(Alliance News) - Calm returned to stock markets in London on Thursday, with the FTSE 100 reversing the losses seen on Wednesday, shaking off talk of the US central bank considering tapering of asset purchases.
"After yesterday's shenanigans European markets have rebounded quite strongly, setting aside yesterday's concerns over cryptocurrency volatility and the US central banks stance on inflation to close higher, and mark a welcome respite to the declines of the last couple of days," CMC Markets Chief Market Analyst Michael Hewson said.
The FTSE 100 index closed up 69.59 points, or 1.0%, at 7,019.79. The mid-cap FTSE 250 index ended up 157.47 points, or 0.7%, at 22,392.00. The AIM All-Share index gained 1.4% at 1,245.83.
The Cboe UK 100 index closed up 1.0% at 699.38. The Cboe 250 ended 0.7% higher at 20,140.02. The Cboe Small Companies gained 0.6% at 14,869.17.
In mainland Europe, the CAC 40 in Paris advanced 1.3%, while the DAX 30 in Frankfurt rose 1.7%.
IG's Senior Market Analyst Joshua Mahony said: "What a difference a day makes. Financial markets have gone from a sea of red to one of overwhelming optimism, with the Nasdaq and DAX leading the charge. That comes despite an unwelcome reminder from the FOMC that a tightening phase for monetary policy may not be too far away. With the latest FOMC minutes highlighting the potential need to discuss tapering, there is a fear that tightening talk will only ramp up once the recent inflation readings have been accounted for."
In London, National Grid gained 2.0% after the UK power line operator reported earnings growth in the 2021 financial year.
For the year ended March 31, revenue was GBP14.78 billion, up 1.7% year-on-year from GBP14.54 billion. Pretax profit was GBP2.08 billion, up 19% from GBP1.75 billion.
The London-based gas and electricity utility declared a final dividend of 32.16 pence per share, bringing the total dividend to 49.16p. That's up 1.2% from 48.57p last year, in line with the consumer price index with housing costs measure of inflation.
National Grid also signed a joint venture with Germany's RWE to develop offshore wind projects in northeast US. The two companies plan to bid in the upcoming New York Bight seabed lease auction, RWE said.
Experian advanced 4.8%, rebounding from Wednesday's 1.9% loss. The credit-checking firm posted revenue of USD5.37 billion for the year that ended March 31, up 7% at an actual rate and 4% organically, from USD5.18 billion the previous year.
Looking ahead, Experian is forecasting organic revenue growth in the range of 15% to 20% for the first quarter. It also was buoyant in its full-year guidance, predicting organic revenue growth between 7% and 9% and total revenue growth between 11% and 13%.
In the midcaps, Trainline plunged 23%. The UK government plans to create a new public railway operator called Great British Railways, to simplify a system that is "too complicated", Transport Secretary Grant Shapps said.
Great British Railways will own and manage rail infrastructure, issue contracts to private firms to run trains, set most fares and timetables, and sell tickets. It will absorb Network Rail in a bid to end what the UK Department for Transport branded a "blame-game system" between train and track operations when disruption occurs. GBR is not expected to be established until 2023.
Still, the move poses a direct threat to Trainline which operates an online platform for train tickets and railcards.
CMC's Hewson said: "The abolition of franchising looks set to mean fewer ticketing options and it is perhaps here that could be causing the collapse in the Trainline share price, with the government collecting fares and operators being paid a fee to run services, with the government set to create its own ticketing options and app."
easyJet gave back 2.1%. The budget airline said it is waiting to take advantage of pent-up demand for travel abroad as Covid-19 restrictions are eased, after trading continued to be hurt by the pandemic.
On Monday, travellers were able to finally leave the UK and go on holiday to a select number of locations.
Half-year revenue to March 31 fell by 90% from a year before to GBP240 million from GBP2.38 billion, sending the low-cost airline to a GBP645 million loss, widened from GBP353 million. In addition, passenger revenue fell by 91% to GBP170 million and ancillary revenue decreased by 87% to GBP70 million.
Passenger numbers dropped by 89% and capacity was cut by 85% in response. Despite the disappointing results, easyJet said first-half results were in line with expectations.
Cash burn was better than expected for the quarter at GBP38 million per week and the airline has GBP2.9 billion in total liquidity to last it through the ongoing uncertainty.
The budget carrier said it expects to fly just 15% of 2019 capacity in the third quarter to June 30, with capacity starting to be increased from June onwards as travel restrictions are eased. Up to 90% of its fleet could be operated over the peak summer period to match demand, easyJet stated.
At the other end of the FTSE 250, Future ended the best performer, up 9.4%, extending gains from Wednesday's 12% rise. The stock set a record high of 2,914.00p in early trade.
The magazine publisher on Wednesday said it delivered a robust first-half performance extending its track record of growth in revenue and profit.
Euromoney Institutional Investor gained 7.0%. The business information publisher and events organiser reported a fall in interim profit as the pandemic hit physical events, but it still declared a dividend for the half year.
Revenue for the half-year to March 31 fell 17% to GBP155.5 million from GBP186.3 million year-on-year, while the London-based firm's pretax profit dropped 53% to GBP17.5 million.
The company declared an interim dividend of 5.7p per share, versus none a year ago, reflecting its "strong balance sheet, cash generative nature of the business and confidence in the future."
Royal Mail added 2.8% with its annual performance "well above initial expectations", driven by a boom in online shopping.
Pretax profit for the financial year ending March 28 improved significantly to GBP726 million, up from GBP180 million the year before. Adjusted operating profit more than doubled to GBP702 million.
Revenue rose 17% year-on-year to GBP12.64 billion from GBP10.84 billion the year before, which the postal operator attributed to strong parcel growth at both Royal Mail and international arm GLS.
Royal Mail's financial performance has been given a significant boost by the pandemic, with customers turning to online shopping as high street stores were forced to shut. Parcels revenue was up 39%, partly offset by a letters revenue decline of 13%.
New York equity markets were higher at the London close. The DJIA was up 0.7%, with the S&P 500 index 1.0% higher and the Nasdaq Composite up 1.6%.
"US markets have started on a much more positive note after the losses of recent days after weekly jobless claims fell to 444,000, another post pandemic low. What was a little more concerning was a rise in continuing claims to 3.75 million, while the latest Philadelphia Fed survey slowed more than expected in May, falling back to 31.5, from 50.2," CMC's Hewson said.
US initial jobless claims continued to fall in May as job growth picked up and restrictions further ease, the latest figures from the Department of Labor showed on Thursday.
In the week ending May 15, the number of US workers filing new claims for unemployment benefits dropped by 34,000 to 444,000 claims from 478,000 the week before. The latest figure came in below market expectations, cited by FXStreet, for 450,000 claims and was also a new 14-month low.
Analysts at ING said: "This still hints at some ongoing stress, especially when we remember back to pre-pandemic norms when initial claims were typically in the 200,000 to 250,000 range. Reasons could include some companies re-start and hiring staff, but then find out that they perhaps don't need quite as many employees just yet given demand dynamics."
The pound was quoted at USD1.4163 at the local equities close on Thursday, up from USD1.4155 at the London equities close Wednesday - with the dollar giving back the gains it made after the release of the minutes from the latest US Federal Reserve meeting on Wednesday night.
The euro was priced at USD1.2210, lower from USD1.2216. Against the yen, the dollar was trading at JPY108.84, up from JPY108.68.
CMC's Hewson said: "After yesterday's rebound the US dollar has slipped back, as markets continue to parse yesterday's Fed minutes. Ultimately the minutes aren't that significant given that circumstances have changed since that meeting, which means for all the chatter about a discussion on a possible taper, such an outcome isn't imminent given April's disappointing payrolls report. Today's softer US dollar would appear to reflect that."
Some US Federal Reserve officials believe it may soon be time to consider tapering asset purchases meant to aid the US economy's recovery from the pandemic, according to meeting minutes released Tuesday.
In the minutes, the Fed noted the economy "remained far from the [FOMC's] maximum-employment and price-stability goals" and, as a result, "it would likely be some time until the economy had made [the] substantial further progress "needed to begin tapering those purchases."
The minutes continued: "A number of participants suggested that if the economy continued to make rapid progress toward the committee's goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases."
Brent oil was quoted at USD66.20 a barrel Thursday evening, up from USD66.06 late Wednesday. Gold was trading at USD1,878.30 an ounce, lower against USD1,883.00.
A busy international economics events calendar on Friday has a slew of flash PMI readings, with France at 0815 BST, Germany at 0830 BST, the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST. There is also UK retail sales data due at 0700 BST.
In the local corporate calendar, Investec will publish full-year results while Close Brothers will issue a trading statement.
By Paul McGowan; paulmcgowan@alliancenews.com;
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