UK stocks retraced early losses on Thursday afternoon, helped by a strong opening in US markets with the benchmark FTSE 100 index closing flat at 7,249.
US stocks gained despite third quarter GDP coming in below expectations at 2%, the lowest annualised growth reading since the pandemic and below trend growth prior to the pandemic.
Markets brushed off the headline data as the cause of the miss was related to a big drop in consumer spending on durable goods which was affected by supply constraints and the availability of vehicles. The weekly jobless numbers were better than expected.
Meanwhile Ford Motor shares rallied 8%, marking a seven year high after it released strong third quarter earnings.
SHELL MISSES EARNINGS FORECASTS
Oil major Royal Dutch Shell slipped 3.5% lower to £17.07 despite reporting a jump in third quarter profit with a boost from higher oil and gas prices, although the results undershot expectations.
For the third quarter, adjusted earnings swelled to $4.13 billion from $955 million year-on-year. However, the quarterly results were overshadowed by reports that activist investor Dan Loeb’s Third Point has taken a $750 million stake in the oil major and is seeking to break up the company.
High street bank Lloyds Banking (LLOY) improved 1% to 49.5p after the group raised its outlook on performance after reporting a jump in third quarter profit following a rise in net income.
For the three months to September 2021, pre-tax profit jumped 96% to £2.19 billion year-on-year as net income rose by 20% to £4 billion.
Advertising giant WPP (WPP) was marked up 8% to £10.44 after the FTSE 100 company raised its full year outlook after reporting higher third quarter revenue as demand for marketing continued to increase, particularly in digital media and e-commerce services.
For 2021, WPP now sees like-for-like revenue growth in the 11.5%-to-12% range, up from 9%-to-10% growth previously. WPP also said it has bought £448 million of its shares year-to-date and expects to complete its £600 million buyback programme by year end.
‘Our strength in media combined with our focus on digital, commerce and data is delivering very positive momentum in the business,’ said the company.
INCHCAPE UPGRADES GUIDANCE
Elsewhere, Inchcape (INCH) revved up 1.9% to 821p as the automotive distributor upgraded its annual profit outlook to ‘at least £290 million’ off the back of stronger-than-expected third quarter results, as higher margins offset a weaker sales amid a supply shortage.
‘Whilst the widely reported supply issues are not expected to improve until well into 2022, we are confident that margins will remain robust through this period, mitigating the likely impact on our topline,’ insisted the company.
Defence group Meggitt (MGGT), which is being taken over by Parker-Hannifin, was broadly flat at 750.8p despite warning that annual profits will disappoint due to supply chain disruptions and softer backdrop in the defence industry.
Cider and beer maker C&C (CCR) fizzed 6% higher to 264.6p as investors toasted the premium drinks giant’s swing to a first half profit as the easing of on-trade restrictions bolstered performance.
Looking ahead, C&C expects to deliver full year 2022 operating profit in the range of €50 million to €55 million.
Estate agent Foxtons (FOXT) was flat at 48p despite positive news that revenue jumped 50% for the nine months to September thanks to positive trading momentum in the residential sales market and a recovery in rents.
‘We have good momentum going into the fourth quarter’, insisted Foxtons, ‘with rents back to 2019 levels and an under offer sales pipeline that is significantly ahead of 2019 levels.’
Chemicals company Synthomer (SYNT) skipped 4.3% higher to 494.2p after agreeing to acquire the Adhesive Resins business of Eastman Chemical Company for $1 billion in an earnings-enhancing deal.
Online wine retailer Virgin Wines (VINO:AIM) moved 3.2% higher to 190p after uncorking palate-pleasing results for the year to June 2021, with pre-tax profit before exceptional items up 86% to £5.2 million.
The premium wines purveyor also said momentum has continued into the new financial year, with first quarter sales up 13.3% and the number of new customers acquired up 10.7% despite tough prior year comparatives.
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