Proactive Investors -
- FTSE 100 jumps 115 points to 8,390
- HSBC (LON:HSBA) revenues and profits beat forecasts
- Bank of Japan hikes rates for second time in 17 years
Commodities to the rescue
"Commodities came to the rescue," for the FTSE this morning, "helping the UK stock market to buck the sell-off that gripped Wall Street yesterday," says analyst Russ Mould at AJ Bell.
The large rise in the London index is driven by miners and oil companies, including Shell, BP (LON:BP), Glencore (LON:GLEN), Anglo American (JO:AGLJ) and Antofagasta (LON:ANTO).
HSBC's update, which also includes announcing a new CFO promoted from within, gets a positive reaction, while among the top risers is Diageo (LON:DGE) bouncing back from yesterday’s disappointing results.
"The common thread with these stocks and the UK market in general is that there is a lot of value on offer," says Mould.
"Valuations aren’t expensive, particularly relative to the US market and the tech titans in the Nasdaq.
"When we get a big sell-off in tech names, investors often rotate to more value-orientated stocks and the UK market is full of them."
9.40am: Ferrexpo surges, Taylor Wimpey mixed
Ferrexpo PLC (LON:FXPO) shares have shot up 11% after the Ukrainian iron ore producer reported a 75% increase in output and 85% in sales for the first half, with profit after tax more than doubling.
Ferrexpo's operating base is in central Ukraine, where it operates three mines.
“From a corporate perspective, we are adapting to the complexities of a prolonged war,” said executive chair Lucio Genovese.
Shares in Taylor Wimpey PLC (LON:TW) climbed over 2% after it reported underlying profits ahead of expectations but made an increased cladding fire safety provision of £88 million.
It said this provision was mostly due to cost inflation on new tenders received and increased project admin costs.
Management has guided to full-year volumes towards the upper end of the previous guidance range of 9,500-10,000 home completions, expects to meet current consensus for operating profit of £416 million and have net cash of around £550 million at year end.
Analysts at UBS calculate this implies around £234 million adjusted operating profit in the second half at a slightly improved margin.
Oil prices pick up
Oil prices have been picked up from their two-month lows this morning, with Brent crude futures up 1.7% to $79.40 a barrel.
One likely spark for this is increased geopolitical tension in the Middle East, after the political leader of Hamas was been killed in an Israeli strike in Iran.
Off the back of this, oil giants Shell PLC (LON:SHEL and BP PLC are contributing the the Footsie's progress, now up 107 points or 1.3%.
Gold also climbed to a week's high, hitting $2423 this morning, supported by the increased geopolitical tensions, which included Russia's largest drone attack on Ukraine, plus with today’s Fed meeting in focus.
Analysts at Saxo noted that crude oil reversed some of its near-10% losses in the past month, with the killing of the Hamas leader paired with the API reporting a 4.5 million drop in US crude stocks overnight.
"Despite the mentioned gains during the past 24 hours, the commodity sector is heading for a +4% loss on the month, its worst performance in 14 months driven by China growth concerns forcing long liquidation from speculative accounts across key commodities from energy to industrial metals," they said.
London in the lead
The FTSE 100's 1.2% jump, where miners are doing a lot of the heavy lifting, is almost being mirrored by the FTSE 250, which is up 195 points or 0.9% to 21,628.
Both London indices are the top risers in Europe this morning, with the next being the DAX, up 0.7% in Germany, while Italy's FTSE MIB has risen 0.4%, France's CAC 40 is just above flat and Spain's IBEX 35 is down 0.2%.
For the Euro Stoxx 600, the gain is just under 1%, with the big risers including Kenco owner JD Peet, up 17%, software company TeamViewer, and Just Eat Takeaway (LON:JETJ).
Results from Just Eat Takeaway.com NV included a fresh share buyback programme, after 3% growth in gross transaction value for the first half of 2024.
Elsewhere among UK-listed companies, Wickes Group PLC (LON:WIX) is up 3.3% despite struggling to retain customers in its bespoke kitchen, bathroom and home office installation offering.
Wicked said there was “continued soft consumer appetite for larger ticket purchases” in the period, coupled with a strong comparative performance in the first half of 2023.
Endeavour Mining PLC (LON:EDV) said it will pay out a minimum of US$435 million in dividends over the next two years and more if special payments and share buybacks are included.
GSK ups guidance, but shares lead fallers
More on GSK PLC (LON:GSK), where shares are down 2.5% now, despite the drug maker raising its annual earnings and sales forecasts after a strong second-quarter performance driven by cancer and HIV treatments.
For 2024, core EPS growth is now guided to grow 10-12%, up from 8-10% before, and its sales growth guidance is lifted to 7-9%, up from 5-7%.
The performance has failed to impress the market, which is still worried about the potential financial whack the drug giant might take from ongoing Zantac litigation.
Analyst Sean Conroy at Shore Capital said second-quarter sales and earnings both also beat consensus expectations for another consecutive quarter.
There were misses among the numbers though, with vaccines missing forecasts by 9% as shingles treatment Shingrix was a 20% miss as sales fell 36% in the US on lower demand and inventory reductions, being partially offset by uptake outside the US which accounted for circa 64% of sales.
HIV, oncology and general medicines all came in ahead of expectations.
Conroy noted that GSK now anticipates slightly higher FX headwinds for the year, "which we believe will likely absorb any upgrades".