UK stocks traded sideways on Wednesday as investors waited to hear whether the US Federal Reserve would renew its monetary stimulus later today, potentially signalling a higher tolerance for inflation.
Meanwhile US lawmakers are considering cutting weekly unemployment benefits for 30 million people by a third just as the economic recovery appears to be running out of steam.
The dollar, which has weakened significantly in recent weeks, recovered to trade at $1.2932 against the pound while gold prices pulled back to $1,950 per ounce after topping $1,980 on Tuesday and Brent crude oil futures held steady at $43.40.
The FTSE 100 index was flat at 6,131.6 points as weakness in banks and housebuilders offset gains in consumer stocks.
BANKS AND BUILDERS FLOP
Shares in Barclays (BARC) dropped 3.5% to 108p after half year earnings showed a 57% fall in pre-tax earnings as consumer and corporate borrowing took a hit from the pandemic and it raised its provisions for bad loans.
Despite a strong showing from the investment bank, which increased its Markets revenues by 49% to £2.1 billion, the £1.6 billion provision for loan losses was slightly higher than market expectations sending investors scurrying.
Also on the losing side was housebuilder Taylor Wimpey (TW.) which fell 6.6% to 124p after posting a 56% fall in first half revenues due to impact of lockdown on its building sites and the housing market.
Shareholders were also disappointed by the company’s view that it would complete around 40% fewer homes this year than last year, although its order book was solid through 2020 and 2021.
Rival homebuilders Barratt Developments (BDEV), Berkeley Group (BKG) and Persimmon (PSN) suffered in the fall-out, giving up between 2% and 3% apiece.
RELIEF FROM NEXT
High street fashion retailer Next (NXT) was the best performer in the FTSE, jumping 9% to £57.45 after it said that second quarter trading was above management expectations.
Full-price sales were down 28%, ‘much better than we expected and an improvement on the best-case scenario given in April’ thanks to better warehouse capacity and store sales the firm said.
That allowed it to raise its full year pre-tax earnings guidance to £195 million against market forecasts of less than £140 million.
Mr Kipling maker Premier Foods (PFD) served up a 22.5% increase in first quarter sales thanks to ‘elevated demand’ for its grocery products as consumers switched to home cooking rather than going out during lockdown.
Household penetration of its brands increased 6.2% to nearly 75% while online sales rocketed 115% handing the firm a 2.7% gain in market share. Investors showed their approval, pricing the stock up 3% to 88.7p.
Low-cost airline Wizz Air (WIZZ) reported a predictably downbeat set of results for the first quarter to 30 June with passenger numbers down 93% and revenues down 86.9% to €90.8m from €691 million a year ago.
However, investors were encouraged by news that the carrier was operating at 70% of capacity by the end of June giving it ‘operational momentum going into the summer season.’ Shares gained 3.7% to £35.25.
Sports car maker Aston Martin Lagonda (AML) reported a 64% drop in half year sales to 30 June as retail deliveries fell 41% and wholesale deliveries shrank 63% in unit terms as the firm reduced dealer inventories to rebalance supply and demand to what it calls ‘luxury norm levels.’
Aston Martin shares, which had lost 90% this year, rallied 4.4% to 51.75p.
FOR A LIST OF FTSE GAINERS AND LOSERS SEE HERE
