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(Alliance News) -Â Next's share price surged on boosted profit guidance early Wednesday, giving a boost to London's recovery from a start-of-week sell-off, with a weaker pound also aiding the FTSE 100 index.
The large-cap stock measure surged 87.26 points, or 1.3%, to 6,968.39 early Wednesday. The index had dived 2.3% on Monday and recovered 0.5% on Tuesday.
The mid-cap FTSE 250 index jumped 320.98 points, or 1.5%, to 22,440.46 on Wednesday. The AIM All-Share index was up 1.0% at 1,208.05.
The Cboe UK 100 index was up 1.3% at 693.79. The Cboe 250 was up 1.5% at 2,0083.26, and the Cboe Small Companies up 0.3% at 14,728.55.
Stock markets were battered at the start of the week on concerns over surging coronavirus cases across the globe. Indonesia, Iran and France were suffering alarming surges in coronavirus cases on Tuesday, as governments raced to vaccinate populations in a bid to outpace the highly contagious Delta variant, first detected in India.
However, stock markets rebounded on Tuesday, and the recovery has extended into Wednesday morning.
"So it came to pass, with Monday's Covid-19, we're all doomed, meltdown being quickly replaced by a buy the dip frenzy yesterday," remarked Jeffery Halley at Oanda.
"Perhaps the biggest lesson of the past two days is that the global recovery trade will not be a perfectly synchronised one. There will be haves and have nots, with the North American and European region powerhouses having, and most of Asia and all the developing world have-not-ing."
In Asia on Wednesday, the Nikkei 225 index in Tokyo closed up 0.6%. In China, the Shanghai Composite closed up 0.7%, while the Hang Seng index in Hong Kong was down 0.2%. The S&P/ASX 200 in Sydney ended up 0.8%.
Pushing up London's FTSE 100 in early trade was Next, surging 9.2% as it boosted profit guidance and return to the dividend list.
Next declared a special payout of 110 pence. 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. It did not pay out a dividend for its last financial year, ended this past January.
The 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. It has increased its full-price sales guidance for the rest of the year to 6% from 3%.
In addition, Next bumped up its central guidance for full-year pretax profit by GBP30 million to GBP750 million, which is towards the top of its previous guidance. In financial 2021, pretax profit dropped 54% to GBP342.4 million from GBP748.5 million in financial 2020.
"Since our stores have reopened they have performed better than we expected, and we intend to repay any business rates relief we have received, or will receive, while our stores are open this year. This decision was taken after consulting major shareholders who, between them, account for around 30% of our shares in issue. Assuming that our stores remain open for the remainder of the financial year, we estimate the cost of this repayment will be GBP29 million," Next said.
The worst performer in the blue-chip index was Royal Mail, down 3.1% as it remained confident on its full-year prospects but anticipates "fluctuations" in volumes as lockdown restrictions ease.
For the three months to the end of June, revenue was up 13% on a year ago and 20% higher than two years ago.
"The domestic parcel market remains strong. The early signs are that domestic parcel volumes appear to be re-basing at a higher level than pre-Covid as consumers continue to shop online. While domestic parcel volumes decreased 7% year on year, they increased by more than a third, up 35%, compared to pre-COVID levels in 2019-20," the company noted.
Royal Mail held its full-year expectations.
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."
In the FTSE 250, Future shares surged 9.7%. The magazine publisher and new owner of Gocompare said it expects full-year profit to beat current market forecasts after a strong second half to date.
The Media division's performance has been led by "robust" digital advertising revenue and e-commerce product affiliate revenue growth, including Prime Day in June. The Magazines division performance is in line with expectations, it added.
As a result of "continued positive momentum", Future expects full-year profit to be materially ahead of current market forecasts.
Elsewhere in London, Bridgepoint shares surged 25% to 440 pence from its 350p IPO price.
A total of 85.7 million new shares were issued by the private equity firm and 139.7 million existing shares were sold by existing holders. This gives an offer size of GBP789 million and represents 27% of Bridgepoint's total 823 million shares. Additionally, there is an over-allotment option of 33.8 million existing shares.
At its current share price, Bridgepoint has a market valuation of GBP3.62 billion.
In mainland Europe, the CAC 40 in Paris was up 1.0% while the DAX 30 in Frankfurt was 0.3% higher early Wednesday.
In the currency space, the US dollar was on the front foot early Wednesday.
The euro traded at USD1.1756, soft on USD1.1764 late Tuesday. Against the yen, the dollar rose to JPY110.11 from JPY109.91.
Sterling continued the week's slide, quoted at USD1.3598 early Wednesday, down on USD1.3602 at the London equities close on Tuesday.
UK government borrowing eased in June, data on Wednesday showed, though the figure was still the second-highest for the month on record.
Public sector net borrowing was estimated to have been GBP22.8 billion in June. While this was the second-highest June borrowing since monthly records began in 1993, the Office for National Statistics said, it was GBP5.5 billion less than in June 2020, during the first wave of the coronavirus pandemic.
Gold was quoted at USD1,807.10 an ounce early Wednesday, flat on USD1,808.34 on Tuesday. Brent oil was trading at USD69.27 a barrel, firm on USD69.14 late Tuesday.
By Lucy Heming;Â lucyheming@alliancenews.com
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