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(Alliance News) - It was a mixed day in London on Wednesday, with the FTSE 100 fizzling in afternoon trade as pharma giant GlaxoSmithKline took a dive.
The FTSE 100 index closed off 8.83 points or 0.1%, at 6,507.82, despite gaining as much as 0.9% in morning trading.
The FTSE 250 ended up 62.23 points, or 0.3%, at 20,752.44. The AIM All-Share closed up 9.99 points, or 0.8%, at 1,198.95.
The Cboe UK 100 ended down 0.2% at 646.49, the Cboe UK 250 closed up 0.2% at 18,286.10, and the Cboe Small Companies ended up 1.0% at 12,325.51.
In Paris, the CAC 40 ended marginally lower, while the DAX 30 in Frankfurt advanced 0.7%.
Glaxo lost 6.3%, the worst performer in the blue chip index, after it said adjusted earnings per share fell in 2020, and it expects further decline in the year ahead.
Revenue for 2020 rose 1.0% to GBP34.10 billion from GBP33.75 billion in 2019, with pretax profit growing 12% to GBP6.97 billion from GBP6.22 billion. Consensus had seen Glaxo posting revenue of GBP34.02 billion.
Adjusted earnings per share fell 6% to 115.9 pence, or a 4% decline at constant exchange rates. For 2021, Glaxo expects a "mid to high-single digit percent" decline in adjusted earnings per share at constant currencies.
SpreadEx analyst Connor Campbell noted this is higher than the 3% drop expected by analysts, explaining the drop in share price.
The firm expects healthcare systems and consumer trends will approach normality in the second half of this year, with turnover expected to show flat to low-single digit growth for the Pharmaceuticals and Vaccines businesses and low to mid-single digit growth for Consumer Healthcare.
The firm added it is on track for separation into new standalone Biopharma and Consumer Healthcare companies in 2022.
Separately, Glaxo said it will collaborate with German biopharmaceutical company CureVac to develop next generation mRNA vaccines for Covid-19, with the potential to address multiple emerging variants in one vaccine.
Helping to combat the GSK drop, and keeping the FTSE 100 flat, was London's oil majors rising on swelling oil prices.
Brent oil was quoted at USD58.64 a barrel at the London close, up from USD57.58 at the close Tuesday.
ThinkMarkets analyst Fawad Razaqzada said: "Following three weeks of consolidation, crude oil prices have surged further higher this week. At the time of writing, they were holding near their weekly highs amid expectations of rebounding demand while ongoing OPEC+ supply cuts are also helping to keep the market not too far from being balanced.
"But the rally is unlikely to last too long, in my view. Normal travel is unlikely to start for some time yet, which means the potential upside could be limited from here as the rebound in demand is going to be slow. Also, as prices rise and demand returns, the OPEC will be easing its supply cuts, while shale oil is likely to ramp up production at the same time. Therefore, I can’t see oil prices climbing significantly higher from these levels, although for the time being the path of least resistance remains to the upside."
IG Chief Market Analyst Chris Beauchamp added: "Both BP and Shell have staged a rally today, as the market digests the former's earnings and prepares for the latter. Shell is likely to say broadly the same things as its FTSE 100 peer, namely that it is putting an annus horribilis firmly behind it, and with demand still rising and oil prices on the up it looks like oil majors around the globe have good reason to be cautiously confident."
On Tuesday, BP reported a swing to an annual loss following a tumultuous year in which the global oil and gas industry faced severe challenges.
For 2020, BP swung to a replacement cost loss of USD18.10 billion from an RC profit of USD3.52 billion in 2019 on revenue of USD183.50 billion, down 35% from USD282.62 billion.
For Shell tomorrow, company-compiled consensus sees adjusted earnings at USD5.05 billion for 2020, down 69% on the USD16.46 billion reported for 2019. Adjusted earnings per share are also seen falling 69%, to USD0.64 from USD2.04 the year before.
Analysts consensus has the company reporting lower cash flow from operating activities for 2020. This is expected to be down at USD34.24 billion from USD42.18 billion a year prior.
Shell 'A' shares advanced 0.9% Wednesday, while the 'B' shares rose 1.3%. BP gained 1.3%.
Also in the green, Vodafone ended the FTSE 100's best performer, up 5.9%, after the telecommunications firm said it returned to organic service revenue growth in its third-quarter, helped by a much stronger showing in Germany.
Total revenue in the quarter ended December 31 fell 4.7% to EUR11.20 billion from EUR11.75 billion a year earlier. The organic figure - which strips out the effects M&A activity and currency movements - was 0.4%.
Vodafone generates the bulk of its cash from service revenue, which includes monthly access charges, airtime usage and roaming. In the third quarter ended December, service revenue rose 0.4% on an organic basis. The organic service revenue figure is one that is closely eyed by analysts.
In Germany alone, service revenue rose 1.0% year-on-year on both an organic and reported basis to EUR2.91 billion.
Aviva ended up 3.7% after Morgan Stanley upgraded the blue-chip insurer to Overweight from Equal Weight.
Taylor Wimpey and Persimmon gained 0.9% and 1.5% respectively after Barclays upgraded both UK housebuilders to Overweight from Equal Weight.
Schroders added 1.0% after UBS upped the wealth manager to Buy from Neutral.
The pound was quoted at USD1.3651 at the London equities close, up from USD1.3644 at the close Tuesday.
In the US, Wall Street was muted at the London equities close. The DJIA was 0.2% lower, while both the S&P 500 index and the Nasdaq Composite were up 0.1%.
IG's Beauchamp believes the afternoon data in the US has left investors buying into a 'good news is bad news' thesis.
He said: "The February rally in equities has been deflated somewhat this afternoon, at least in the US, where the bounce from Friday's lows has encountered its first real challenge after breezing higher for 48 hours. Undoubtedly some of the blame will get pinned on today's ADP and ISM numbers, both of which came in stronger than anticipated, and in the case of the payroll report much stronger, with the argument being better data will strengthen the hands of the fiscal hawks on Capitol Hill and give them more firepower in their attempts to water down any Biden stimulus package."
The ISM Services PMI rose to 58.7 in January from 57.7 in December, while US private sector employment increased by 174,000 jobs in January, recovering from a downwardly revised 78,000 jobs in December. The latest figure beat market forecasts, cited by FXStreet, for an increase of 49,000 jobs.
The euro stood at USD1.2022 at the European equities close, down from USD1.2029 late Tuesday. Against the yen, the dollar was trading at JPY105.05, unchanged from late Tuesday.
Gold was quoted at USD1,835.90 an ounce at the London equities close, lower against USD1,837.20 late Tuesday.
In the economic calendar on Thursday there is a UK Markit construction PMI reading at 0930 GMT, followed by eurozone retail sales at 1000 GMT and US initial jobless claims at 1330 GMT.
The focus, however, will remain on the the Bank of England's latest monetary policy decision, alongside the release of the Monetary Policy Committee meeting minutes and the quarterly Monetary Policy Report, at midday on Thursday. A press conference will follow at 1300 GMT.
Analysts largely expect the central bank to stand pat on policy this week despite a recent surge in coronavirus cases, with focus around the debate over negative interest rates.
The Bank Rate, the UK's key interest rate, currently lies at a record low 0.10%, cut to that level back in March last year as the pandemic first hit.
A busy UK corporate calendar on Thursday is headlined by oil major Shell's annual results, alongside annual results from consumer goods giant Unilever, half-year results from housebuilder Barratt Developments and a third quarter update from BT Group.
By Paul McGowan; paulmcgowan@alliancenews.com
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