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FTSE 100 closes solidly in the green as US stocks rally ahead of more tech earnings

Last updated: 16:50 27 Apr 2022 BST, First published: 06:50 27 Apr 2022 BST

FTSE up
  • FTSE 100 closes 39 points higher
  • US stocks rally in volatile trade
  • Earnings from Facebook owner Meta Platforms eyed

4.50pm: Recovery continues

The FTSE 100 index ended higher on Wednesday as US stocks rallied following the previous session’s plunge albeit as investors eye more key tech earnings due after-hours, including from Facebook owner Meta Platforms.

In London, the UK blue-chip index closed 39.42 points, or 0.5% higher at 7,425.61, below the session peak of 7,458.24 but above the day’s low of 7,344.89.

Craig Erlam, senior market analyst, UK & EMEA, at OANDA commented: “We're seeing a little bit of positivity back in the markets on Wednesday but there's still plenty of underlying unease amid a mixed bag of earnings and rising uncertainty.

“Earnings season will continue to be a core focus for investors, despite the wide array of other factors that have been dominating market sentiment for months. It has gone quite well so far but it's clear that there are some big challenges ahead which explain why we're not seeing the lift we may otherwise see.”

Erlam added:  “And when Russia is cutting off gas supplies to Poland and Bulgaria in response to their refusal to pay in roubles, following Putin's decision to change the terms of payment, you can understand why. This may be a warning sign to others in the hope that they don't follow suit but if they do, the standoff could play havoc with energy prices.

“It will also continue to be a headwind for European stock markets as a result of the bloc's heavy reliance on Russian gas. The weaponisation of gas was long seen as an unlikely last resort but now the Kremlin has got the ball rolling, the risk has become significantly greater which could pose a massive economic threat to the EU.”

3.45pm: Footsie falters heading into the close

Leading shares have come off their best levels after a bright start on Wall Street fizzled out, with all three main US indices now barely changed.

The FTSE 100 is up 24.59 points or 0.33% at 7410.78, below the high of the day of 7458.

Housebuilders are among the main fallers, with Persimmon PLC (LSE:PSN) falling 4.04% after its results failed to inspire investors.

Caught in the slipstream were Barratt Developments PLC (LSE:BDEV), down 3.05%, and Taylor Wimpey PLC (LSE:TW.), off 2.64%.

But the biggest loser was software group Aveva Group (LSE:AVV), which dropped 16.61% as it warned of slowing revenues and operating profits this year.

Miners have provided some support for the market, with Anglo American PLC (LSE:AAL) adding 4.97%, Antofagasta PLC (LSE:ANTO) up 3.68% and Fresnillo PLC (LSE:FRES) climbing 3.65% after its latest production update.

Among the banks HSBC Holdings PLC (LSE:HSBA) was 2.24% higher, recovering some of the losses made on Tuesday following its figures.

2.55pm: US investors go bargain hunting

US markets started higher midweek after yesterday's sell-off, despite the continuing problems of surging inflation, interest rate rises, China’s COVID-19 outbreak  and now Russia's move to cut off gas supplies to Poland and Bulgaria.

The Dow Jones Industrial Average added 146 points in New York to stand at 33,386.

The broader-based S&P 500 gained around 20 points at 4,195. The tech-laden Nasdaq index added around 90 points at 12,581.

"Following Tuesday’s big drop in equity prices, we have seen a sharp rebound so far in today’s session. But like we have seen previously, the overall macro backdrop is not very positive right now. Thus, the latest rebound could, once again, get faded into, possibly as soon as later this afternoon," noted Fawad  Razaqzada, market analyst at City Index and FOREX.com

The analyst suggested that Wednesday's rebound was driven by "bargain hunting and short-covering".

"When you consider the fact that there is an energy crisis in Europe, with Russia’s decision to suspend gas supplies to Poland and Bulgaria potentially triggering an energy war, China’s determination to beat the COVID-19 outbreak with lockdowns, and – above all – a Federal Reserve pursing an aggressive monetary tightening policy, investors find it difficult to buy and hold stocks for the long term, without first seeing a major correction – even if the Nasdaq is close to wiping out its entire 2021 gains."

On the earnings front, shares in computer titan Microsoft Corp added almost 5% after the firm reported profit and sales estimates late on Tuesday, which beat forecasts.

Shares in Google parent Alphabet however slid 3.7% in New York as the tech giant unveiled sales and earnings, which fell short of estimates.

Back in the UK, the FTSE 100 remains in positive territory, up 42.06 points or 0.57% at 7428.25.

2.47pm: US GDP set to see fall in growth?

Economists have been looking at what the trade news means for the forthcoming US growth figures.

Nothing good is probably the answer.

1.54pm: US trade gap grows to all time high

The US trade deficit in goods widened last month to a record high following a surge in imports.

The deficit rose 17.8% to US$125.3bn, with imports up 11.5% and exports up 7.2%, according to the latest figures from the Commerce Department.

This is worse than the figure of US$106bn which had been expected.

The data suggests trade remains a drag on economic growth, as it has been for six quarters in a row so far.

12.07pm: Wall Street on track for recovery

US stocks are expected to open higher, recovering from a sell-off that pushed the tech-heavy Nasdaq to its lowest close this year as jitters over corporate earnings added to global growth concerns, China’s lockdown slowdown and the impact of Russia’s war on Ukraine. 

Futures for the Dow Jones Industrial Average rose 1.14% in Wednesday pre-market trading, while those for the broader S&P 500 index gained 1% and the Nasdaq also added 1%.

The Nasdaq led Tuesday’s market decline, slumping 4% to 12,491 ahead of results from Microsoft Corporation (NASDAQ:MSFT) (Microsoft Corporation (NASDAQ:MSFT)) and Google parent Alphabet Inc (NASDAQ:GOOG) (Alphabet Inc (NASDAQ:GOOG)) after the bell. The S&P 500 fared slightly better with a 2.8% decline to 4,175 points, while the Dow slipped 2.4% to 33,240 points.

“Alphabet added to worries as it reported a miss on both the top and bottom lines as YouTube numbers notably underwhelmed. The Google parent partly blamed Russia’s invasion of Ukraine...ok whatever, I guess if people are spending a bit less you can blame that on Putin...but as with inflation, the setup was all there before anyway,” commented Neil Wilson, chief market analyst at Markets.com.

“Whilst Alphabet’s earnings will undoubtedly add to concerns about megacap tech growth, Microsoft was a lot more encouraging, beating expectations on both the top and bottom lines. CEO Satya Nadella also brushed aside macroeconomic concerns and boasted that in an inflationary environment, software is ‘the only deflationary thing’,” he added. 

After falling 3.6% on Tuesday, Alphabet's shares were 2.6% lower in pre-market trading. Microsoft's shares were 5.4% higher in pre-market trading following a 3.7% decline in the previous session.

Meanwhile, Tesla Inc (NASDAQ:TSLA) (Tesla Inc (NASDAQ:TSLA))’s shares rose 2.6% in pre-market trading after sinking 12.2% on Tuesday over concern that chief executive Elon Musk may sell shares to help fund his $44 billion buyout of Twitter. Twitter’s stock sank 3.9%, taking it about 10% below Musk’s $54.20 per share offer price.

“Whilst this was against a backdrop of broad-based tech selling with the Nasdaq down almost 4%, it underscores that investors are naturally anxious about what Musk is up to and whether he can pull it off,” Wilson said. 

The rebound on Wall Street has helped push the UK market higher.

The FTSE 100 is currently up 60.94 points or 0.83% at 7447.13.

11.14am: UK retail sales poor in April

It is perhaps not the biggest surprise in the world given the cost of living crisis and supply shortages due to the Ukraine conflict, but April retail sales were poor

Sales volumes slumped from a balance of +9 in March to -35, according to the latest CBI monthly Distributive Trades Survey. Analysts had expected a fall, but only to -5.

(A balance is the weighted difference between the percentage of retailers reporting an increase and those reporting a decrease.)

It is the first fall in retail sales volumes in 13 months.

Sales are expected to remain below seasonal norms in May, but to a lesser extent in comparison to April.  

Internet sales volumes continued to fall in the year to April, but at a slower pace than in March (-36% from -46%). This marks the third consecutive monthly drop. Internet sales are expected to decline at a modest pace next month (-6%). 

Martin Sartorius, principal economist at the CBI, said:  “Retail sales were below seasonal norms in April as consumer spending continued to shift back towards services and rising prices impacted households’ spending power. 

“Rapid inflation means that the cost-of-living crisis is going nowhere soon. To combat these challenges, the government will need to keep a close eye on support for vulnerable households and businesses struggling with higher energy prices. Meanwhile, going for growth must continue to be the government’s primary domestic focus, as increasing productivity growth is the only sustainable route to raise living standards.”  

10.51am: Gas prices higher as Russia turns off the taps to Poland and Bulgaria

Gas prices have surged after Russia made good on its threat to turn off the taps to countries who did not pay for their supplies in roubles.

With Gazprom confiriming it had suspended flows to Poland and Bulgaria, benchmarket European gas prices have climbed as much as 24% while British wholesale gas contracts for next winter are up 15.7% to 260.51p a therm.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘’Energy is being increasingly weaponised as the war in Ukraine looks set to enter the long haul and expectations grow that a crude oil embargo will end up being slapped on Russia by the EU.

"For now the tit for tat retaliation centres around gas supplies, with Russia turning off the taps to Poland and Bulgaria after both nations’ refusal to pay in roubles. Sanctions isolating from Russia from the global financial systems have prompted this strategy to drive a rouble rebound, after the currency went into freefall following the invasion, and it’s been working helped by the initial 20% interest rate hike and currency controls."

The European Commission president Ursula von der Leyen has responded.

She said: "We are prepared for this scenario. We are in close contact with all Member States.

"We have been working to ensure alternative deliveries and the best possible storage levels across the EU.

"Member States have put in place contingency plans for just such a scenario and we worked with them in coordination and solidarity.

"A meeting of the gas coordination group is taking place right now.

"We are mapping out our coordinated EU response.

"We will also continue working with international partners to secure alternative flows".

10.03am: HSBC recovers and Lloyds climbs

Banks and mining companies are providing some support for the market.

HSBC Holdings PLC (LSE:HSBA), which fell back on Tuesday after its results, has recovered 3.35% to 489.7p.

Analysts at Credit Suisse have cut their price target from 530p to 515p but maintained a neutral rating.

Meanwhile Lloyds Banking Group PLC (LSE:LLOY) is up 2.3% after its well received figures.

Among the miners Rio Tinto PLC (LSE:RIO) has risen 1.82% and Antofagasta PLC (LSE:ANTO) has added 1.5%.

Overall the FTSE 100 continues to shrug off the weakness on Wall Street and is up 20.64 points or 0.28% at 7406.83.

9.11am: German consumer confidence hits new low

Consumer confidence in Germany has hit a record low, according to research firm GfK, and the conflict in Ukraine was unsurprisingly the main reason.

Its sentiment index is forecast to be -26.5 points in May, down from -15.7 points for April and well below the previous record low set in the spring of 2020 during the first pandemic lockdown.

It was also well below the expected figure of -16.

“The war in Ukraine and rates of high inflation have dealt a severe blow to consumer sentiment. This means that hopes of a recovery from the easing of pandemic-related restrictions have finally been dashed,” explains Rolf Bürkl, GfK consumer expert.

GfK said the surge in energy prices as a result of the great uncertainty due to the war as well as the extensive sanctions against Russia have also caused consumers’ income expectations to slip. High inflation rates are melting away consumers’ purchasing power. As a result, income expectations dropped to -31.3 points in April. This is 9.2 points lower than in March and marks the lowest value for the indicator in almost twenty years. The last time a lower value was measured was in February 2003, with -32.8 points.

Bürkl said: “There will only be a sustainable trend shift in consumer sentiment if there are successful peace negotiations on the war in Ukraine.” 

8.57am: Mixed response to company updates

Amid a host of blue chip company results, software group Aveva Group (LSE:AVV) has currently taken the wooden spoon.

Its shares are down 13.59% as it warned of slowing revenues and operating profits this year, due to the sanctions on Russia, rising costs and increased investment.

Victoria Scholar, head of investment at interactive investor said: "Aveva has been caught off guard by the challenging macro combination of cost inflation including on wages as well as the fallout from Russia’s inflation of Ukraine and the West’s retaliatory action. The stock has now shed almost 50% since the peak in September with today’s slump an extension of the recent downtrend.

"From a technical perspective on the chart, it looks as though the bearish pattern could continue with a further declines a menacing possibility for the embattled industrial software business.”

Also lower is London Stock Exchange Group PLC (LSE:LSEG), down 2.5% despite saying first quarter income was up 6.3% and it was on track to meet its financial targets.

Housebuilder Persimmon PLC (LSE:PSN) said it was trading in line with expectations, but its shares are still down 2.43%.

Russ Mould, investment director at AJ Bell, said: “Unlike its peer Taylor Wimpey, housebuilder Persimmon did not impress the market with its latest trading statement. Nothing too alarming was revealed but build rates are lagging behind a little and overall, the company seems a little less bullish than Taylor Wimpey.”

Heading higher is Fresnillo PLC (LSE:FRES), up 2.4% as reported a rise in silver production in the first quarter and stable gold output despite a new wave of COVID-19 in Mexico.

Overall the FTSE 100 has shrugged off its early decline and is now up 12.86 points at 7399.05.

8.15am: Investors cagey as market opens lower

Leading shares have made a cautious start to the day, with the FTSE 100 down 6.81 points at 7379.38.

Investors are cagey after last night's falls on Wall Street, while after-hours results from Microsoft and Alphabet have done little to lighten the mood.

In particular Alphabet's Service division came in below expectations, largely due to lower than forecast advertising revenues from YouTube.

Sentiment has not been helped by the latest reported moves by Russia, including the Kremlin apparently cutting off gas flows to Poland after that country's government refused to pay in roubles.

CMC Market's Michael Hewson said: "This escalation on the part of Russia, along with reports that Moscow might be behind a number of incidents in Moldova, with a view to mobilising its troops there hasn’t helped, while comments by Russian foreign minister Sergey Lavrov about the risk of nuclear war only served to unsettle markets even more.

"Lavrov’s remarks appear to be the latest attempt by the Kremlin to try and keep the US and NATO off balance in a war that hasn’t gone Russia’s way and is unlikely to yield them the results they had hoped for."

Leading the risers, Lloyds Banking Group PLC (LSE:LLOY) is up 2.8% after it reported a better than expected first quarter profit of £1.6bn, albeit this was down 14% from a year earlier due to a £177mln charge related to possible defaults linked to the cost of living crisis.

Richard Hunter, head of markets at interactive investor, said: "Stripping out the impairment figure, underlying profit rose by 26%, showing the progress which the bank has been able to make

"Some of the sting was taken out by an increase of 12% in net income, driven by more customer activity (loans and especially mortgage growth) and higher interest rates, the latter of which has been to the benefit of the sector as a whole."

6.50am: Uncertain start on the cards

The FTSE 100 is expected to open Wednesday’s session slightly higher as European equities follow falling US markets.

CFD firm IG Markets sees the blue-chip benchmark up only 4 points, making a price of 7,386 to 7,389 with just over an hour to go before the start of trading.

“Yesterday’s market weakness was led by the Nasdaq 100, which slid to its lowest levels in over a month,” said Michael Hewson, analyst at CMC Markets.

“The inability to hold onto the attempted rally is not only worrying but also speaks to a general lack of confidence more broadly about the economic outlook, as well as the ability of central banks to engineer a ‘soft landing’ as they look to tackle inflation.”

In New York, the Dow Jones fell over 800 points, or 2.38%, to close Tuesday’s trading at 33,240.

The S&P 500 lost 2.8% to finish at 4,175 and the Nasdaq fell farthest, losing 3.95% to 12,490.

At the same time, the small-cap focussed Russell 2000 index gave up 3.25%.                                                                                                                                                                                                                                                                                                                                         

Asian stocks indices were mostly falling too. Japan’s Nikkei shed 1.25% to 26,367 whilst Hong Kong’s Hang Seng rebounded to trade in positive territory, up 0.5% at 20,042.

The Shanghai Composite, meanwhile, rallied by more than 2% to 2,943.

Around the markets

The pound: US$1.2584, up 0.17%

Gold: US$1,899 per ounce, down 0.4%

Silver: US$23.58 per ounce, down 0.09%

Brent crude: US$105.62 per barrel, up 3.2%

WTI crude: US$102 per barrel, up 3.5%

Bitcoin: US$38,487, down 5.31%

Ethereum: US$2,851, down 5.26%

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