28th Jul 2022 09:20
(Alliance News) - Stock prices in London opened higher on Thursday, amid a busy day on the UK corporate earnings front, after another aggressive interest rate hike by the US Federal Reserve on Wednesday but what sounded to the market like dovish commentary from the Fed thereafter.
The FTSE 100 was up 23.82 points, or 0.3%, at 7,372.05. The FTSE 250 index was up 150.64 points, or 0.8%, at 19,788.78. The AIM All-Share index was up 3.97 points, or 0.4%, at 906.85.
The Cboe UK 100 index was up 1.5% at 735.47. The Cboe 250 was up 0.6% at 17,202.12. The Cboe Small Companies was up 0.3% at 13,705.61.
In Paris, the CAC 40 stock index was up 0.4%, while in Frankfurt, the DAX 40 was 0.9% higher.
In the FTSE 100, Ashtead was the best performer, up 3.5%, after the equipment rental firm's US rival United Rentals reported record second-quarter results after the New York close on Wednesday.
The world's largest equipment rentals firm posted second-quarter net income of USD493 million, or USD6.90 per diluted share, up from USD293 million, or USD4.02 per share, last year.
The Stanford, Connecticut-based firm also raised its annual revenue outlook to USD11.4 billion to USD11.7 billion from USD11.1 billion to USD11.5 billion.
United Rentals shares rose 5.1% in after-hours trade in New York.
Schroders was up 3.2% after the fund manager reported interim results that "weathered difficult market conditions".
For the six months to June 30, revenue inched up to GBP1.43 billion from GBP1.42 billion, but pretax profit fell to GBP312.8 million from EUR373.9 million.
Assets under management ended the period at GBP773.4 billion, up from GBP766.7 billion on December 31, despite sharp falls in equity and bond markets.
The London-based firm maintained its interim dividend at 37 pence per share.
Shell was up 1.9% after the oil major's earnings surged on the back of higher oil prices following Russia's invasion of Ukraine.
For the six months to June 30, adjusted earnings before interest, tax, depreciation and amortisation was USD42.18 billion, up 67% from USD25.20 billion last year. Income attributable to shareholders almost tripled to USD25.15 billion from USD9.09 billion.
Tuning to returns, the oil major declared an interim dividend of USD0.50, up 21% from USD0.41 last year.
In addition, Shell launched a share buyback programme of USD6 billion, which is expected to be completed by the third quarter of this year.
At the other end of the large-caps, Smith & Nephew was the worst performer, down 9.1%, after the medical devices maker reported a drop in first-half profit and lowered annual guidance.
For the six months to June 30, revenue was flat at USD2.60 billion from the same time last year and pretax profit fell to USD204 million from USD223 million.
Looking ahead, Smith & Nephew kept its 2022 underlying revenue growth guidance of 4.0% to 5.0% unchanged. However, its trading profit margin is now expected to be around 17.5%, down from the 18.5% previously guided. Its trading profit margin in 2021 was 18.0%.
The London-based firm said the downgrade reflects the "prolonged impact of the inflationary environment and continued external supply challenges".
Barclays was down 2.5% after the lender reported a drop in first-half profit as the bank took a credit impairment charge, but also launched a share buyback.
For the six months to June 30, total income was GBP13.2 billion, up 17% from GBP11.3 billion last year, but pretax profit was GBP3.73 billion, down 24% from GBP4.90 billion.
Barclays took litigation and conduct charges of GBP1.9 billion for the first half of the year, including a previously disclosed GBP1.3 billion cost related to the "over-issuance of securities" in the US.
Barclays declared a half-year dividend of 2.25p per share and said it intends to initiate a further share buyback worth up to GBP500 million.
In the FTSE 250, CMC Markets was the worst performer, down 17%, after the contract-for-difference provider said operating costs were set to be higher than initially expected.
CMC now expects operating costs to be 5% above guidance provided at the 2022 results last month.
CMC attributed the rise in operating costs to a combination of higher personnel and non-personnel costs, including higher professional fees and software costs associated with expansion projects.
New York ended sharply higher on Wednesday, with the Dow Jones Industrial Average up 1.4%, S&P 500 up 2.6% and Nasdaq Composite up 4.1%.
The US federal funds rate was lifted by 75 basis points to a 2.25% and 2.50% range, as widely expected. It had lifted rates by the same increment in June - the first hike of that magnitude since November 1994.
The US central bank also will continue reducing its holdings of treasury securities and agency debt and agency mortgage-backed securities.
All monetary policy board members voted in favour of Wednesday's three-quarter percentage point hike.
Fed Chair Jerome Powell on Wednesday said a period of slower growth may be needed for a US economy characterised by a tight labour market, though he played down recessionary fears.
In addition, he cautioned that a period of detailed forward guidance could come to an end, as the central bank now eyes a "meeting-by-meeting" approach to monetary policy decisions. Powell said Wednesday's rate hike was of the correct magnitude, though the Fed would not hesitate to implement a stronger increase if needed. However, Powell also said going forward, the pace of rate hikes could slow.
In Asia on Thursday, Nikkei 225 index in Tokyo closed up 0.4%. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong was down 0.2%. The S&P/ASX 200 in Sydney ended up 1.0%.
The dollar was lower across the board in the wake of the Fed decision. The pound was quoted at USD1.2170 early Thursday, up from USD1.2045 at the London equities close Wednesday.
The euro was priced at USD1.0210, up from USD1.0133. Against the yen, the dollar was trading at JPY135.55, well down from JPY137.17.
Brent oil was quoted at USD107.90 a barrel Thursday morning, up from USD106.68 a barrel late Wednesday. Gold stood at USD1,743.48 an ounce, higher against USD1,718.59.
Thursday's economic calendar has US gross domestic product data at 1330 BST, after an inflation reading from Germany at 1300 BST.
By Arvind Bhunjun; [email protected]
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