UK shares opened higher on Thursday as positive earnings boosted hopes of an economic recovery, with investors looking to Bank of England's policy meeting later in the day. The BoE’s Monetary Polity Committee is widely expected to maintain base interest rates at the current 0.1%, great for mortgage borrowers and businesses looking to invest, but not so good for high street banks and savers.
The benchmark FTSE 100 index matched gains seen across major European market to rally 0.65% at 9am, with pharma, travel and telcos, with Unilver (ULVR) and the personal goods sector in which it sits, acting as the biggest drag.
Mid-caps were also firmer, the FTSE 250 up 0.5% at 20,862.20.
Overnight, gains were held in check on US markets despite further strong earnings reports, with the Dow Jones and S&P 500 nudging modestly higher while the tech-heavy Nasdaq fractionally slipped.
GROWTH WORRIES HIT UNILEVER
Unilever led the blue-chips loser board on Thursday with a near 4% slump to £41.83 after emerging market performance in the fourth quarter missed some market expectations.
Sales in emerging markets rose 1.2%, hurt in part by strict lockdowns in the first half of the year and declines in Thailand, the Philippines and in Indonesia in the fourth quarter. That compared to long-term sales growth targets across the region of between 3% to 5%.
Catering outsourcer Compass (CPG) rallied more than 3.5% to £13.985, heading the FTSE 100 leaderboard, after saying that it anticipated second-quarter operating margins to improve by another 50 to 100 basis points after its first-quarter operating margin rose to 2.7% from 0.6% in the preceding quarter.
The company reported a one-third fall in organic revenue for the December quarter after a tumultuous 2020 that was marred by school and office closures due to Covid-19 restrictions.
Profit plunged for Royal Dutch Shell (RDSB) to a two decade low last year as the coronavirus pandemic hit energy demand worldwide. Adjusted earnings for 2020 slumped 71% to $4.8 billion, the lowest since at least 2000, according to Reuters data.
But the stock rose 1.1% to £12.86 with Shell able to avoid the huge losses of its rivals thanks to strong trading operations and sales at its network of more than 45,000 filling station where it also has convenience stores. The company also said it expected to raise its dividend again in a sign of confidence.
BT (BT.A) reported a fall in profit as performance was weighed down ongoing legacy product declines and the impact of Covid-19 on its consumer and its enterprise units.
BT shares rose more than 2% to 131.69p.
Homebuilder Barratt Developments (BDEV) reinstated its dividend after reporting an uptick in first-half profit. An increase in completions propped up revenue and gave the shares price a rough 3% lift to 695p.
ELSEWHERE ON THE MARKET
Engineering firm Renishaw (RSW) saw profit more than triple in the first half as lower costs from travel curbs and fewer exhibitions during the pandemic bolstered performance.
The FTSE 250 company posted an adjusted pre-tax profit of £43.4 million for the six months to 31 December, compared with £14.3 million a year earlier. It also reinstating an interim dividend of 14p per share, yet the stock nudged 0.8% lower to £60.70.
Water utility Severn Trent (SVT) said it is ‘on track’ to deliver its full-year results in line with expectations and increased guidance for outperformance on customer targets to £50 million.
In its trading update covering 1 October 2020 to 4 February 2021, the company said its Water business is set for its ‘best ever performance’ on a number of measures, including the Compliance Risk Index and water quality complaints.
Oil services business Petrofac (PFC) has secured two contracts worth a total of $300 million through Petroleum Development Oman. The positive announcement pushed its share price up 1.6% to 117.65p during early morning trading.
