Street were scrambling to come up with a plan to stabilise the ailing bank, a day after it revealed its customers had withdrawn US$100bn of deposits during last month’s turmoil.
It said at the start of the week it is pursuing “strategic options”, but reports suggest it is struggling to come up with a viable solution, with the regional bank being sued by shareholders who accuse it of concealing how rising interest rates threatened its business model by prompting an exodus of deposits.
The bank's bosses are in touch with the government in Washington, which is on high alert following the failure of Silicon Valley Bank and Signature Bank last month, with concerns that the crisis could once more spread to other US regional banks.
Today, Facebook and Instagram owner Meta Platforms Inc (NASDAQ:FB) is due to report after the closing bell, with all eyes on its artificial intelligence plans. Other companies reporting include Boeing, Boston Scientific and Hilton Worldwide, among others.
12.45pm: UK blocks Microsoft gaming deal
The UK’s Competition and Markets Authority has blocked the proposed US$75bn acquisition by Microsoft of video games group Activision Blizzard, potentially derailing the tech behemoth's biggest-ever deal.
Protecting innovation in the cloud gaming market, was the reason given by the antitrust watchdog, saying the combination of the two companies would be commercially motivated to make Activision’s games exclusive to its own cloud gaming service, adding that Microsoft had failed to address its concerns.
“We have concluded that the merger would result in the most powerful operator in the fast-developing market for cloud gaming, with a current market share of 60-70%, acquiring a portfolio of world-leading games with the incentive to withhold those games from competitors and substantially weaken competition in this important growing market,” the CMA said.
Microsoft said it would appeal the ruling. “We're especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works,” Brad Smith, Microsoft president, said in a statement.
MSFT shares are still up 7% in pre-market trading in the US.
12.25pm: Market confidence dissipating
Confidence among investors is slightly seeping away in London and overseas, with blue-chip benchmarks turning down and US futures dipping.
The FTSE is down 30 points or 0.4% to 7860, while Germany's Dax is down 0.8%, France's CAC 1.1% lower and the Stoxx 600 down 0.9%.
Futures markets in New York were pointing to a positive open, but the Dow Jones is now poised to open in the red, according to pre-market trading, with the S&P 500 flat and the Nasdaq 100 up 0.8%, boosted by last night's upbeat numbers from Microsoft and Alphabet.
TickMill analyst James Harte says: "US stocks have come under pressure mid-week as fears for the US banking sector returned to the spotlight yesterday.
"The headline move was shares in First Republic Bank (NYSE:FRC) (FRC) tanking by over 50%. The decline came in response to news that deposits with the bank had plunged by around $100 billion last month as customers rushed to withdraw their capital, anticipating the potential collapse of the bank. On the back of the SVB collapse and Signature Bank forced closure from the Fed, FRC was widely pegged to be the next bank to fail."
11.47am: Optimism about the FTSE's future (but not until 2024)
There are "upside risks" for markets ahead, says Paul Dales, chief UK economist at Capital Economics, seeing "scope for big rate cuts" in 2024.
But for 2023 he sees the FTSE 100 falling 7% to 7300, from the 7,862 where it sits now (down 0.3% so far today).
"The recent resilience in economic activity and stubbornness of inflation is raising market rate expectations, gilt yields, UK equities and the pound," he says in a note.
"And there is a growing risk that interest rates rise above 4.50% and/or stay high for longer. But we think it’s only a matter of time before the rise in interest rates already seen takes a heavier toll on activity and causes the recent rally in the pound and equity prices to reverse.
"If this economic weakness happens and successfully tames inflation, it should pave the way for interest rates to be cut further than investors currently anticipate in 2024."
A recession ending "should enable the FTSE 100 to climb from 7,300 at the end of 2023 to around 9,000 in 2024", he predicts, foreseeing the GBP/USD climbing back from $1.12 to $1.25.
11.20am: UK work absences 'show impact of Covid and old people forced to work'
There's a few thoughts coming in on the ONS productivity and sickness data earlier.
"These figures should not be misread as showing the sickness rate for working people," says Paul Nowak, general secretary of the TUC.
"They miss out on many workers with little choice but to work while ill. This includes low-paid workers excluded from sick pay entitlement and those who can't get by on just £110 a week - the miserly rate for statutory sick pay."
The TUC is calling for the following reforms to sick pay, including that statutory sick pay be given from day one of illness (as in the pandemic) instead of from the fourth day of sickness under the current rules, for the rate to be raised and for lower-paid workers to stop being excluded.
Almost a quarter of causes of absence were minor, notes Sarah Coles, head of personal finance at Hargreaves Lansdown, which she says may owe something to viruses circulating again after social distancing came to an end, while respiratory illnesses have overtaken mental health problems and now make up twice as large a proportion of illnesses as before the pandemic.
"It's also worth noting that while the absence rate increased across the board, for those aged 65 and over, it hit a record high of 3.7% of working hours. This is linked to the fact that people over the age of 65 make up a larger proportion of the workforce than in past years."
The raising of the state pension age means that those working beyond 65 are no longer largely healthy people who are keen to keep working, she says, with this also including those who are "struggling on in jobs that may not be improving their health conditions, because they have no other choice".
Ben Keighley, founder of social media recruitment specialist Socially Recruited, says: "It’s official: Britain is the sick man of Europe again. These figures show clearly the uphill battle Jeremy Hunt is facing as he tries to tackle the UK’s productivity crisis."
He adds that Covid is continuing to contribute directly to sickness rates in the workplace, with soaring absenteeism and time in the workplace continuing to have a significant bearing on people's mental well-being.
He calls for companies to ensure they offer flexible and remote working models when recruiting to give a better work-life balance.
11.05am: London stocks remain in red
The Footsie is largely sitting around 20 points in the red as traders seems to be waiting for New York counterparts to join in and set the tone for the rest of the session.
AB Foods, Spirax-Sarco and CRH are the biggest fallers, with drugs giant AstraZeneca dragged lower by GSK numbers out earlier.
The leaderboard is topped by Persimmon, up 6% after its positive update, dragging rival housebuilders Taylor Wimpey and Barratt Developments behind it, up 2.5%.
Looking down to the FTSE 250, it is down 0.17%.
Drax is the top riser, up 3.9% despite reports that its biomass fuel is being investigated by UK energy regulator and its own scientific advisers questioning whether it should even be calling biomass 'carbon neutral'.
Main fallers include travel groups Carnival and TUI amid a Bloomberg report that Chinese tourists remain wary of travelling overseas, along with a mixed report from Heathrow.
11.00am: Retail survey
While the CBI remains embroiled in controversy, its research arm is still working and has published its Distributive Trades Survey, which looks at the retail sector.
Its reported sales balance rose to +5 in April, from +1 in March. No consensus forecast is reported.
The survey suggests retailers saw an uptick in sales in April, while the sales-for-the-time-of-year balance increased to a 17-month high of +21 in April, from +12 in March, remaining well above its average of -2 in the prior 35 years.
Gabriella Dickens, economist at Pantheon Macroeconomics, said the time-of-year data has a slightly better relationship with the official data than the main balance.
She said the main figure perhaps got a boost from the hike to state benefits, but this will prove to be temporary, given that the real value will decline again over the coming months as prices continue to rise.
"In addition, both business surveys and the Insolvency Service’s data on redundancy notifications suggest employment will merely flatline over the coming months."
10.43am: New CBI boss, Amazon union recognition sought
Looking at other stories in the business world this morning, the CBI's new boss starts today after the allegations of sexual misconduct reported in recent months.
The business group's former chief economist, Rain Newton-Smith, is taking over as director general, though many corporations have cancelled their membership.
Elsewhere, UK workers at the Amazon.com Inc (NASDAQ:AMZN) are applying for union recognition after membership numbers soared to 700, thought to be over half the staff on site.
If the Amazon Coventry site is successful, it would be the first time that UK workers at an Amazon site have won trade union recognition, said the GMB Union, which is representing them and organised recent strike action over pay and conditions.
There's also more inflation news, with Pret a Manger hiking the price of its coffee subscription 20%, which it said was in line with its staff pay hike but not as much as its 200% energy price rise.
The offer of five coffees a day is rising from £25 a month to £30, with a new 10% discount now also offered on food and snacks, with the service renamed “Club Pret”.
10.31am: Crypto markets boosted by banking worries
In the world of crypto, big guns bitcoin and ethereum have been seeing a First Republic bounce.
Something resembling an inverse relationship has been formed, writes our crypto correspondent, with bitcoin rallying close to 3% following First Bank’s disclosures and shares tanking yesterday.
"While open interest in the derivatives market has not noticeably surged, the tick higher on bitcoin’s spot price implied a rush of inflows as investors seek to diversify."
10.12am: Mix of FTSE fallers
Leading the fallers is Primark owner AB Foods (LSE:ABF) after its update yesterday, down 5.1% as more analyst opinions are added to the hivemind's thoughts.
Fellow retailer JD Sports (LSE:JD.) is also among the big fallers, with no news from the company but mixed news from sportswear giant Puma, which reported a 14% rise in first-quarter sales as a rebound in China offset a downturn in North America.
JD has a large presence in the US, via chains such as Finish Line (NASDAQ:FINL), Shoe Palace and DTLR.
A couple with news out today are also among the bottom bunch: CRH PLC (LSE:CRH) down 3.9% and Reckitt Benckiser Group PLC down 2%.
While CRH sales and earnings were ahead, maybe UK investors were disappointed by it confirming that it is seeking approval for a US listing.
The market also does not seem that impressed with the new Reckitt boss, promoted from within, or that first-quarter results showing sales volumes are down as prices were hiked over 12%.
Overall the FTSE 100 index is down 26 points or 0.33% at 7,865.26.
9.55am: Sick man of Europe?
The number of working days in the UK lost to sickness hit a record high last year, with the total of 185.6mln up almost 50mln on pre-pandemic 2019, productivity data from the Office of National Statistics shows.
Growth in output per hour worked in the final quarter of 2022 was flat (0.0%) year on year, with output per worker and output per job down 0.2% and 0.3% respectively.
The biggest increases in productivity were seen in the construction and administrative service industries.
"Sickness absence rose again in 2022, so that the proportion of working hours lost was the highest since 2004," said ONS head of labour market and household statistics, David Freeman.
He noted sickness days dropped to a lowest-ever rate at the start of the pandemic, when lockdown and furloughing reduced people’s exposure to minor illnesses, and added that the record levels are partly caused by the working population being "much bigger now than it was nearly twenty years ago".
The jump in days lost to minor illnesses following the return to the office, along with a surge in days lost to people with long-term illnesses and an increase in respiratory conditions (possibly both linked to Covid) meant 2.6% of all working hours were lost to sickness or injury last year.
9.40am: London losses pared
London's blue-chip index is battling back, paring losses as bank shares reverse earlier falls and joining the builders in the green.
The FTSE is down 22 points now, or 0.28%, better than the 0.60% decline for Germany's DAX and 0.67% for the CAC 40 in Paris.
As well as the banks, the index's drug giants are both in the red, but oil heavyweights are positive.
More summaries of the market situation are poring in.
London and the other big European indices are managing "to avoid the big losses seen in the US overnight", helped by strong results from big tech after Wall Street had packed up and gone home for the day, says Russ Mould, AJ Bell's investment director.
"Microsoft and Alphabet, two firms whose fates feel increasingly intertwined thanks to their competing AI search offerings, both demonstrated some resilience as their earnings came in ahead of forecasts," he said.
But an update from First Republic Bank (NYSE:FRC) has "undoubtedly reopened the sores from March, as investors fret about the financial system again," Mould added, with numbers from regional US lenders under heavy scrutiny in coming days and weeks.
9.12am: GSK slips despite a healthy start to the year
Shares in GSK have fallen 1.7%, reflecting the broader malaise in the market with the FTSE 100 now down around 50 points.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “GSK’s got off to a healthy start to the year."
He noted that, as anticipated, slowing sales of Covid-19 medicines dented the top line, but strong revenue from higher margin products such as Shingrix for shingles, meningitis vaccines and long-acting HIV medicines helped shore-up profits.
Full year guidance, which also excludes COVID-19 revenues, remains unchanged but if the sales trends in the first quarter trends continue then the 6-to-8% growth range set out for 2023 is "very beatable."
Nathan pointed out that the new drug pipeline is making progress, looking ahead there are nine drug programs pending approval from the medical authorities before the end of this year, helped by the recently agreed US$2bn acquisition of Bellus Health.
8.50am: Footsie slips back but housebuilders rise
Equities have fallen back after a resilient start with the FTSE 100 now down 36 points reflecting the falls in the US.
US stocks fell as nerves in the banking sector resurfaced after shares in First Republic slumped 49% on Tuesday, while a number of disappointing corporate updates and weak consumer confidence figures raised fears as to the health of the US economy.
“Realisation is dawning that more ominous clouds are gathering over the US economy, causing fresh nervousness for investors," said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Despite some better-than-expected results from the first of the big tech crowd to report, the darkening picture of consumer confidence has increased concerns about lower spending ahead.”
In timely fashion, one of the Footsie’s big banks gave its take on the banking crisis, with Standard Chartered PLC (LSE:STAN) reporting it had no seen volume impact from the recent banking stress.
Streeter commented: “Given the turmoil we’ve seen in the banking sector over recent weeks, even in the last 24 hours with First Republic’s woes so front of minds, it’s a breath of fresh air to see Standard Chartered surpass earnings expectations and post a pretty upbeat outlook.”
Shares in the Asian-focused bank held around opening levels falling from early highs while other banks failed to hold onto their opening gains.
But Lloyds, Barclays and NatWest all slipped after making a bright start to the day.
In Europe, there were no obvious signs of distress in the financial sector. Deutsche Bank fell 0.4%, while the French banks BNP Paribas and Societe Generale posted modest gains.
Elsewhere, housebuilders were performing well after Persimmon made some cautiously positive noises about trading.
Shares rose 3.3% making it the best performer in the index dragging others in the sector such as Taylor Wimpey and Barratt Developments higher.
But shares in CRH fell 4%. The building materials giant said it expects sales, earnings and margins to rise in the first half after a particularly strong start to the year in the United States, though the European backdrop remains challenging.
The firm which is in the process of moving its primary stock listing to the US said a more challenging backdrop in Europe is being driven by continued inflationary pressures and some slowdown in the new-build residential sector.
Associated British Foods PLC (LSE:ABF) extended its falls after yesterday's trading update with shares down a further 3.8%.
8.17am: FTSE little changed, banks hold steady despite US falls
The FTSE 100 made a stronger-than-expected start to trading as encouraging updates from a number of leading lights in the index, well received results from Microsoft and Alphabet helped offset concerns over US banks which sent shares ijn New York lower on Tuesday.
At 8.15am London’s lead index was down 1.56 points at 7,889.57 although the FTSE 250 fell to 19,172.60, down 42.79 points, or 0.22%.
Results from Microsoft, Alphabet and Visa after the closing bell in New York saw all move higher in after-hours trading while in London there also some positive trading updates.
Asian-focused bank Standard Chartered PLC (LSE:STAN) rose 0.7% after it reported better-than-expected first-quarter pre-tax profit as higher interest rates and increased trading income boosted the lender.
The bank said it had seen no volume impact from the recent banking stress and its balance sheet remains strong.
Statutory pre-tax profit of US$1.8bn was 25% higher than a year before and above City expectations of US$1.4 billion while underlying profit also advanced 25% to US$1.7 billion.
The bank’s performance “continues to improve . . . and has been achieved in what continues to be an uncertain environment,” chief executive Bill Winters said. “We remain optimistic about our continued strong performance”.
The upbeat mood was shown in plans by the bank to return in excess of US$5bn to shareholders by 2024.
The figures provided support to the banking sector with shares in Lloyds Banking Group PLC (LSE:LLOY), Barclays PLC (LSE:BARC) and HSBC Holdings PLC (LSE:HSBA) rising although NatWest Group PLC (LSE:NWG) eased slightly.
GSK also rose 0.7% after it beat expectations for its first-quarter revenue and profit, helped by sales of its blockbuster shingles vaccine Shingrix.
The London-listed drugmaker reported adjusted profit of 37p per share on revenue of around £7bn ahead of City forecasts of 33.2p and £6.5bn respectively, according to company-compiled consensus estimates.
The company's shingles vaccine, Shingrix, generated £833mln, ahead of than the GSK-compiled consensus of £829mln.
Persimmon PLC (LSE:PSN) was another share in the green, jumping 3%, despite reporting a 42% fall in new home completions in the first quarter.
The housebuilder said there were some encouraging signs.
In recent weeks visitor numbers are up, cancellation levels are normalising and sales rates continue the steady improvement evident since the start of the year, the firm said.
“If sales rates continue at the levels seen year to date, we would expect full year 2023 volumes to be toward the top end of the previously indicated range of 8,000 to 9,000 completions,” the company said.
But shares in Reckitt Benckiser PLC slipped 1.2% after it revealed it sold lower volumes in the first quarter as it continued to hike prices, and said it is promoting Kris Licht, currently chief customer officer, to be its new chief executive.
7.55am: GSK beats expectations, Shingrix sales strong
GSK also beat expectations for its first-quarter revenue and profit, helped by sales of its blockbuster shingles vaccine Shingrix.
The London-listed drugmaker reported adjusted profit of 37p per share on revenue of around £7bn ahead of City forecasts of 33.2p and £6.5bn respectively, according to company-compiled consensus estimates.
The company's shingles vaccine, Shingrix, generated £833mln, ahead of than the GSK-compiled consensus of £829mln.
GSK reaffirmed its guidance for 2023.
7.51am: StanChart tops forecasts, plans to return US$5bn by 2024
Standard Chartered PLC (LSE:STAN) reported better-than-expected first quarter pre-tax profit as higher interest rates and increased trading income boosted the Asian-focused lender.
Statutory pre-tax profit of US$1.8bn were 25% higher than a year before and above City expectations of US$1.4 billion while underlying profit also advanced 25% to US$1.7 billion.
The bank’s performance “continues to improve . . . and has been achieved in what continues to be an uncertain environment,” chief executive Bill Winters said. “We remain optimistic about our continued strong performance”.
The upbeat mood was shown in plans by the bank to return in excess of US$5bn to shareholders by 2024.
Operating income improved 8% to US$4.4 billion while the net interest margin climbed 5 basis points to 1.63% from the previous quarter with the benefit from rising interest rates partly offset by increased hedge losses and adverse liability and asset mix.
Deposit balances stable in the quarter and deposit migration and betas performing as expected, the bank said.
Standard Chartered said the balance sheet remains strong, liquid and well diversified.
Customer loans and advances fell down 3% to US$301bn in the quarter but it said customer deposits were stable and there had been no volume impact from the recent banking stress.
The CET1 ratio of 13.7% was towards the top of the 13-14% target range.
“Our liquidity profile remains strong, with deposit balances stable and deposit migration and betas performing as expected. We continue to actively manage our credit portfolio and closely monitor sovereign risks in markets that are most vulnerable. Capital levels remain robust,” the bank said.
Looking ahead and the bank forecast income for the financial year to increase by around 10%, the top end of the 8-10% range in 2023 and in the 8-10% range in 2024.
A full year average NIM of around 170bps in 2023 and around 175bps in 2024 while the return on total equity is seen approaching 10% in 2023, and to more than 11% in 2024, with further growth thereafter.
The company took a bad debt charge of US$26mln, down US$172mln on the previous year.
7.38am: Solid revenue growth at Smith & Nephew
Smith & Nephew reported strong growth in its Sports Medicine and Advanced Wound Management businesses underpinned solid growth in first quarter revenue.
The Watford-based medical equipment manufacturing company said revenue in the quarter to March 31 rose 3.8% on a reported basis to US$1.36 billion from US$1.31 billion or 6.9% on an underlying basis.
Smith & Nephew said underlying revenue in Sports Medicine & ENT rose 10.0%, in Advanced Wound Management by 7.9% and in Orthopaedics by 3.9%.
Established Markets revenue improved 10.0% on an underlying basis as procedure volumes strengthened, offsetting Emerging Markets, where revenue was down 7.3% due to the expected impact in China from volume-based procurement and Covid.
The firm left its financial year 2023 guidance unchanged, underpinned by ongoing delivery of its 12-Point Plan.
The company is targeting 5.0% to 6.0% underlying revenue growth and a trading profit margin of at least 17.5%.
7.25am: New home completions tumble 42% at Persimmon
Persimmon PLC (LSE:PSN) reported a 42% fall in new home completions in the first quarter but said there were some signs of encouragement.
The FTSE 100-listed housebuilder said in recent weeks visitor numbers are up, cancellation levels are normalising and sales rates continue the steady improvement evident since the start of the year.
“If sales rates continue at the levels seen year to date, we would expect full year 2023 volumes to be toward the top end of the previously indicated range of 8,000 to 9,000 completions,” the company said.
But Persimmon cautioned: “ As outlined at our 2022 full-year results, lower completions and build cost inflation outstripping the more modest increase in ASP are, as expected, having a significant impact on the Group's profit margins this year.”
It also said sales to first-time buyers “remain more challenging, reflecting stretched affordability and reduced mortgage availability at higher loan-to values.”
New home completions totalled 1,136 in the quarter to March reflecting the challenging market conditions in the fourth quarter and the consequent lower forward order book.
Net private sales per outlet fell to 0.62 from 0.98 a year prior but above 0.30 posted in the fourth quarter.
Overall pricing remained firm in the first quarter, with the group's private average selling price on completions up 10% on the first quarter of 2022 2022 and up 4% on the previous quarter.
7.02am: FTSE 100 seen lower after heavy falls in the US
The FTSE 100 is expected to open lower following heavy falls in the US on renewed concerns over the health of the banking sector although well-received results from Microsoft and Alphabet results after the closing bell in New York may limit the declines.
Spread betting companies are calling London’s lead index down by around 20 points.
On Wall Street, stocks tumbled on concerns over the economy, the banking sector and after a mixed batch of earnings which saw the likes of logistics and shipping firm UPS tumble nearly 10%.
First Republic Bank (NYSE:FRC) slumped 49% after it reported on Monday a sharp outflow of deposits at the bank dragging others in the sector lower. Wels Fargo, Bank of America and JPMorgan were among those to slip.
But after the closing bell, shares in Microsoft, Visa and Google-owner Alphabet all rose after their latest financial updates.
In Asia, markets were mixed. In Tokyo, the Nikkei 225 stock index was down 0.7%. In China, the Shanghai Composite was up 0.1%, while the Hang Seng index in Hong Kong was up 1.0%.
Back in London and the early focus will be results from Standard Chartered and GSK.