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ADVFN Morning London Market Report: Thursday 22 February 2024

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London open: FTSE nudges up as Rolls-Royce, Beazley surge


London stocks nudged higher in early trade on Thursday as investors cheered solid results from US AI chipmaker Nvidia overnight and strong numbers from engine maker Rolls-Royce.

At 0915 GMT, the FTSE 100 was up 0.1% at 7,672.00.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: “Nvidia is cementing quite a reputation for setting exceptional growth targets and then beating them. Fourth quarter revenues reported after yesterday’s close saw revenues more that treble to $22.1bn. Underlying earnings per share leap nearly six-fold to $5.16 with both metrics sailing past consensus forecasts.

“Nvidia’s managing to deliver a staggering performance without overly extending the cost-base, testament to its design-led asset-light business model. Sales guidance for the current quarter of about $24bn has also eclipsed the street’s expectations of $21.9bn. That’s reassured the market with the shares up 9% in after-hours trading more than compensating for the jitters seen earlier in the week.”

On home shores, Rolls-Royce jumped to the top of the FTSE 100 as it reported a more than doubling of its full-year profits, underpinned by its civil aerospace segment. Full-year 2023 underlying operating profit came in at £1.6bn, up from £652m a year earlier, with revenues rising to £15.4bn from £12.7bn. Analysts were expecting operating profit of £1.4bn.

Beazley rallied as it upgraded its guidance for the undiscounted combined ratio from low-80s to mid-70s for 2023 thanks to better-than-expected claims during the year. It also said that as well as an ordinary dividend, shareholders will receive an additional capital return for the year of around $300m.

Hikma Pharmaceuticals gained as it bumped up its dividend by almost a third following double-digit growth in full-year core revenues and profits in 2023.

Anglo American was up despite slashing its annual dividend by a half after seeing profits plunge in 2023 on the back of impairments and downturns in the platinum and diamond markets.

Mondi also advanced even as the paper and packaging firm reported lower full-year profits on the back of weaker demand and lower prices, with the latter continuing into the first quarter of 2024.

Indivior surged as the opioid addiction treatment maker said it was considering moving its primary listing to the US.

Jupiter Fund Management pushed higher as it said full-year underlying pre-tax profit rose 36%.

On the downside, Lloyds Bank lost ground as it reported a 57% jump in full-year profits and announced another £2bn share buyback, but also set aside £450m for the regulatory probe into UK motor financing.

Advertising giant WPP fell even as full-year results came in as expected, while Hargreaves Lansdown retreated as it posted a decline in net new business.


Top 10 FTSE 100 Risers

Sponsored by Plus500
# Name Change Pct Change Cur Price
1 Rolls-royce Holdings Plc +7.16% +23.60 353.10
2 Carnival Plc +4.69% +49.50 1,104.50
3 Hikma Pharmaceuticals Plc +4.08% +81.50 2,079.00
4 Intertek Group Plc +3.13% +140.00 4,618.00
5 Anglo American Plc +2.49% +42.80 1,760.60
6 Tui Ag +2.12% +12.00 578.50
7 Scottish Mortgage Investment Trust Plc +1.81% +13.80 776.40
8 Hiscox Ltd +1.77% +19.00 1,090.00
9 Ashtead Group Plc +1.45% +78.00 5,460.00
10 Mondi Plc +1.44% +20.00 1,405.50


Top 10 FTSE 100 Fallers

Sponsored by Plus500
# Name Change Pct Change Cur Price
1 Hargreaves Lansdown Plc -7.90% -63.60 741.80
2 Wpp Plc -3.02% -23.60 756.80
3 Whitbread Plc -2.38% -85.00 3,490.00
4 Land Securities Group Plc -2.32% -15.00 630.80
5 Barclays Plc -1.94% -3.16 159.60
6 Sse Plc -1.80% -29.00 1,580.50
7 Lloyds Banking Group Plc -1.73% -0.75 42.54
8 Severn Trent Plc -1.71% -44.00 2,529.00
9 Astrazeneca Plc -1.68% -170.00 9,932.00
10 Tesco Plc -1.54% -4.40 281.10


US close: Stocks mixed following FOMC minutes, Nvidia earnings in focus

Wall Street stocks delivered a mixed performance on Wednesday as attention turned to earnings from chipmaker Nvidia and minutes from the FOMC’s latest policy meeting.

At the close, the Dow Jones Industrial Average was up 0.13% at 38,612.24, as was the S&P 500 at 4,981.81, while the Nasdaq Composite saw out the session 0.32% weaker at 15,580.87.

The Dow closed 48.44 points higher on Wednesday, taking a small bite out of losses recorded in the previous session.

In focus on Wednesday, chipmaker Nvidia posted record quarterly numbers after the close, with revenues surging 265% on the back of a booming artificial intelligence unit. Concerns regarding the group’s high valuation continued to grow in the lead-up to its earnings announcement.

On the macro front, mortgage applications plunged 10.6% in the week ended 16 February, according to the Mortgage Bankers Association of America, extending the previous week’s 2.3% decline. Last week’s drop marked the sharpest decline in mortgage demand so far this year and came just shy of matching the 10-month-high decline of 10.7% in the final week of 2023. Applications to purchase a new home dropped 10%, while those to refinance a home sank by 11%.

Elsewhere, minutes from the Federal Open Markets Committee‘s latest policy meeting indicated that the central bank was in no rush to cut interest rates, as policymakers expressed both caution and optimism regarding inflation. They also not only chose to leave their key overnight borrowing rate unchanged but switched up the post-meeting statement to make it clear that no cuts would be coming until they had “greater confidence” in receding inflation.

“Most participants noted the risks of moving too quickly to ease the stance of policy and emphasised the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2%,” the minutes stated.

In the corporate space, shares in Palo Alto Networks traded sharply lower after the cybersecurity firm slashed full-year revenue guidance, while SolarEdge Technologies also headed south in early trading on the back of weak first-quarter guidance.

In terms of Wednesday’s earnings, banking giant HSBC saw full-year pre-tax profits surge 80% to a record $30.3bn, driven by high interest rates, Wingstop beat on both the top and bottom line but warned that sales had slowed for a fourth-consecutive quarter, while Etsy turned in a quarterly earnings miss on the back of a slow start to the trading year.


Thursday newspaper round-up: Online slot machines, Vauxhall, Body Shop

The government is set to impose new limits of as little as £2 a spin for online slot machines, the Guardian understands, in a move that could cost casino companies hundreds of millions of pounds. Ministers have been consulting on imposing a maximum stake for the digital casino-style games since publishing a white paper on gambling reform last year. – Guardian

Vauxhall’s owner, Stellantis, will make electric vans at its factory in Luton from 2025, helping to secure the future of 1,500 UK jobs at the plant. The Luton factory will produce medium-sized electric vans for the Vauxhall, Citroën, Peugeot and Fiat Professional brands, Stellantis announced on Thursday. – Guardian

Taxpayers will be forced to pay millions of pounds to sacked staff at The Body Shop as administrators oversee a drastic restructuring of the collapsed chain. Employees at the company have been told to make claims through the government-backed redundancy payments service if they are laid off. This is funded using National Insurance contributions. – Telegraph

Nvidia Corporation forecast first-quarter revenue above estimates last night, banking on huge demand for its industry-leading artificial intelligence chips and improving supply chain dynamics. The company, based in Santa Clara, California, estimated current-quarter revenue of $24 billion, plus or minus 2 per cent, compared with expectations of $22.2 billion. – The Times

Investment bankers made an “unrealistic” and “inappropriate” $1 billion cash demand on the Frasers Group partly out of snobbery towards the retailer’s owner Mike Ashley, a court has been told. Lawyers told a High Court judge on Wednesday that senior executives at Morgan Stanley wanted the group off its books because Ashley — the former owner of Newcastle United FC — was viewed as an “upstart”. – The Times


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