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(Alliance News) - Reckitt Benckiser and Whitbread helped to boost the FTSE 100 on Tuesday amid a busy week for earnings, with focus now turning once again to US tech for updates from Microsoft and Google parent Alphabet.
The FTSE 100 index closed up 54.80 points, or 0.8%, at 7,277.62. The FTSE 250 ended up 219.49 points, or 1.0%, at 23,161.27, and the AIM All-Share closed up 4.31 points, or 0.4%, at 1,233.32.
The Cboe UK 100 ended up 0.7% at 721.33, the Cboe UK 250 closed up 0.8% at 20,836.88, and the Cboe Small Companies ended flat at 15,588.71.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.8%, while the DAX 40 in Frankfurt surged 1.0%.
"Earnings season is continuing to lift stock markets this week, giving investors the reason they've craved to jump back in and push equities back to record highs," said Craig Erlam, senior market analyst at Oanda.
Well-received earnings were helping to buoy the FTSE 100 on Tuesday, with Reckitt Benckiser rallying 5.8% after lifting annual revenue guidance after stronger-than-expected third quarter trading.
The FTSE 100 firm posted revenue for the third quarter ended September 30 of GBP3.28 billion, down 6.8% from a year before on a reported basis but up 3.3% like-for-like. Despite a mixed top-line performance, the consumer goods company said it had seen an encouraging start to the cold and flu season, with two-year stacked like-for-like net revenue growth up over 18%.
Reckitt said it now expects like-for-like net revenue growth for the year in the range of 1% to 3%. Margin guidance remains unchanged, the company said, while confidence in the medium-term outlook continues.
Whitbread rose 4.4% after saying its Premier Inn hotel chain's recovery in the first half was ahead of expectations as lockdown restrictions eased in the UK and Germany.
For the six months to August 26, revenue more than doubled to GBP661.6 million from GBP250.8 million last year. Pretax loss was nearly eliminated, narrowing to GBP19.3 million from GBP724.7 million, benefiting from GBP141.6 million of Covid-19 related government support schemes in the UK and Germany.
The hotel and restaurant operator said its sales recovery is ahead of expectations, and its UK like-for-like revenue per available room run rate has "potential" to make a full recovery next year.
Outside of earnings, BT topped the FTSE 100, rising 6.0%, after Sky News reported that the telecommunications firm has bolstered its defences against a possible takeover bid from French peer Altice. BT has appointed advisory firm Robey Warshaw to work alongside Goldman Sachs.
At the bottom of the blue-chip index was Entain, falling 6.3% after suitor DraftKings decided against making a firm offer to acquire the FTSE 100 betting company.
Elsewhere in London, THG shares plummeted 21% to 242.00 pence. The stock is now worth less than half last year's IPO price of 500p. This was despite the beauty products retailer and e-commerce platform provider delivering a strong quarterly performance and outlining steps to improve its corporate governance.
However, analysts flagged margin headwinds.
THG, which trades as The Hut Group, reported revenue of GBP507.8 million for the three months to September 30, up 34% from GBP378.1 million last year and up 86% on 2019. Looking ahead, THG said it remains on target to trade "comfortably" ahead of expectations set out at the time of its September 2020 initial public offering.
Irish broker Davy said: "Today's weakness in the equity partly reflects downward pressure on FY21 Ebitda consensus estimates relating to margin headwinds."
IG Design Group dived 37% after the consumer gift packaging guided to annual earnings "significantly below current market expectations" due to supply challenges.
In addition to logistical disruption within its supply chain, IG Design said it is experiencing worsening cost headwinds, with sea freight costs up significantly across all regions, alongside raw material and labour inflation, as well as supply availability issues. Due to disruption and cost increases, operating margins in the first half have been harmed, and it expects supply challenges to continue into the second half.
Focus in the US continues to lie on tech giants, with earnings from software firm Microsoft and Google parent Alphabet after the New York market close on Tuesday.
Shares in Facebook were down 2.4% after the social media giant reported solid quarterly growth on Monday in a set of results overshadowed by whistleblower allegations that the firm "unquestionably" fuels hate.
Total revenue for the three months to the end of September jumped 35% year-on-year to USD29.01 billion, from USD21.47 billion. This resulted in a 17% uplift to net income, rising to USD9.19 billion from USD7.85 billion.
Facebook's results came just hours after whistleblower Frances Haugen told UK lawmakers that posting content featuring anger and hate "is the easiest way to grow" on the social media platform as she urged better regulation.
Stocks in New York were in the green at the London equities close, with the Dow Jones up 0.4%, the S&P 500 index up 0.6%, and the tech-heavy Nasdaq Composite up 0.7%.
The economic calendar on Wednesday has German Gfk consumer confidence at 0700 BST and an interest rate decision from the Bank of Canada at 1500 BST. In the UK, focus will lie on the UK government budget, delivered by Chancellor of the Exchequer Rishi Sunak, at 1230 BST.
The pound was quoted at USD1.3774 on the eve of the budget, flat compared to USD1.3772 at the close on Monday.
UK economic growth and government finances have proved better-than-expected, but generous handouts from Wednesday's budget are unlikely in the aftermath of unaffordable pandemic-driven spending.
Back in March, the Office for Budget Responsibility forecast gross domestic product growth of 4% in 2021, and pointed to the economy returning to pre-pandemic levels in the second quarter of 2022. While GDP growth for August disappointed, data last week showed, at just 0.4% month-on-month, economic output now stands just 0.8% below pre-virus levels.
As such, the OBR is expected to deliver a raft of economic upgrades as Britain recovers faster than expected from the Covid-19 crisis.
The euro stood at USD1.1587 at the European equities close Tuesday, down from USD1.1612 at the same time on Monday. Against the yen, the dollar rose to JPY114.25 compared to JPY113.68 late Monday.
Brent oil was quoted at USD86.37 a barrel on Tuesday, pulling back from USD86.57 late Monday. Gold, considered a safe haven asset, was quoted at USD1,788.24 an ounce at the London equities close, tumbling from USD1,807.93 at the close on Monday amid Tuesday's risk-on trade.
The UK corporate calendar on Wednesday has production results from precious metals miner Fresnillo and third quarter results from pharmaceutical firm GlaxoSmithKline.
By Lucy Heming; lucyheming@alliancenews.com
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