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LONDON (Alliance News) - UK equities bounced early Thursday, supported by a rebound in oil prices and a cautious tone on Wednesday in the minutes of US Federal Reserve's June meeting.
In early UK company news, Associated British Foods led the gainers list in the FTSE 100, up 5.6% after it reported growth in revenue in the first 40 weeks of its financial year and said its full-year outlook has improved due to sterling weakness after the UK's European Union referendum.
AB Foods, which owns discount fashion retailer Primark, as well as British Sugar, along with agriculture and consumer goods businesses, said group revenue in the 40 weeks ended June 18 grew by 1% year-on-year.
"Following the result of the EU referendum, sterling has weakened further and at these rates we expect a bigger translation benefit in the final quarter with no material transactional effect. As a result, our outlook for this financial year has improved, and we no longer expect a decline in adjusted earnings per share for the group for the full year," AB Foods said in a statement.
The FTSE 100 index was up 1.3%, or 84.02 points , at 6,547.61. The FTSE 250 was up 1.2% at 15,857.63 and the AIM All-Share up 0.3% at 698.81.
In Europe, the CAC 40 index in Paris was up 1.1% and the DAX 30 in Frankfurt was up 0.8%.
The higher open was seen after the US central bank released the minutes of its June 14-15 meeting late Wednesday. As the meeting took place before the UK's vote to leave the European Union, the market was interested to see the Fed's view on the economy given the weak May nonfarm payrolls number.
The minutes showed the Federal Open Market Committee wanted to wait for additional data before considering another rate rise and were cautious ahead of the UK's referendum.
"The Brexit vote alone is likely to deter them from raising rates until at least the end of the year as they wait to see what the knock on effects will be, both from an economic and financial markets perspective," commented Craig Erlam, senior analyst at Oanada.
European stock indices also benefited from a rebound in oil prices, which rose after the American Petroleum Institute weekly crude oil stocks shrank. The API said Wednesday the stock of oil fell by 6.7 million barrels in the week to July 1, compared to a 3.9 million barrel fall in the week before.
Just after the London stock market open Thursday, Brent oil trades at USD49.00 a barrel compared to USD47.61 at the equities market close on Wednesday.
In Asia, the Nikkei 225 in Tokyo closed down 0.7%, the Shanghai Composite ended flat, and the Hang Seng in Hong Kong continues up 1.0%.
In other UK corporate news, Marks & Spencer Group traded down 1.8%, amongst the biggest fallers in the blue-chip index. The food, clothing and homeware retailer said group sales in the 13 weeks ended July 2 grew by 1.3% on the same period the year before, as 4.0% growth in the food division offset an 8.3% decline in the clothing & home division.
M&S said its new Simply Food stores continued to perform ahead of its expectations, while clothing & home was hit by a "weak market". Clothing & home sales also suffered from the retailer's decision to run fewer price promotions, while lowering everyday prices.
Chief Executive Steve Rowe added: "While it is too early to quantify the implications of Brexit, we are confident that our strategic priorities and the actions we are taking remain the right ones to deliver results for our customers and our business."
In the FTSE 250, Sports Direct International traded up 12%. The sporting goods retailer said profit was over 15% higher in the last financial year but warned the volatility in the retail sector and the uncertainty caused by the EU referendum will "drag on consumer confidence" over the short to medium term.
Sports Direct reported pretax profit of GBP361.8 million in the financial year to April 24, a significant increase from the GBP313.5 million profit booked a year earlier as revenue experienced a lift to GBP2.90 billion from GBP2.83 billion.
No dividend has been proposed, with Sports Direct stating it will continue to preserve financial flexibility, facilitating future investments and other growth opportunities. The dividend remains under review.
"Trading since the start of May and leading up to the EU referendum was broadly in line with management expectations albeit with the continued volatility seen in the wider retail sector. Since the EU vote we expect the current political uncertainty, and potential weakness in the UK's short to medium term economic outlook, is likely to act as a continuing drag on consumer confidence," said the company.
NCC Group said its pretax profit for the year to the end of May was pulled lower by one-off charges, but underlying trading proved very strong and the information assurance group hiked its dividend payout.
The FTSE 250 company provides software escrow and verification, cyber security consulting and managed services. It said pretax profit for the year to May 31 was GBP9.4 million, down from GBP21.4 million a year earlier as the group booked an GBP18.9 million one-off charge after shutting down its Domain Services business.
Stripping out the one-off charge, adjusted earnings before interest, taxation, depreciation and amortisation for the year was GBP43.7 million, up 48% from GBP29.5 million a year prior.
NCC declared a final dividend of 3.15 pence, taking its total payout up 17% year-on-year to 4.65p. The stock traded up 11%.
Still ahead in the economic calendar, UK industrial and manufacturing production data at 0930 BST. The focus will then be on the accounts of the European Central Bank's meeting on June 2 at 1230 BST.
US ADP employment change is at 1315 BST, as is initial and continuing jobless claims. The National Institute of Economic and Social Research's UK GDP estimate is at 1500 BST and the US Energy Information Administration's crude oil stocks are at 1600 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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