LONDON MARKET CLOSE: FTSE 100 flirts with 7,000 mark amid retail boost

(Alliance News) - Equities in Europe had a more emphatic session on Wednesday, though the FTSE 100's rally was not strong enough to take the blue-chip index back above the 7,000 point mark, despite a strong update from Next and decent gains for oil majors.

Earnings season continued in New York, meanwhile, as Coca-Cola reported stronger earnings, while Netflix shares dropped on a tricky outlook for the streaming firm.

The FTSE 100 index closed up 117.15 points, or 1.7%, at 6,998.28. The mid-cap FTSE 250 index climbed 422.49 points, or 1.9%, at 22,541.97. The AIM All-Share index closed 16.79 points higher, or 1.4%, at 1,212.51.

The Cboe UK 100 index closed up 1.8% at 697.48. The Cboe 250 rose 2.4% to 20,259.28, and the Cboe Small Companies rose 1.6% to 14,925.55.

The CAC 40 in Paris rose 1.9%, while the DAX 30 in Frankfurt climbed 1.4%.

European equities strained to close in the green on Tuesday, having surrendered some chunkier earlier gains and on Monday, stocks were battered by virus worries.

"Less than two days after Monday's sharp falls, markets have undergone a complete and utter mood change. The concern that rising Delta infections will slow down the economic rebound, appears to have been replaced by optimism that today's better than expected company reports speak to a consumer that is down but by no means out," CMC Markets analyst Michael Hewson commented.

Retailer Next topped London's blue-chip index on Wednesday, gaining 7.5%. Next raised profit guidance and resumed 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. This is to reflect higher-than-expected sales. It said full-price sales in the 11 weeks to July 17 were up 19% on two years earlier, 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.

Other retailers rose in tandem. JD Sports climbed 3.9% and FTSE 250 constituent Marks & Spencer jumped 5.4%. AIM-listed online fashion firms ASOS and boohoo rose 4.4% and 3.4%, respectively.

Cineworld rose 15%, the best performing mid-cap firm, as the "appetite for higher risk stocks" returned, AJ Bell analyst Russ Mould commented.

Brent oil fetched USD71.86 a barrel at the time of the London Stock Market close on Wednesday, up considerably from USD69.14 at the same time on Tuesday.

OANDA analyst Edward Moya commented: "Crude prices are soaring as risk appetite returns and energy traders believed a 15% pullback over the past two weeks was excessive given how tight market conditions remain."

BP shares rose 3.4%, while Royal Dutch Shell's A and B both stock climbed 3.0%. Italian peer Eni also joined the rally, adding 2.6% in Milan.

Elsewhere in London, Bridgepoint Group shares surged on its first day of trading. The private equity firm priced its float at 350 pence per share. Its stock ended at 448.87p, up 28% from its IPO price.

Gold was quoted at USD1,805.13 an ounce late Wednesday, down slightly from USD1,808.34 on Tuesday.

Sterling was quoted at USD1.3684 late Wednesday, rising from USD1.3602 on Tuesday.

CMC's Hewson commented: "The pound appears to be finding a little bit of a base after several days of decline, with the negative noises surrounding the NI protocol starting to become background noise."

The EU has warned the UK it will not renegotiate the deal on Northern Ireland's post-Brexit trading arrangements after David Frost demanded significant changes to the terms.

Brexit minister David Frost said "we cannot go on as we are" but held back – for now – from taking the dramatic step of effectively suspending parts of the deal, even though he claimed the UK would be justified to do so.

UK Prime Minister Boris Johnson also hit out at the EU's "inflexible" approach.

The euro traded at USD1.1800 at the European equities close Wednesday, up from USD1.1764 late Tuesday. Against the yen, the dollar rose to JPY110.25, from JPY109.91.

In New York, stocks added to their strong Tuesday. The Dow Jones Industrial Average rose 0.9%. The S&P 500 and the Nasdaq Composite both climbed 0.6%.

"US stocks are rising after a wrath of earnings showed mostly better-than-expected results and guidance, except for Netflix," OANDA's Moya added.

Netflix shares were 3.8% lower as it cautioned subscriber growth will slow in 2021.

Meanwhile, soft drinks firm Coca-Cola added 1.9%. The Atlanta-based firm reported second quarter net income of USD2.62 billion, up 65% from USD1.76 billion a year prior. Revenue jumped 42% annually to USD10.13 billion from USD7.15 billion.

On Thursday, chipmaker Intel and social networking firm Twitter report second quarter results.

Thursday's local corporate calendar, meanwhile, as a first quarter update from energy company SSE, third quarter figures from soft drinks maker Britvic and half year output results from gold miner Centamin.

The economic calendar has the latest European Central Bank interest rate decision at 1245 BST, followed by a press conference with President Christine Lagarde at 1330 BST. The latest US weekly jobless claims figures are also at 1330 BST.

By Eric Cunha; ericcunha@alliancenews.com

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