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Banks and commodity stocks higher as FTSE 100 rallies
A recovery for the FTSE 100 index has lifted spirits for London investors at the end of a turbulent week.
The improvement of 0.4% or 30.76 points to 7733.40 came after worries in the US regional banking sector triggered another session in the red for Wall Street on Thursday as the VIX index of volatility traded above 20 for the first time since March.
Tech giant Apple helped the mood after the closing bell, however, as it overcame supply chain disruption to beat expectations with a record March quarter performance for iPhone revenues.
Its resilience set the tone for a stronger session in Europe as heavyweights Adidas and British Airways owner IAG also pitched in with confidence-boosting updates.
A recovery for Brent Crude after losses nearing 9% earlier this week added to London’s momentum as BP shares rose 3% or 12.85p to 489.35p. Rio Tinto led a stronger mining sector with a gain of 71.5p to 4941.5p and there was also a much-needed boost for banking stocks as NatWest cheered 3.7p to 256.1p.
Others on the risers board included JD Sports Fashion, which improved a penny to 160.8p on the read-across from the consensus beating sales figures by sportswear giant Adidas.
The UK-focused FTSE 250 index climbed 66 points to 19,310.91 with risers including Aston Martin Lagonda after a gain of 2% or 5p to 222p.
Housebuilding declines at sharpest pace for almost three years
UK housebuilding fell sharply in April, but overall construction still increased, according to the S&P Global / CIPS UK Construction PMI.
Total construction was up for the third straight month, as the Purchasing Managers’ Index hit 51.1, with anything over 50 representing growth. But the growth was entirely driven by the commercial sector, as housebuilding PMI fell to 43.0, the lowest figure since the heights of the Covid-19 pandemic ground most building projects to a halt.
“The return to growth for UK construction output appears worryingly lopsided as residential work decreased for the fifth successive month,” Tim Moore, economics director at S&P Global Market Intelligence said. “Extended delays on new housing starts were reported again in April, due to a considerable headwind from elevated mortgage rates and weak demand.”
City Comment: Forget the GDP hit and enjoy the Coronation fun
Landmark royal events like tomorrow’s Coronation are, economically speaking, a cross between an ngland World Cup final and a train strike.
While they certainly set off a sugar rush of spending on bunting, buns and beer, they are also massively disruptive to output, just like a total shutdown of the rail system. In fact a lot worse, as the impact of a walkout on the trains or Tubes is considerably softened these days by the working-from-home revolution.
Read more here
Numis begins to see green shoots
Numis, the ‘mini-investment bank’ to be bought by Deutsche, says there are “emerging indications” that market activity will pick up over next six months, after its profits fell by 55% in the past half-year.
Revenue slid by 14%, which the City firm put down to “subdued” market activity. However, the company’s advisory arm performed much better, with revenue up 40%.
While performance in recent months has been disappointing, Numis expects a turnaround. After warning last month that there was “unlikely to be a meaningful change in market conditions”, the firm is now starting to see green shoots.
“We have started to see emerging indications that the second half may see relatively better conditions,” co-CEOs Alex Ham and Ross Mitchinson said.
FTSE 100 in recovery mode, Aston Martin shares up 3%
The FTSE 100 index is 0.6% or 48.76 points higher at 7751.40, with a broad range of stocks on the risers board.
Shares in British Airways owner IAG lifted 6.1p to 153.1p, with its upgraded guidance also boosting confidence in Rolls-Royce as the engines giant added 2.1p to 151.35p.
Banking stocks enjoyed a stronger session as Lloyds rose 0.8p to 46.1p and Barclays cheered 3.7p to 151.9p, while Anglo American and BP led a rebound for the commodities sector after their shares improved 49.5p to 2426.5p and 14.25p to 490.75p respectively.
The read-across from better-than-expected results by sportswear giant Adidas meant shares in JD Sports Fashion improved 2.4p to 162.25p.
The FTSE 250 index climbed 76.59 points to 19,321.50, with notable risers including Aston Martin Lagonda after a gain of 3% or 6.4p to 223.4p.
Pound nears one-year high
The pound is close to its highest level against the dollar in more than a year, as the US currency continues to weaken after the Federal Reserve signaled it would pause rate rises.
A pound now buys $1.2621, just slightly below the highs it reached in late May of last year. A pound buys €1.1438.
International sales help Bentley profits approach record highs
UK luxury car maker Bentley reported the second-best quarter in its 103-year history today, as strong sales abroad helped profit rise by 27% to €216 million.
Sales in the UK slipped by 2%, but Bentley – which made the state limousine that is likely to bring King Charles III around London over the Coronation weekend – made up for this with 39% growth in the Americas and 66% growth in the Middle East.
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Aquazzurra steps into Bond Street
Aquazzurra, the luxury shoe brand that has been worn by stars including Nicole Kidman, Rihanna and Dua Lipa, is stepping into Bond Street and joining a host of retailers opening new stores there in 2023.
The Florence-based company founded by Edgardo Osorio has agreed a 10-year lease for a 2,000 square feet store where it is set to trade over three floors at 26 New Bond Street. It will neighbour existing retailers Jimmy Choo and Balenciaga.
The deal comes at a busy time for 11-year-old Aquazzura, which in March launched its first bag collection. It runs a number of stores as well as being stocked at over 300 retailers in 58 countries and online.
Its new branch is set to open in June, and Anthony Selwyn who is co-head of prime global retail at Savills, acting on behalf of the landlord, a private Hong Kong investor, said: “This area of the street has seen significant recent activity, and is currently the most desirable location for luxury fashion apparel and accessory brands.”
Apple beats forecasts after strong iPhone sales
Apple’s second quarter results pleased Wall Street last night as the tech giant showed resilient trading in the face of supply chain pressures and slower consumer demand.
Revenues of $94.8 billion (£75.1 billion) for the three months to 1 April were down 3% on a year earlier , but better than expected after a record March quarter performance for iPhone sales.
In a sign of Apple’s confidence, it also announced an additional $90 billion (£71.3 billion) of share buybacks and is also raising its quarterly dividend for the 11th year in a row.
Shares were 2.5% higher in extended hours trading, having fallen earlier in the week.
Hargreaves Lansdown analyst Sophie Lund-Yates said: “Apple is one of the very few big tech companies that hasn’t announced sweeping job cuts, which is partly linked to the less bloated business model.
“The group’s impenetrable brand is also holding it in good stead, but the overarching theme of these numbers is that consumers are very much starting to pull back on buying bigger-ticket items.”
British Airways owner IAG lifts profit guidance as demand for leisure travel takes off
The owner of British Airways, IAG, has lifted its profit guidance for 2023 after the rebound in demand for leisure travel.
It said the summer peak season looked “encouraging” with “around 80%” of expected revenue for the second quarter already booked. Business travel is also coming back, it said, but at a slower pace.
The company, which also owns Iberia of Spain and Ireland’s Are Lingus, said it now expects annual profit to top the upper end of its previous guidance at €2.3 billion (£2 billion).
For the first quarter, it returned to an operating profit, of €9 million from a loss of €718 million in the same period a year ago.
Luis Gallego, IAG’s CEO said: “ We are seeing healthy forward bookings with leisure demand particularly strong while business travel continues to recover more slowly.
Lower fuel prices in the period also helped.
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