Equities in London made a bright start to trading, led by lender HSBC, as the recent bullish run continued.
Trade was more cautious in mainland Europe, however, ahead of key eurozone data later.
The FTSE 100 index rose 26.28 points, 0.3%, at 8,173.31. The FTSE 250 was up 51.07 points, 0.3%, at 20,135.86, and the AIM All-Share was up 1.36 points, 0.2%, at 764.69.
The Cboe UK 100 was up 0.4% at 817.04, the Cboe UK 250 added 0.5% to 17,426.40, and the Cboe Small Companies was up 0.1% at 15,725.69.
In European equities on Tuesday, the CAC 40 in Paris was down slightly, while the DAX 40 in Frankfurt was down 0.1%.
In New York on Monday, equities traded higher, both the Dow Jones Industrial Average and Nasdaq Composite rose 0.4%, while the S&P 500 added 0.3%.
In Tokyo, the Nikkei 225 shot up 1.2%. Financial markets in Tokyo had been closed for a public holiday on Monday. In China, the Shanghai Composite ended 0.3% lower, while the Hang Seng in Hong Kong was up 0.3%. In Sydney, the S&P/ASX 200 rose 0.4%.
The Federal Open Market Committee meeting kicks off Tuesday, with a decision on Wednesday. The Fed is expected to leave rates unmoved, with focus on what Chair Jerome Powell has to say at a subsequent press conference.
Commerzbank analyst Ulrich Leuchtmann commented: ‘Not long ago, it seemed that the Fed would soon be able to declare ’mission accomplished’ in the fight against inflation. That is no longer the case. At the time of the last FOMC meeting in March, it was far from clear. That is the relevant piece of news that emerged in the inter-meeting period. And tomorrow, it’s all about how the FOMC statement reacts to it. Because that communication will determine whether the revisions to the Fed’s expectations since then have been too much, too little, or just right. Therein lies the importance of tomorrow’s statement and tomorrow’s press conference.’
The pound was quoted at $1.2537 early Tuesday, down from $1.2554 late Monday. The euro stood at $1.0705, falling from $1.0717. Against the yen, the dollar was trading at JP¥156.90, up from JP¥156.64.
The dollar-yen pair moved wildly on Monday, peaking at JP¥160.16, but falling as low as JP¥154.54 at one point, prompting speculation about a currency intervention.
ING analysts commented: ‘Japan has likely intervened in the FX market, but this has not yet been made official and intervention figures for yesterday should only be published at the end of May. More support to the yen may well be needed as markets still have reasons to push USD/JPY higher.’
The economic calendar for Tuesday has a eurozone gross domestic product reading, as well as consumer price inflation data, at 1000 BST.
In London, HSBC rose 2.5%, the best FTSE 100 performer. The London-based, Asia-focused lender said first-quarter net interest income fell 3.4% to $8.65 billion from $8.96 billion year-on-year, though came in higher than company-compiled consensus of $8.50 billion. Net operating income increased 1.5% to $20.03 billion from $19.74 billion.
Pretax profit was $12.65 billion, 1.8% lower than the prior year’s $12.89 billion, but ahead of $12.61 billion consensus. HSBC noted the figure included a $4.8 billion gain following the disposal of its Canadian banking business, which was partially offset by a $1.1 billion impairment related to the sale of its business in Argentina.
HSBC said it has approved a first interim dividend of $0.10 per share, up year-on-year from $0.09. It will also pay a special dividend of $0.21 following the sale of its Canadian banking business. In addition, it announced a new share buyback of up to $3 billion, following the conclusion of the $2 billion buyback announced with its full-year results.
‘I’m pleased with our start to 2024. We completed the sale of our Canada business and agreed the sale of our Argentina business, both of which allow us to focus on markets with higher value international opportunities. Our good profit performance...in the first quarter has enabled us to continue the trend of rewarding our shareholders,’ said Chief Executive Noel Quinn.
HSBC said Quinn has informed the board of his intention to retire from the bank after nearly five years leading the company, and 37 years at the firm in total. Quinn said he plans to ‘pursue a portfolio career’ going forward.
Asia-focused insurer Prudential fell 4.6%, the worst large-cap performer.
First quarter new business profit, excluding economic impacts, rose 11% at constant exchange rates to $810 million, compared to $727 million a year prior. But, after allowing for economic impacts, new business profit was broadly unchanged at $726 million. At actual exchange rates, and factoring in the ‘economic impacts’, new business profit fell 2.3%.
First quarter annual premium equivalent sales increased 4.2% to $1.63 billion from $1.56 billion a year prior, despite strong comparatives in Hong Kong and headwinds in Vietnam. At constant currency, it grew 7.3%.
Chief Executive Anil Wadhwani said he was ‘pleased’ with the results.
‘Our continued focus on the quality of business written is reflected in new business profit (excluding economic impacts) growing more than APE sales. Our total APE sales have grown sequentially each quarter since [the third quarter of 2023], reflecting resilient consumer demand across Asia and demonstrating the strength of our multi-market and multi-channel distribution model,’ the CEO said.
There was no share buyback, but Wadhwani said Prudential would provide an update on its capital management plans by its half-year results.
Hargreaves Lansdown shot up 6.9%. It reported assets under administration spiked to a record high in its recently-ended third-quarter, and it said ‘momentum’ has continued this month.
The wealth management platform reported net new business of £1.6 billion for the three months ended March 31. It noted ‘good momentum into tax year end with increased gross inflows, net new clients and share dealing volumes’. Assets under administration rose 5.3% on-quarter to £149.7 billion, a record, from £142.2 billion.
Hargreaves Lansdown noted the net new business outcome was a ‘significant step up versus the first half of the year’.
It posted net client growth of 34,000 in the quarter, picking up speed from 23,000 a year prior. Share dealing volumes averaged 794,000 per month, rising on-year from 770,000.
Total revenue in the quarter was 6.2% higher year-on-year at £199.7 million from £188.1 million.
It added: ‘Looking ahead to the remainder of the financial year, we are pleased to see momentum continue into April as clients take advantage of the benefits of investing at the start of the tax year. We continue to make good progress against our priorities for the year - improving our client proposition, controlling our costs and increasing our execution pace so that we can capitalise on the significant growth opportunities that lie ahead and create value for all our stakeholders.’
Elsewhere in London, Card Factory rose 7.6%. Its revenue in the year to January 31 climbed 10% to £510.9 million from £463.4 million a year prior.
The greeting cards seller said pretax profit surged by 25% to £65.6 million from £52.4 million.
It returned to the dividend list, with a 4.5p payout. It had suspended its dividend following the outbreak of Covid-19.
essensys slumped 18% as the provider of software and cloud services for the flexible workspace industry posted weaker half-year earnings.
Revenue in the six months to January 31 fell 9.1% to £11.7 million from £12.9 million. Its pretax loss stretched to £2.8 million from £7.7 million.
Looking ahead, it warned: ‘Whilst recurring revenue continues to track in line with management expectations full year revenue will be below market expectations due to lower than expected non-recurring revenue as customer capex budget pressures persist.’
Brent oil was quoted at $87.29 a barrel early Tuesday, flat from $87.27 late Monday. Gold was quoted at $2,315.98 an ounce, down from $2,337.40.
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