London open: Stocks dip as investors wait on Fed, more US tech earnings

(Sharecast News) - Stocks were trading slightly lower in early trading despite better-than-expected results out of BP and HSBC.
Possibly restraining risk appetite, investors were waiting on the US Federal Reserve's latest policy guidance with the central bank's two-day policy meeting set to get underway later on Tuesday.

"In spite of the strong finish for US markets yesterday and a subdued Asia session, today's European open looks set to be another subdued one as the latest Federal Reserve meeting gets under way, with little expectation of any distinct change of tone from what we saw in March, with the US dollar expected to come under further pressure in the short term," Michael Hewson, chief market analyst at CMC Markets UK was telling clients ahead of the opening bell in London.

As of 0908 BST, London's top-flight index was off by 0.06% or 3.65 points at 6,959.95, while the second-tier was drifting down 0.04% or 2.36 points to 6,960.76.

Also likely dampening sentiment, US carmaker Tesla's shares ended the after-hours session in New York down by 2.49% after the release of a first quarter earnings report that was again boosted by exceptionals, including the sale of $780m of regulatory credits and $101m of Bitcoin.

On the economic side of things, the year-to-date rate of growth in Chinese industrial profits slowed from 179% in February versus a year ago, to 92.3% in March.

Nevertheless, Freya Beamish at Pantheon Macroeconomics said the slowdown in the in the annual rate was best ignored due to "wild" base effects. Indeed, if anything there was "a sturdy pick up" in March month-on-month, she estimated.

"The main question mark is over the extent to which China will benefit from U.S. stimulus, as without that, the manufacturing sector should be slowing."

Also overnight rate-setters at the Bank of Japan bumped up their 2021 GDP growth forecast for the country from 3.9% to 4.0%.

Stateside, the main risk event of the session will be the US Treasury's auction of seven-year debt, with Microsoft set to follow with its quarterly results after the close of trading.

On home shores, the Confederation of British Industry will release the results of its Distributive Trades survey for April at 1100 BST.

BP to buy back shares, HSBC beats

British energy company BP on Tuesday reported better-than-expected first quarter profits on the back of higher oil prices as it hit its debt reduction target early and said it would resume share buybacks in the second quarter to the tune of $500m. BP's first-quarter underlying replacement cost profit, the company's measure of net profit, came in at $2.6bn compared with a $115m in the final quarter of 2020 and $791m a year earlier. Analysts had expected a first-quarter profit of $1.4bn.

HSBC saw first quarter profits more than double versus the year ago period, boosted by a $400m reversal in its credit losses, profits across all major divisions, and with its European and US operations back in the black. For the three months to 31 March, the lender posted adjusted pre-tax profits of $6.4bn. That compared positively to the $4.3bn anticipated by the analyst consensus.

IWG said occupancy at its serviced offices "stabilised" and then "improved modestly" towards the end of the first quarter. Yet over the three months to 31 March, open centre revenues were down 16.1% to £523.1m and pre-2020 sales fell 20.1% to £496.1m at constant currencies, with the firm pointing out that the year ago quarter had seen the strongest start to a year ever. The reverse was true of the latest three-month stretch, which IWG described as its "most challenging" ever. However, IWG predicted that the first quarter marked an inflection point and that the "positive momentum" would continue throughout the next quarter.

Software firm Aveva reported double-digit revenue growth during for second half of its financial year. The company said that its strong showing on the topline over the past six months had resulted in full-year revenues being flat year-on-year, on a standalone organic constant currency basis. That overall performance reflected disruptions related to the Covid-19 pandemic. The FTSE 100-listed group also noted that it had "responded flexibly" to the challenges posed by Covid-19, growing combined pro forma revenue for the enlarged group by "a low single-digit percentage" on an organic constant currency basis, while achieving strong growth in subscription revenues and increasing operating margins.

Halma acquired North Carolina-based PeriGen, a provider of artificial intelligence software with an automated early warning platform during labour. The FTSE 100 engineer said the cash consideration for PeriGen was $58m (£42m) on a debt free basis. The transaction was to be funded from Halma's existing facilities. It said PeriGen's unaudited revenue for the year ended 31 March was about $20m, with return on sales slightly above Halma's target range of between 18% and 22%.

Market Movers

FTSE 100 (UKX) 6,962.64 -0.01%
FTSE 250 (MCX) 22,509.77 -0.30%
techMARK (TASX) 4,365.22 -0.24%

FTSE 100 - Risers

BP (BP.) 302.95p 2.16%
HSBC Holdings (HSBA) 428.55p 1.37%
Pershing Square Holdings Ltd NPV (PSH) 2,735.00p 1.30%
AstraZeneca (AZN) 7,624.00p 1.25%
Auto Trader Group (AUTO) 578.20p 1.15%
SSE (SSE) 1,487.00p 0.68%
Rightmove (RMV) 623.20p 0.61%
Diageo (DGE) 3,235.00p 0.61%
Ocado Group (OCDO) 2,207.00p 0.55%
Scottish Mortgage Inv Trust (SMT) 1,269.50p 0.51%

FTSE 100 - Fallers

Aveva Group (AVV) 3,690.00p -5.55%
Rolls-Royce Holdings (RR.) 104.52p -3.06%
Whitbread (WTB) 3,310.00p -2.96%
Bunzl (BNZL) 2,396.00p -2.12%
Next (NXT) 7,922.00p -2.08%
Compass Group (CPG) 1,574.50p -1.47%
Land Securities Group (LAND) 715.00p -1.41%
Evraz (EVR) 662.40p -1.25%
Aviva (AV.) 395.10p -1.25%
WPP (WPP) 956.00p -1.20%

FTSE 250 - Risers

TUI AG Reg Shs (DI) (TUI) 429.40p 3.47%
Babcock International Group (BAB) 305.90p 2.72%
Serco Group (SRP) 145.20p 2.69%
AO World (AO.) 293.60p 1.87%
IMI (IMI) 1,578.00p 1.68%
PZ Cussons (PZC) 272.50p 1.49%
BlackRock World Mining Trust (BRWM) 641.00p 1.26%
Sabre Insurance Group (SBRE) 263.00p 1.15%
Restaurant Group (RTN) 125.40p 1.13%
Virgin Money UK (VMUK) 195.00p 1.06%

FTSE 250 - Fallers

Avon Rubber (AVON) 3,400.00p -3.57%
Ascential (ASCL) 346.00p -2.37%
Greggs (GRG) 2,296.00p -2.26%
Shaftesbury (SHB) 622.00p -2.20%
Redde Northgate (REDD) 353.00p -1.94%
Hammerson (HMSO) 39.01p -1.94%
Chemring Group (CHG) 274.00p -1.79%
Meggitt (MGGT) 476.60p -1.73%
Frasers Group (FRAS) 504.50p -1.66%
Centrica (CNA) 54.16p -1.63%