Next Share News (NXT)

(Alliance News) - The European stocks rebound gathered steam on Wednesday, with lockdown reopening plays, as well as a guidance upgrade from retailer Next, helping the FTSE 100 to advance by more than 100 points.

"Yesterday's market rebound was welcome, but also raised questions as to whether it was a dead cat bounce. The fact markets have sustained positive momentum for a second day in a row is more encouraging," said Russ Mould, investment director at AJ Bell.

The FTSE 100 index was up 108.62 points, or 1.6%, at 6,989.75. The FTSE 250 was up 366.05 points, or 1.7%, at 22,485.53, and the AIM All-Share was up 1.3% at 1,211.76.

The Cboe UK 100 was up 1.6% at 695.91, the Cboe UK 250 was up 1.8% at 20,146.27, and the Cboe Small Companies up 0.9% at 14,814.84.

In European equities on Wednesday, the CAC 40 in Paris was up 1.3%, while the DAX 30 in Frankfurt was up 0.9%.

European markets were battered at the start of the week by concerns over rising coronavirus cases across the globe, driven by the more infectious Delta variant. While Tuesday saw a tepid rebound from Monday's sell-off, conviction behind the move higher appeared to be stronger on Wednesday.

Joshua Mahony, senior market analyst at IG, said reopening stocks are "finally finding the kind of love many had expected" following England's so-called 'freedom day' on Monday.

Shares in jet engine maker Rolls-Royce were up 6.3% at midday, while British Airways-parent International Consolidated Airlines was up 4.9% and Premier Inn hotel-owner Whitbread advanced 3.8%.

Leading the charge in the FTSE 100 though was Next, surging 8.2% after raising full-year profit guidance and resuming dividends with a special payout.

The clothing and homewares retailer boosted its pretax profit prediction for the financial year that will end in January 2022 by GBP30 million to GBP750 million, near the upper end of its previous guidance, to reflect higher-than-expected sales.

The Leicestershire, England-based retailer said full-price sales in the eleven weeks to July 17 were up 19% on two years ago, ahead of its guidance of 3% growth.

Adding to the good news behind the Wednesday update, Next also unveiled plans to resume dividend payments with a 110p special payout.

It plans to announce another special dividend alongside its Christmas trading statement in January next year, and return to ordinary dividends in the financial year to January 2023. Next did not pay a dividend for financial 2021.

Another blue-chip stock in the green was Compass, rising 4.6% after Jefferies raised the contract caterer to Buy from Hold.

All of this was helping to outweigh share price losses for Royal Mail, which dipped 2.3% as it anticipated "fluctuations" in parcel volumes as lockdown restrictions ease.

For the three months to the end of June, revenue was up 13% at GBP3.16 billion from GBP2.81 billion the same period a year prior and 20% higher than two years ago.

Chair Keith Williams said: "We continue to expect fluctuations in volumes as we emerge from Covid restrictions, which we will need to manage accordingly. Nonetheless we are encouraged by the revenue performance across Royal Mail and GLS in the first quarter."

Topping the mid-cap FTSE 250 index was Future, rallying 9.5% as it guided to full-year profit materially ahead of current market forecasts.

The Bath, England-based magazine and website publisher has continued to perform strongly in the second half of the 2021 financial year, which ends on September 30.

"As a result of the continued positive momentum, and despite the macro-economic uncertainties, the board expects full year profitability to be materially ahead of current market expectations," the firm said.

Looking to the US, earnings season will continue on Wednesday with earnings from soft drinks maker Coca-Cola Co and mobile phone network Verizon Communications.

Late Tuesday, Netflix reported growth in second quarter revenue but cautioned on membership growth in 2021.

Revenue at the video streaming firm for the three months to June 30 increased 19% year-on-year to USD7.34 billion, from USD6.15 billion. Operating income rose 36% to USD1.85 billion from USD1.36 billion.

Netflix said it finished the quarter with over 209 million paid memberships, slightly ahead of its forecast, and up from 193 million paid memberships the year prior. The company noted that Covid has created some "lumpiness" in its membership growth. It expects slower membership growth in 2021 compared to 2020.

Netflix shares closed down 0.2% but were trading 0.2% higher pre-market.

Stocks in New York were called higher, with the Dow Jones seen up 0.5%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.1%.

Sterling was quoted at USD1.3623 midday Wednesday, firm on USD1.3602 at the London equities close on Tuesday.

The euro traded at USD1.1773, firm on USD1.1764 late Tuesday. Against the yen, the dollar rose to JPY110.14 from JPY109.91.

Gold was quoted at USD1,802.36 an ounce midday Wednesday, down on USD1,808.34 on Tuesday. Brent oil was trading at USD70.15 a barrel, up on USD69.14 late Tuesday.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.