The FTSE 100 closed higher on Friday, ignoring declines in US stocks as inflation, looming interest rate hikes and weak jobs report spooked investors across the pond.
At the close, the UK benchmark index had rallied 0.47% to hit 7,485.28, although the mid-cap FTSE 250 lost further ground, down 0.27% to finish at 23,353.25.
‘Although today’s jobs report shows yet another disappointing top line jobs number, it’s the higher than expected rise in earnings growth which will grab the spotlight,’ said Seema Shah, chief strategist at Principal Global Investors.
‘A 4.7% gain in annual hourly earnings, coupled with a drop in the unemployment rate to a fresh pandemic low of 3.9%, is a clear sign of a tight labour market if ever there was one, and will likely give the Fed a green light for monetary tightening. The unemployment rate already is only a few skips away from the pre-pandemic low.
‘Equity markets are on the line for a volatile month,’ Shah believes.
While the Dow Jones made modest 0.2% gains by the UK close, the S&P 500 was showing a 0.2% decline and the already bruised Nasdaq lost another 0.6%.
Elsewhere, there was positive news in the technology sector with Samsung Electronics, a major Asian chipmaker, and STMicroelectronics, one of Europe’s biggest chipmakers, both posting better than expected fourth quarter revenues due to strong demand.
Closer to home, the Halifax building society reported average UK house prices rose by 9.8% in December, the fastest pace since July 2007, to a record high of £276,000. The rise takes the annual increase to £24,500, the biggest yearly gain since March 2003.
BIG BUYBACK FOR SHELL
Shares in Royal Dutch Shell (RDSB) nudged 0.2% higher to £17.39 despite the company saying it would continue its $7 billion buyback programme ‘at pace’. Shell still has $5.5 billion of proceeds from the sale of assets in the Permian Basin, and the buyback is in addition to the 20% to 30% of cash flow distributed to shareholders under the capital allocation programme.
The firm posted a mixed trading update for the final quarter, with revenues from oil marketing well below the previous quarter and gas production below estimates due to unplanned maintenance, although trading profits were higher thanks to the jump in LNG spot prices.
Shares in drinks group C&C (CCR) lost nearly 3% at 230.2p after it hinted that full year operating profit might not meet its target of €50 million to €55 million due to the re-imposition of restrictions in the UK and Ireland in December, which had ‘significantly impacted’ trading.
The firm said it had a strong balance sheet and more than enough liquidity to support its operations but due to uncertainty over the extent and duration of government restrictions it would wait until March to update its guidance.
Shares in industrial conglomerate Essentra (ESNT) rallied almost 5% to 357p after the firm posted a 12.7% increase in fourth quarter like for like revenues and confirmed its full year earnings target.
However, there was no new news on the strategic review and the divestment of the Filters and Packaging divisions other than that it was ‘progressing as planned’.
Free-to-air broadcaster ITV (ITV) lost ground on Friday although recovered earlier losses to finish 0.5% down at 114.3p after analysts at Morgan Stanley downgraded their recommendation from Buy to Hold on concerns advertising revenues might disappoint due to the impact of the omicron variant on global growth.
SMALLER CAP WRAP
Luxury carmaker Aston Martin Lagonda (AML) reported an 82% increase in sales to dealers, due mainly to demand for its DBX sports utility vehicle, but cautioned that core earnings would be about £15 million lower than expected due to a delay in orders for its latest Valkyrie sports car.
The shares rallied almost 5% £14.61 with investors content for now that progress is on track for £2 billion revenue and £500 million core earnings by 2025.
Ad agency M&C Saatchi (SAA:AIM) slumped 12.5% to 184p after investors were left disappointed that a proposed takeover offer from in Murria-backed AdvancedAdvT (ADVT:AIM) would likely be pitched as an all-share deal.
M&C Saatchi’s board were left sceptical but further talks are likely that could see the terms of any deal changed, with some cash element possibly included.
Car retailer Lookers (LOOK) said it expected to post record underlying pre-tax profits for the year to December ahead of the current consensus of £82 million, sending its shares 1.3% higher to 73.9p.
The firm also said it would reinstate dividends alongside the full year results, which will be released in mid-April.
Aviation services company Air Partner (AIR) announced that due to continued strong customer demand through December, in particular freight bookings, it expected pre-tax profits for the year to the end of January to come in ‘materially ahead’ of market expectations. Shares climbed 4.5% to 90p.
In a similar vein, shipping services firm Clarkson (CKN) reported stronger than expected trading in December meaning pre-tax profits for the full year would be no less than £69 million, lifting its shares 4% to £39.75. The current consensus puts pre-tax earnings at £65 million.
Scientific instrument maker Judges Scientific (JDG:AIM) also raised its guidance for the full year thanks to double-driven revenue growth driven by a recovery in orders in the second half, sending its shares rallying nearly 5% to £85.60.
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