Stocks in London climbed on hopes earnings from two of the biggest names in US business would spark further upward momentum in equities.
The FTSE 100 index closed up 33.57 points, 0.4%, at 7,666.31. The FTSE 250 ended up 38.34 points, 0.2%, at 19,349.50, and the AIM All-Share closed up 4.61 points, 0.6%, at 754.89.
The Cboe UK 100 ended up 0.5% at 766.38, the Cboe UK 250 closed up 0.3% at 16,807.59, and the Cboe Small Companies ended down 1.2% at 14,742.05.
The economic calendar for this week has the US Federal Reserve announcing its latest interest rate decision on Wednesday at 1900 GMT, followed by the Bank of England on Thursday at 1200 GMT.
Both central banks are expected to keep rates on hold, with the focus instead being on whether the Fed and the BoE give any clues about the trajectory of interest rates.
Before then, Microsoft and Google owner Alphabet will release earnings after US market close on Tuesday. They were up 0.1% and down 0.6% respectively in New York at the time of the London equities close.
‘Microsoft and Alphabet release numbers after the US market close tonight and investors will be hoping for some stellar results to help sustain positive momentum among equities. The S&P 500 and Nasdaq have been on a roll since early January and a successful showing from these two tech giants could easily keep the market rally going. However, positive results are not a given, and multiple stocks in the so-called Magnificent Seven group of mega-cap tech names have shown cracks in recent months,’ said AJ Bell analyst Russ Mould.
‘Microsoft is seen as an unstoppable beast and investors will be hoping for proof that AI investments are now translating into financial gains. The focus for Alphabet will be on the pace of growth in its cloud computing arm and how much advertising income it is generating from Google and YouTube. Alphabet’s cloud division disappointed last time round, so a repeat of this situation would go down like a lead balloon.’
Stocks in New York were higher at the London equities close, with the DJIA up 0.1%, the S&P 500 index marginally down, and the Nasdaq Composite down 0.4%.
Investors also had some mixed economic data to digest from the eurozone.
According to a flash preliminary estimate from Eurostat, the eurozone’s economy was stagnant on-quarter, but improved slightly annually.
Gross domestic product in the fourth quarter of 2023 was flat on-quarter, having fallen by 0.1% in the third quarter of the year.
Annually, eurozone GDP edged up by 0.1%. In the third quarter, GDP had been stagnant annually.
Germany continues to drive economic weakness in the eurozone, with recession looming in the country.
According to Destatis on Tuesday, the German economy contracted by 0.3% on a quarterly basis in October to December, on a price, seasonally and calendar adjusted basis. In the third quarter, GDP was entirely flat, with neither growth nor decline.
What’s more, the ifo Institute said it expects Germany’s economic output to shrink in the first quarter of 2024.
The Munich-based research institution said it expects GDP to shrink by 0.2% in the first quarter of 2024.
In European equities on Tuesday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up 0.2%.
The pound was quoted at $1.2665 at the equities close on Tuesday in London, slightly lower compared to $1.2675 at the equities close on Monday. The euro stood at $1.0839, up against $1.0802. Against the yen, the dollar was trading at JP¥147.80, higher compared to JP¥147.72.
In the FTSE 100, IMI rose 1.6%.
The company named Jamie Pike as its future chair. Pike will pick up the role at the start of 2025, ‘following a comprehensive selection process and as part of its orderly succession planning activities.’
Pike will take over from Robert Smith, who plans on seeking re-election at the 2024 annual general meeting to aid the transition. He will then step down on December 31.
Pike is currently chair of Spirax-Sarco Engineering, a role he will step down from in 2024 following nine years as a director.
Spirax-Sarco shares rose 0.5% on Tuesday.
IMI Chief Executive Officer Roy Twite said: ‘We are delighted that Jamie is joining the Board and taking on the role of Chair next year. He brings a wealth of listed board experience and a deep understanding of engineering. I am very much looking forward to working with him.’
Rum-maker Diageo gained 0.7%.
Sales in the six months ended December 31 fell 2.8% to $15.18 billion from $15.61 billion a year earlier.
This was driven by a decline in organic net sales in Latin America & Caribbean, where they contracted by 23% on a year before. Diageo said this was the result of strong year-earlier comparison, as well as ‘lower consumption and consumer downtrading due to macroeconomic pressures in the region’.
Pretax profit dropped 15% to $3.08 billion from $3.61 billion the year before.
Despite the worse results, Diageo raised its interim dividend by 5.0% to 40.50 US cents from 38.57 cents.
Elsewhere in the FTSE 100, housebuilders were a mixed bag following some rating changes.
Taylor Wimpey rose 1.5%, after Bank of America raised the stock to ’buy’.
Meanwhile, Barratt Developments and Persimmon lost 1.2% and rose 0.5%, respectively. BofA cut Barratt to ’underperform’ and Persimmon to ’neutral’.
In the FTSE 250, Carnival rose 3.0%, after it predicted a profit hit as it re-routes itineraries due to Red Sea disruption, though the cruise ship operator hailed ‘robust’ recent bookings.
Carnival said it expects a $0.07 to $0.08 hit to its adjusted earnings per share for its financial year ending November, the bulk of which hitting its second quarter.
Carnival said it will reroute itineraries for 12 ships across seven brands, which were scheduled to pass the Red Sea through May 2024.
However, it added: ‘The company has not seen an impact on booking trends due to the Red Sea situation and has no other Red Sea transits until November 2024.
Auction Technology jumped 20%.
The London-based online auction operator said that the year had started ’in line with expectations‘, with total revenue of $43.9 million for the three months ended December 31, up 11% from a year prior.
The company said that trading is in line with its 2024 outlook, which reflects an anticipated improvement in performance through the stabilisation of industrial and commercial asset prices alongside contributions from its value added services revenue.
Organic revenue is expected to grow between 5% and 8% from the £135.2 million earned in financial 2023. The company also expects to maintain a 46% margin for adjusted earnings before interest, tax, depreciation and amortisation.
Brent oil was quoted at $82.32 a barrel at the equities close in London on Tuesday, up from $82.01 late Monday. Gold was quoted at $2,033.15 an ounce, higher against $2,026.77.
In Wednesday’s UK corporate calendar, GSK posts its full-year results.
The economic calendar has consumer price inflation data out for Germany.
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