• FTSE 100 closes up 19 points
  • S&P 500 drops flat after opening surge
  • Sainsbury falls after COVID-19 costs

5.10pm: London’s leading index pulls out a win

The FTSE 100 ended Wednesday up 19 points, 0.3%, at 6,964, while the FTSE 250 added 7 points to finish at 22,440.

Oil prices jumped after weekly crude stockpile data fell short of expectations, IG Chief Market Analyst Chris Beauchamp noted.

“Oil firms in London and on Wall Street have felt the benefit, as the commodity itself rallies, building on the gains made so far this week,” Beauchamp wrote. “As with equities, it has been unwise to assume the oil rally of recent months has come to an end, and a few more indications of strengthening demand could see oil recover the highs of March.”

In the US, the Dow was down 134 points, 0.4%, at 33,851 by midday. The Nasdaq has seen major volatility, going from down to up to down again, landing 39 points lower, 0.3%, at 14,052. The S&P 500 gave back its early gains to settle in less than a point above the flatline at 4,187.

“Markets are holding up ahead of the Fed decision and Apple earnings, although the Dow and Nasdaq 100 continue to trade modestly in the red,” Beauchamp wrote. “…It is far from clear that the FOMC will provide that spark however, with most investors still expecting the Fed to remain silent over any change in policy until later in the year when, it is hoped, the picture of a strong recovery bolstered by stimulus plans will be more advanced.”

3.55pm: Positive results keep leading shares in the green

Leading shares continue to be dominated by the day’s company results.

WPP PLC (LON:WPP) is one of the real winners, leading the risers in the blue chip index and adding 4.23% or 40.20p to 991.2p after its latest update.

Sophie Griffiths at Oanda said: ” WPP, the world’s largest advertising agency, often considered a bellwether, saw net sales growth ahead of target. Clients are ramping up their marketing spend in preparation for the global reopening – another positive signal for investors to latch on to.”

Lloyds Banking Group (LON:LLOY) also benefited from positive results, up 3.24% or 1.41p to 44.99p and giving a lift to the whole sector.

But Reckitt Benckiser (LON:RKT) disappointed investors, and its shares have fallen 210p or 3.19% to 6376p. So too J Sainsbury PLC (LON:SBRY), down 2.73% or 6.6p at 235.5p.

Ahead of its results on Thursday Royal Dutch Shell PLC (LON:RDSA) has added 28.8p or 2.13% to 1384p.

Overall the FTSE 100 remains ahead of the game, up 31.03 points or 0.45% at 6976.

 

3.25pm: US trade deficit hits record

More signs of the recovery in the US economy- and something else for the Federal Reserve to mull over during its latest meeting –  has come with a rise in the US trade deficit in goods for the third month in a row.

The deficit hit a record high of $90.6bn in March, up 4%, with imports climbing 6.8% to $232.6bn, also a record. Exports rose 8.7% to $142.1bn but they have recovered more slowly than imports in recent months because other countries have not recovered as rapidly as the US, so overseas demand for US goods is lower.

The Dow Jones Industrial Average has dipped further, down 0.44% while the S&P 500 is up 0.2%. The Nasdaq Composite has now edged into positive territory, up 0.15%.

In the UK the FTSE 100 is relatively stable, up 32.42 points or 0.47% at 6977.39.

2.39pm: Wall Street off to mixed start

The main indices on Wall Street have opened on a mixed footing on Wednesday as traders the latest decision on interest rates from the Federal Reserve.

Shortly after the opening bell, the Dow Jones Industrial Average was down 0.36% at 33,863 while the Nasdaq dropped 0.12% to 14,072. The S&P 500 was the positive outlier, rising 0.04% to 4,188.

Aside from fresh economic insight from the Fed, some traders may also be keeping their powder dry ahead of earnings from Apple and Facebook, which are due after the close.

Back in London, the FTSE 100 had continued to advance into late afternoon and was up 38 points at 6,983 at around 2.35pm.

12.59pm: Drugs giant sees profits fall

GlaxoSmithKline PLC (LON:GSK) is edging higher after its first quarter results broadly met City expectations.

Revenues fell 18% to £7.4bn as travel restrictions hit its vaccine business, while profits fell 17% to £1.5bn.

The company plans to split itself into a pharmaceuticals business and consumer healthcare firm, and is also under pressure from activist investor Elliott, the US hedge fund.

Steve Clayton, manager of the HL Select UK Income Shares fund, which has a position in GSK said: “The challenges facing GSK this quarter had been well flagged. A year ago, wholesalers were pulling orders forward to stock up ahead of looming lockdowns. Social distancing has kept colds and flu at bay whilst GPs have concentrated on COVID-19 vaccinations, rather than other treatments.

“The reduction in profits has led to a weak quarter for cash generation at GSK, and the company needs to show that they can improve this going forward…

“More importantly perhaps though is what GSK don’t want to talk about; the arrival of activist investor Elliot Management on the GSK share register. Elliot have a reputation for shaking up underperforming businesses and driving strategic change. What they will push for at GSK is yet to be seen, but it’s a safe bet that they see more value taking a course different from that which GSK is currently following.

“With major structural change on the cards at GSK, with or without Elliot’s alternative vision, it looks set to be a year of forced evolution at GSK.”

Its shares are up 0.53% or 7.11p at 1343.91p.

Overall the FTSE 100 remains positive although off its best levels again, up 30.68 points or 0.44% at 6975.65.

Danni Hewson, AJ Bell financial analyst, said: “Markets are scenting recovery as a bumper crop of results out this morning demonstrates resilience and, in some cases, a full-on return to pre-COVID-19 trading,”

12.32pm: US markets uncertain ahead of tech giants and Fed

Wall Street is set for a mixed opening, with tech giants Apple and Facebook due to report results after the closing bell.

Microsoft and Google-owner Alphabet both beat forecasts on Tuesday but the former’s results still seem to have been deemed not quite good enough.

Ipek Ozkardeskaya, senior analyst at Swissquote said: “Beating analyst estimates hasn’t been enough to boost the share price of Microsoft yesterday, and it may not be enough to boost Facebook and Apple’s share prices after today’s earnings announcements. 

“There is clear consensus on the official consensus, and the real consensus for the tech stocks is a super-beat, and not just a slight beat, and even less an in-line number.”

Apple is expected to have weathered the pandemic pretty well as people work from home and it continued to launch new products. Revenues could rise by some 32% year on year in the second quarter with earnings up around 53% with some estimates as high as 68%. 

Facebook meanwhile is expected to report first quarter revenues up 33% and earnings around 37% higher. There are also (unsubstantiated) rumours it may reveal it holds Bitcoin on its balance sheet.

 

Also in the spotlight will be the latest US Federal Reserve decision, which expected to leave rates and bond buying as it is. But the central bank’s comments will be scrutinised for its current view on inflationary pressures and whether there are hints it might start to ease off on its monetary support.

Joshua Mahoney at IG said: “Markets are waiting patiently for the latest update from the Federal Reserve today, although they could be disappointed. Despite a resurgence in jobs and inflation data, we are unlikely to see [Fed chair Jerome] Powell lay the groundwork for any tapering in asset purchases today. Instead, it seems likely that he will stress the need to see sustained above-target inflation and proof of economic strength before they decide to start to reposition towards a less accommodative future”. 

Sophie Griffiths at Oanda said: “No change in policy is expected today, so the central focus will be on…Powell’s press conference. While the US vaccination programme continues at a rate of knots and data reveals an increasingly convincing economic recovery, it’s still early days for tapering talk. June’s meeting could be much more significant. The Fed has said it will want to see approximately around 75% of the population vaccinated in order to begin tapering discussions. We’re not there yet, but we could well be by June.

“The Fed aside, investors will also be watching for comments regarding [President] Biden’s tax-raising plans when he addresses Congress. Reports of the tax hike have sent stocks lower once before, and any sense that these plans are firming up could hit market sentiment and pull stocks further from all-time highs.”

The Dow Jones Industrial Average is expected to open around 30 points lower at 33,954. The S&P 500 is forecast to edge up 0.09% and the tech heavy Nasdaq Composite is set to dip by a similar amount.

In the UK the FTSE 100 is heading back towards its high of the day, up 36.84 points or 0.53% at 6981.81.

Could 7000 be on the cards again?

11.36am: Broadcaster lifted as UBS raises target price

The FTSE 100 has picked up the pace a little, now up 21.61 points or 0.31% at 6966.58

Meanwhile the mid-cap FTSE 250 is marginally outperforming the blue chip index, up 92.12 points or 0.41% at 22,525.2.

One of the major risers here is ITV PLC (LON:ITV), up 3.18% or 3.7p at 120.25p.

Analysts at UBS have raised their price target from 125p to 135p on the back of improving advertising revenues.

A suggested £200mln valuation for joint venture Britbox would add another 5p to the target price.

UBS said: “Our monthly Media buyer survey indicates April momentum is likely to continue into May and June.

“ITV at their full year results indicated while the first quarter 2021 TV total adverting revenue was expected to be  down 6%, April was up 60-75%. Channel checks suggest May is likely to be up 78% and June 80% resulting in 75% in the second quarter, with Media Buyers citing an increase in Auto, Retail and Food & Beverage spend. Note May 2020 was down 46% and June 2020 down 42%. In full year 2020, Media buyers now expect TV total advertising revenue to be up 10% to 18%. Consensus is currently up 8-9%.”

10.17am: Challenger bank sees loans decline

Somewhat overshadowed by the stellar performance of Lloyds Banking Group PLC (LON:LLOY) – up 3.61% at 45.15p – challenger bank Metro Bank PLC (LON:MTRO) has also issued a trading update.

Loans fell 17% to £12bn in the first quarter compared to the same time last year, as customer activity dropped during the latest lockdown. Deposits rose 13% to £16.4bn as people spend less, with growth across business and retail customers’ instant access and current accounts and a reduction in higher-cost fixed term deposits. 

Chief executive Daniel Frumkin said the bank’s turnaround strategy was continuing: “Metro Bank has delivered a solid first quarter, with continued improvement in deposit mix. We are also beginning to see progress across our loan book, with strong growth in consumer lending and specialist mortgages as we focus on assets delivering higher risk-adjusted returns.”

Its shares have edged up 0.5p to 116p.

Meanwhile the FTSE 100 continues to drift away from the day’s peak, now up just 10.39 points or 0.15% at 6955.36.

9.36am: Mixed fortunes for major companies after results

Leading shares are holding on to their gains despite mixed fortunes for the raft of major companies unveiling their results.

Lloyds Banking Group PLC (LON:LLOY) continues to top the risers, up 1.41p or 3.24% to 44.99p. This is their highest level for more than a year after first quarter profits of £1.9bn beat expectations.

Britain’s biggest housebuilder Persimmon PLC (LON:PSN) is in demand after reporting a strong start to the year, up 73p or 2.32% at 3220p. Rival Barratt Developments PLC (LON:BDEV) is also better, up 15.8p or 2.05% at 785.2p.

WPP PLC (LON:WPP) has risen 24.6p or 2.59% to 975.6p after first quarter revenues rose 3%.

But not everyone was happy.

J. Sainsbury PLC (LON:SBRY) is down 2.4% or 5.8p to 236.3p after it made a full year statutory loss of £261mln. Revenues rose 7.3% as trade boomed during the closure of non-essential shops but its spent £485mln on COVID-19 related costs, including redesigning stores and paying staff more in recognition of their efforts.

It is paying a dividend of 7.4p a share but was cautious on the outlook as customer behaviour returns to more normal levels.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The extent to which customer behaviour is changing now that the virus has been suppressed and restrictions on shopping have been lifted, is far from clear.

“That’s why J Sainsbury, like many other retailers, views the future as uncertain. But despite the accounting loss, its proposed a final dividend of 7.4 pence per share showing its quiet confidence in continued cash generation and the expectation of a bounce back in profits by 2022 to exceed 2020 levels.’’

There is also the lurking suggestion of takeover action after Czech billionaire Daniel Kretinsky recently raised his stake to nearly 10%, although in a statement he said he backed the current management.

Reckitt Benckiser PLC (LON:RKT) is another faller, down 106p or 1.61% at 6480p. First quarter revenues rose 4.1%, driven by growth in its hygiene business amid the pandemic. But its nutrition division struggled and it is reviewing that business in China, with some expecting a sale to result from this.

Overall though the positive is outweighing the negative – just –  and the FTSE 100 is up 12.51 points or 0.18% at 6957.48, off its best level of 6976.

8.53am: Leading shares open in positive territory.

The FTSE 100 opened in positive territory ahead of the US Federal Reserve call on interest rates with traders betting that Jerome Powell and his cohort will maintain their ultra-accommodative monetary stance.

There have been a few market wobbles of late with America’s rapid vaccination programme sparking a faster than anticipated economic rebound, which in turn precipitated inflationary fears.

“Assuming that the Fed stays resolutely on-message, I expect buy-everything-business-as-usual to return shortly thereafter,” said Jeffrey Halley, analyst at OANDA.

The banks led the early charge, prompted by stellar quarterly results from Lloyds Banking Group (LON:LLOY), which was marked 4.8% higher.

“[It] is seeing the benefit of the rising tide of sentiment in the UK and its numbers reflect a recovery play in action,” said Richard Hunter, head of markets at Interactive Investor.

“This time a year ago as the UK economy was going into freefall, the banks found themselves in the eye of the storm.

“This latest update from Lloyds encapsulates the improvements that have been seen since, and the release of £459mln of bad loan provisions is a strong indication of an improving economic outlook.”

NatWest (LON:NWG), up 2.9%, was pulled higher in Lloyds’ wake.

Also on the up was Persimmon (LON:PSN), which rose 2.2% after saying house sales are now 11% ahead of pre-pandemic levels.

Finally, the completion of the Wickes demerger saw an 11% reverse in the fortunes of its owner Travis Perkins (LON:TPK).

6.55 am: Front foot start predicted 

The FTSE 100 is expected to start Wednesday’s session on the front foot as traders await the latest interest rates decision from the US Federal Reserve.

Spread-betters IG expect the blue-chip index to open around 25 points higher after ending Tuesday’s session down 18 points at 6,944.

When the Fed meets later today traders are likely to keep an eye on what the central bank’s chair Jerome Powell makes of recent improvements in US economic data, with consumer confidence figures for April beating expectations.

The key concern will be whether the current pace of economic recovery will be the high water mark or whether the Fed thinks there is more improvement to come, which in turn could see fresh movements for US Treasuries in the bond markets.

“The belief that this is as good as it gets probably seems a little naïve right now, and while the Fed will be pleased at how the economy is looking based on current data, we will probably still need to see another couple of decent payrolls reports, before we start to see the central bank starting to prepare the ground for a slight change in tone. Until then, Powell will be keen to temper any enthusiasm or foster any expectation of a change in stance, even if officials do alter their dot plot forecasts to signal a slightly earlier taper”, said Michael Hewson at CMC Markets.

Meanwhile, traders will also be hoping for a better performance on Wall Street after a relatively flat session overnight saw the Dow Jones Industrial Average close up just 0.01% at 33,984 while the S&P 500 dropped 0.02% to 4,186 and the Nasdaq fell 0.34% to 14,090.

The picture was looking brighter in Asia this morning, with Japan’s Nikkei 225 rising 0.37% while Hong Kong’s Hang Seng was up 0.21%.

On currency markets, the pound was down 0.2% against the dollar at US$1.388, although the upcoming Fed commentary could provide some catalyst for movement.

Around the markets:

Sterling: US$1.388, down 0.2%

Brent crude: US$66.39 a barrel, down 0.05%

Gold: US$1,770 an ounce, down 0.6%

Bitcoin: US$54,870, up 1.78%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mixed on Wednesday as India’s new COVID-19 cases increased by 360,960, the highest ever daily count for any country, along with 3,293 deaths.

The Hang Seng index in Hong Kong gained 0.15% while the Shanghai Composite in China fell 0.05%.

In Japan, the Nikkei 225 advanced 0.43% but South Korea’s Kospi slipped 0.89%.

Shares in Australia gained, with the S&P/ASX 200 trading 0.46% higher.

Proactive Australia news:

Corella Resources Ltd (ASX:CR9) has resumed trading on the ASX after raising $5 million from a public offer at 2 cents per share.

PNX Metals Ltd (ASX:PNX) first mineral resource estimate for the newly acquired Glencoe Deposit has enhanced development plans for the Fountain Head Gold Project in the Northern Territory.

Galena Mining Ltd (ASX:G1A) (FRA:GM6) has achieved key objectives from the 2020 Abra Drilling Program with a subsequent updated JORC 2012 resource estimate helping to increase confidence in the Abra Base Metals Project in Western Australia.

Auroch Minerals Ltd (ASX:AOU) (FRA:T59) has intersected nickel sulphide mineralisation along strike in a maiden reverse circulation (RC) program at the high-grade Nepean Nickel Project south of Coolgardie, Western Australia.

Caspin Resources Ltd (ASX:CPN) has intersected significant zones of sulphides in diamond drilling at the XC-29 Prospect within the Yarawindah Brook Nickel-Copper-PGE Project in Western Australia.

Mako Gold Ltd’s (ASX:MKG) high-grade results have extended multiple parallel lodes from surface to 200 metres vertical on a section of Tchaga prospect that previously returned 41 metres at 4.51 g/t at Napié Gold Project in Côte d’Ivoire.

Bardoc Gold Ltd (ASX:BDC) (FRA:4SF) passed an important milestone during the March quarter by delivering a robust definitive feasibility study (DFS) for the flagship Bardoc Gold Project in Western Australia.

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