- Blue-chip index up 38 points to 8,083
- Lloyds’ profits down
- Dettol-maker Reckitt hits target
9.39am: Oil surges as US stockpiles drop
Oil prices have gained ground on Wednesday following a surprise drop in US stockpiles.
Benchmark Brent Crude climbed as high as US$88.69 a barrel on Wednesday morning, up 1.8% on a day earlier.
This came as US inventories fell by 3.237 million barrels over the week to April 19, with analysts having expected an increase of 800,000 barrels.
Official data is due later on Wednesday, with a drop signalling positive news for demand.
According to Hargreaves Lansdown analyst Sophie Lund-Yates, “lack of movement on OPEC+’s production mandates” has also helped pushed prices up.
“There’s also growing hope that interest rate cuts could be on the agenda in the near-term, which would boost demand for the black stuff,” she said.
9.22am: Heineken revenue misses expectations
Heineken has reported below-expected revenue despite an improvement in sales over the first quarter, led by premium beer volumes.
Revenue came in at €8.18 billion over the first three months of the year, up 7.2%, the brewer said on Wednesday.
On an adjusted basis, revenue came in at €6.85 billion, below the Heineken-provided market consensus estimate for €6.94 billion.
Beer volumes grew by 4.7% over the period, however, above expectations for a 2.5% increase.
"This quarter was boosted by an earlier Easter and cycling negative one-off effects from last year," executive chairman Dolf Van Brink said.
"Top-line delivery was well-balanced between volume and value as more markets returned to volume growth."
Despite the revenue miss, Hargreaves Lansdown analyst Aarin Chiekrie said the "results finally gave the group something to raise a glass to".
He said: "Total beer volumes were much better than the market expected, meaning that growth on the top line came from a much healthier mix of both price and volume this quarter."
Heineken reiterated guidance for low to high-single-digit operating profit growth, with shares up 0.4% on Wednesday morning.
8.49am: The morning so far
The FTSE 100 continued its record-smashing week this morning by hitting the third all-time high in as many days.
Stocks are enjoying a combination on tailwinds, including an optimistic start to the UK earnings season (exemplified by Primark owner AB Foods’ start turn yesterday), cooling Middle East tensions and elevated hopes of a near-term interest rate cut.
But it wasn’t all glamorous on the company news front this morning.
Lloyds Banking Group PLC (LSE:LLOY) saw net interest margins fall to 2.95% from 3.22% in the first quarter of 2023, with statutory profit after tax down from £1.6 billion to £1.2 billion.
Lloyds mentioned “elevated severance charges” of £100 million that contributed to an 11% surge in operating costs.
A “sector-wide change in the charging approach for the Bank of England levy” contributed to 500 basis points of this 11% increase. The bank’s shares fell 1.7% in opening exchanges.
Dettol maker Reckitt Benckiser revenues fell 4.6% year on year in the first quarter, though this was broadly in line with expectations.
Hygiene comprising Finish, Lysol, Harpic and Vanish was the one segment to pen revenue growth, while nutrition was the worst performer. The market semed buoyed by these results; Reckitt flew to the top of the FTSE 100 risers list with a 4.5% share price gain.
Miners also put in a good display in the first hour of trades, with Glencore, Antofagasta, Rio Tinto and Anglo American all up more than 1%
BAE Systems, BP and Scottish Mortgage are also top of the table.
At the time of writing, the FTSE 100 index was up 35 points to 8,080.
8.32am: Gucci parent Kering delivers profit warning
Across the Channel, Gucci-owner Kering has delivered a profit warning due to slumping sales of its premier luxury handbag.
Revenue for the first quarter of 2024 was down 11% as reported and down 10% on a comparable basis to €4.5 billion.
Guuci sales plummeted 21%, Yves Saint Laurent was down 8% and Bottega Veneta fell just 2%.
Chief executive François-Henri Pinault did not beat around the bush.
“Kering’s performance worsened considerably in the first quarter. While we had anticipated a challenging start to the year, sluggish market conditions, notably in China, and the strategic repositioning of certain of our Houses, starting with Gucci, exacerbated downward pressures on our topline.
“In view of this revenue decline, together with our firm determination to continue investing selectively in the long-term appeal and distinctiveness of our brands, we now expect to deliver sharply lower operating profit in the first half of this year.
“All of us are working tirelessly to see Kering through the current challenges and rebuild a solid platform for enduring growth.”
Kering shares were kicked 9.5% lower.
8.25am: FTSE 100 touches all-time high again
The blue-chip index touched another all-time high again this morning, marking the third straight day of records.
Reckitt Benckiser plc is top of the leagues after posting its first-quarter trading update, with the big-cap miners offering a substantial lift.
Glencore, Antofagasta, Rio Tinto and Anglo American are all up more than 1%, as are BAE Systems, BP and Scottish Mortgage.
After the first 30 minutes of trades, the footsie was trading 35 points higher at 8,079.
8.14am: Tesla to rally when US trading starts
Tesla Inc (NASDAQ:TSLA) shares look set to bounce 13% higher when US markets open later.
Shares surged after hours as it told investors it plans to fast-track the launch of new affordable EVs, despite its first-quarter earnings missing Wall Street estimates.
Elon Musk’s EV giant has modified its strategy, opting to introduce "new models" by early 2025 using its existing production capabilities, diverging from its previous plans to develop an entirely new car range priced at $25,000.
For the first quarter, Tesla posted a 9% year-over-year drop in sales to $21.3 billion, attributed to a reduced vehicle average selling price and a decline in vehicle deliveries.
“This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex-efficient manner during uncertain times,” said the group.
7.59am: Jet2 expecting stronger summer ahead
One of the junior market’s largest members Jet2 said demand for the summer is stronger than last year, signalling a continuation of the post-Covid travel boom.
Bookings for package holidays are up by 13%, Jet2 said in a statement, while flight-only passengers have increased by 18%.
This is as the airline’s capacity is 12.3% higher than a year ago at 17.1 million seats, with the summer season 55% sold so far, leaving load factors 1% ahead of this time last year.
Alongside this, Jet2 said pricing had seen a “modest increase”, easing cost pressures, while over 80% of fuel was already bought for the year, shielding against price shocks from the likes of tensions in the Middle East.
7.45am: Reckitt revenues lower, but premiumisation evident
FTSE 100 consumer goods group Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB)’s revenues fell 4.6% year on year in the first quarter, though this was broadly in line with expectations.
Hygiene comprising Finish, Lysol, Harpic and Vanish was the one segment to pen revenue growth, while nutrition was the worst performer.
On a like-for-like basis (excluding currency volatility, acquisitions and disposals), group revenues ticked 1.5% higher despite sales volumes falling 0.5% thanks to a favourable price mix.
“We continue to benefit from carryover pricing and consumers trading up to our premium innovations,” as chief executive Kris Licht put it.
Licht added: "We have delivered a good first quarter. Following a period of price-led growth, we are now returning to a more balanced contribution from price, mix and volume.
“We grew volumes in many of our powerbrands in the quarter, including Lysol, Dettol, Durex and Finish, as well as our non-seasonal OTC portfolio. In addition, we continue to benefit from carryover pricing and consumers trading up to our premium innovations.”
Management reiterated its full-year guidance of like-for-like revenue growth between 2% and 4%, with adjusted operating profit “to grow ahead of net revenue growth”.
7.27am: Lloyds’ margins lower, layoffs charges increase operating costs
Lloyds mentioned “elevated severance charges” of £100 million that contributed to an 11% surge in operating costs.
A “sector-wide change in the charging approach for the Bank of England levy” contributed to 500 basis points of this 11% increase.
In January, Lloyds said it would be cutting up to 1,600 jobs as part of a major branch overhaul.
Net interest margins fell to 2.95% from 3.22% in the first quarter of 2023, with statutory profit after tax down from £1.6 billion to £1.2 billion.
This lower NIM caused net interest income to fall 10% year on year to £3.18 billion.
Lloyds reaffirmed its full-year guidance with expectations including a NIM of greater than 290 basis points and operating costs of about £9.4 billion.
A CET1 ratio of 13.9% – an important metric of bank liquidity – was ahead of the ongoing target of 13%.
Chief executive Charlie Nunn stated: "The group is continuing to deliver in line with expectations in the first quarter of 2024, with solid net income, cost discipline and strong asset quality.
“Our performance provides us with further confidence around our strategic ambitions and 2024 and 2026 guidance."
7.06am: Blue chips to hit another ATH
FTSE 100 futures have the blue-chip index hitting another all-time high when markets open today, after smashing records on Tuesday.
The index has closed at record highs for two days running, as a combination of interest rate optimism and a pause in Middle East tensions set the stock market alight.
Markets today will be looking at the CBI Business Optimism Index for an update on manufacturing optimism in the UK.
This quarterly gauge deteriorated to -15 in the fourth quarter of 2023, the lowest in one year, but forecasts expect a recovery in the first-quarter print.
Lloyds Banking Group PLC (LSE:LLOY) kicks off the quarterly banking earnings season amid share price upgrades across the sector.
Futures contracts have the footsie opening 46 points higher at 8,093.
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2024-04-24 06:27:00Z
CBMihgFodHRwczovL3d3dy5wcm9hY3RpdmVpbnZlc3RvcnMuY28udWsvY29tcGFuaWVzL25ld3MvMTA0NTk4My9mdHNlLTEwMC1saXZlLXN0b2Nrcy10by1zb2FyLWFnYWluLWxsb3lkcy1sYXlvZmZzLWhpdC1wcm9maXRzLTEwNDU5ODMuaHRtbNIBAA
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