After a weak morning session, UK shares recovered over the course of the afternoon to close at the highs of the day thanks to a rally in banks and other financial stocks which more than offset further falls in house builders and weakness in retailers.
Gold was down 0.2% at $1,823 an ounce while Brent crude was 0.2% higher at $84.35 a barrel. Sterling continued its advance against the dollar, up another 0.2% to $1.37 against $1.32 a month ago.
At 4.35pm the FTSE index of leading shares was up 12 points to 7,564 points with the main positive contribution coming from Prudential (PRU), Barclays (BARC), HSBC (HSBA) and NatWest (NWG).
CORPORATE NEWS
Supermarket chain Tesco (TSCO) increased its guidance for retail operating profit to be slightly above the top end of its previous £2.5 billion to £2.6 billion guidance range after seeing stronger than expected sales in the third quarter and Christmas.
Like-for-like retail sales in the third quarter were up 2.4%, while Christmas sales increased 3.2%, taking the total sales growth for the 19 weeks through 8 January to 2.6%.
Sales in its banking division were up 33%, and the company said operating profit for the division was now expected to be between £160 million and £200 million.
Investors were unmoved, however, marking the shares down 0.9% to 290p after their substantial gains of the last three months.
Retailer Marks & Spencer (MKS) also said trading over the Christmas period had been strong with food outperforming the market over the last 12 and 24 months.
The business generated its highest ever Christmas sales with December growth inline with third quarter growth. For the 13 weeks to 1 January group revenues increased 18.5% to £3.3 billion.
As a result of the strong performance the company said it was confident of delivering the increased guidance set now expects full year profit before tax and adjusting items of at least £500m.
Having leapt almost 70p since November, however, the shares dropped nearly 8% to 233p as investors booked profits.
Shares in global specialist veterinary pharmaceutical group Dechra Pharmaceuticals (DPH) slipped 3.9% to £42.90 despite the firm reporting strong trading had continued through the first half with group revenues increasing 15% at constant exchange rates for the six months ended 31 December.
The company maintained a positive outlook for the financial year in line with the upper end of management expectations and said that results should continue to benefit from good growth in the companion animal market.
MORE RAISED GUIDANCE
Recruitment firm Hays (HAS) said it posted a record second quarter to 31 December with excellent fee income growth across all regions.
Like-for-like fees were up 37% led by permanent up 61% and temporary up 22%, with strong margin and volume growth through the quarter.
Strong trading prompted the company to increase guidance for operating profit to 30 June 2022 to be around £200 million, ahead of market consensus. The shares added 2.2% to 155p.
Shares in consulting and engineering company Wood Group (WG.) soared 21% to 241p after the company said it expected activity levels to improve across 2022 with the order book ‘significantly’ higher than in December 2020.
Full year results were in lime with expectations with revenues down 14% to around $6.4 billion and operating profit before exceptionals of around $195 million to $205 million compared with $214 million last year.
OMICRON CHALLENGES
Pub group Mitchells & Butlers (MAB) said like-for-like sales for the 15 weeks to 8 January 2022 were down 1.5% as the emergence of Omicron weighed on performance.
Over the important festive season like-for-like sales were 10.2% lower. Investors like the update, however, lifting the shares 1% to 260p.
Homebuilder Persimmon (PSN) said full year revenues to 31 December increased 8.4% to £3.6 billion driven by increased home sales and higher prices.
New home completions were 7% higher at 14,551 at an average selling price of about £237,050, up 2.8% over last year.
Looking ahead, the total forward sales stood at £1.62 billion, up from £1.36 billion in 2019. In a separate statement the company said it had appointed Jason Windsor as chief financial officer.
He will succeed Mike Killoran, who announced in July 2021 that he would be retiring in mid-January 2022 after more than 25 years with the Group. The shares eased 0.5% to £26.08.
Shares in smaller rival Countryside Properties (CSP) collapsed 21% to 325p, having touched an intra-day low of 300p, after revenues tumbled in the first quarter due to lower completions and the chief executive fell on his sword.
Turnover for the three months to December dropped to £250 million from £363 million a year earlier as the firm handed over keys to just 809 properties against almost 1,300 previously.
The board announced chief executive Iain McPherson would step down 'with immediate effect' with chairman John Martin taking over on an interim basis.
A list of FTSE 100 index movers can be seen HERE.
