London’s FTSE 100 rose 0.41% to 6,973.11 in early trading on Wednesday as optimism over the economic recovery grows while investors await the latest interest rate decision from the US Federal Reserve.

The Fed is unlikely to make any policy changes this time, though it is expected to acknowledge of the strengthening of the US economy, and it’s been reported that this could be the last Fed meeting before central bank officials begin discussing how and when they will unwind their extraordinary policies undertaken to combat the effects of the pandemic.

Optimism over the economic recovery in the UK grew after a positive set of results from high street bank Lloyds (LLOY), which is seen as a bellwether for the UK economy, while a raft of positive company updates also saw the midcap FTSE 250 index rise 0.52% to 22,550.29.

In Asia, stocks were also having a decent day as Japan’s Nikkei 225 managed to halt its recent negative momentum (owing to new Covid restrictions in the country) with a 0.21% gain, while China’s Shanghai Composite increased 0.42% and the Hang Seng in Hong Kong rose 0.22%.

In the world of commodities, gold fell 0.75% to $1,767.77 an ounce, while Brent crude oil futures gained 0.17% to $66.53 per barrel.

LLOYDS’ PROFIT JUMP

Shares in Lloyds gained 3.9% to 45.3p after it reported a jump in first-quarter profit as bad debt provisions fell amid the ongoing economic recovery.

In its last set of results under outgoing chief executive António Horta-Osório, for the three months ended 31 March pre-tax profit jumped to £1.9 billion, significantly higher than market estimates of £1.1 billion, while net income was down 7% to £3.7 billion.

The bank reported a £459 million release of expected credit loss allowances resulting from improvements to the UK’s economic outlook.

SAINSBURY’S PANDEMIC HIT

Supermarket Sainsbury’s (SBRY) fell 1.3% to 239p as it swung to a full-year loss after rising grocery and general merchandise sales were offset by lower fuel sales and costs associated with adapting to the pandemic.

Pre-tax losses for the year through March amounted to £261 million, compared to a year-on-year profit of £255 million. Revenue, including fuel sales, edged up 0.2% to £29.05 billion, while revenue excluding fuel rose, 7.3% to £28.84 billion.

Underlying pre-tax profit fell 39% to £356 million. Sainsbury’s declared a final dividend of 7.4p per share, bringing the payout for the full year to 10.6p, which was flat year-on-year.

PERSIMMON HOUSE SALES ABOVE PRE-PANDEMIC LEVEL

Housebuilder Persimmon (PSN) gained 2.4% to £32.21 after it reported that house sales so far in 2021 are running 11% higher than the year before the pandemic, as the UK’s mini-housing boom continues.

Forward sales for the period from 1 January to date are worth £3 billion it added, 23% above a year ago when the pandemic struck and compared to £2.7 billion in 2019. Prices are also rising, with the average for a private house built by the group now £252,000 compared to £244,500 a year ago.

Persimmon chief executive Dean Finch said, ‘Demand for newly built homes remains healthy and the group’s sales rates are encouraging. Persimmon’s high quality land holdings, balance sheet strength and liquidity provide a strong platform to continue to deliver the homes the country needs, underpinning long-term sustainable returns for the benefit of all of its stakeholders.’

OTHER NEWS

In a big day for FTSE 350 news, London Stock Exchange Group (LSEG) edged 0.1% higher to £74.86 after it reported a rise in first-quarter income, led by new business and strong customer retention.

First-quarter total income was up 3.9%, with good growth in data & analytics and capital markets. On a reported pro-forma basis, income was down 1.2% on a pro-forma basis.

Advertising company WPP (WPP) rose 2.7% to 976.6p as its first-quarter revenue increased 1.8% year-on-year amid a return to like-for-like growth in all its business segments.

Revenue for the three months through March increased to £2.9 billion, with growth on a like-for-like basis of 6.3%. Revenue less pass-through costs had fallen 1.4% but risen 3.1% on a like-for-like basis. WPP reiterated its guidance or the full year.

Gambling company 888 (888) jumped 4.2% to 449p as it expects adjusted core earnings for the full year to be ‘broadly consistent’ with the prior year after reporting better-than-expected first-quarter performance.

For the first quarter, revenue grew 66% to $272.5 million, driven by ‘product-leadership strategy, long-term positive customer acquisition trends, and continued expansion in regulated markets,’ it added.

Consumer goods group Reckitt Benckiser (RB.) fell 1.7% to £64.73 having reported a 1.1% fall in first-quarter revenue as a surge hygiene products sales was offset by falling health and nutrition revenue, plus negative FX movements.

Revenue for the three months through March fell to £3.51 billion, though like-for-like revenue rose 4.1%. FX revenue fell 5.2%. The company also reiterated its full-year guidance.

Electronics retailer Dixons Carphone (DC.) shed 5% to 149.5p on announcing that it expected to report annual adjusted profits broadly in line with market expectations, as strong online growth boosted sales.

Engineering group Renishaw (RSW), which put itself up for sale in March, added 0.4% to £64.50, having posted a large rise in year-to-date profit and affirmed full-year guidance. Pre-tax profit for the nine months through March increased to £106.3 million, up from £19.7 million year-on-year, as revenue climbed 4% to £407.4 million and it cut costs.

Telecom testing and assurance group Spirent Communications (SPT) firmed 1.3% to 255.2p after it recorded flat first-quarter revenue growth, but notched order growth of 8%.

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Issue Date: 28 Apr 2021