FTSE 100 seen lower after Wall Street sell-off

Concerns over the deteriorating economic outlook weighed on markets yesterday as the S&P 500 closed 1.5% lower and the tech-focused Nasdaq lost 2% during its worst session for a month.

Most of the losses came after London’s closing bell, meaning that CMC Markets expects the FTSE 100 index to extend yesterday’s 0.3% decline by 30 points to 7861 this morning.

Commodity-focused stocks have been the target of recent selling in London and elsewhere amid expectations that the continued rise in global interest rates will slow demand.

Oil prices fell sharply yesterday, although trading on futures markets steadied today to leave Brent crude at $81.24 a barrel.

Financial stocks also had a difficult session after Spanish bank Santander and UBS in Switzerland both set aside larger than expected provisions in their Q1 numbers.

GSK says no more Covid revenues as first quarter sales slide

GSK has warned it expects no further revenues from its coronavirus-related treatments after it reported a drop in first-quarter sales.

Turnover for the first three months of 2023 fell 8% to just under £7 billion as COVID-19 solutions sales fell from £1.3 billion last year to £132 million in 2023.

The firm said in an update: “Based on known binding agreements with governments, GSK does not anticipate further significant COVID-19 pandemic-related sales or operating profit in 2023.

“Consequently, the Company now expects full-year 2023 turnover growth to be impacted by approximately 9%, with Adjusted Operating profit growth being reduced between 5% to 6% versus the prior year.”

New home completions tumble at Persimmon, but encouraging signs from recent trading

First quarter home sale completions tumbled 42% at Persimmon, but the builder today showed some green shoots have appeared in the market with visitor numbers to sites improving.

Persimmon, one of the UK’s largest housebuilders, completed sales on 1,136 homes in the three months to March 31, down from 1,950 a year earlier.

The value of its forward sales order book also dropped, down to £1.7 billion from £2.4 billion.

Chief executive Dean Finch said the performance was as expected “and reflects the challenging trading conditions” in the last few months of 2022.

The FTSE 100 company is among firms hit by the UK housing market slowing in recent months, with consumer finances hit from the cost of living crisis and high mortgage rates hurting demand.

But Finch said: “Trading over recent weeks has offered some signs of encouragement with visitor numbers up, cancellation levels normalising and sales rates continuing the steady improvement evident since the start of the year.”

The update comes after the firm last month said total home sales completed increased to 14,868 last year from 14,551. It cautioned that could tumble to 8,000 to 9,000 in 2023 if the current selling rates continue.

Finch has now said if sales rates continue at the levels seen year to date, Persimmon would expect full year volumes to be toward the top end of the completions guidance.

Microsoft and Alphabet boosted by cloud progress

Leading Wall Street indices closed sharply lower last night, although there was cheer after the closing bell when Google parent Alphabet and Microsoft beat results expectations.

Microsoft shares jumped 8% in after-hours trading after the cloud platform reported a 15% rise in operating profit to $22.4 billion (£18 billion) in the third quarter of its financial year.

Revenues lifted 10% on a constant currency basis to $52.9 billion (£42.6 billion), with Microsoft Cloud’s haul of $28.5 billion (£22.9 billion) was up 25%.

Chief executive Satya Nadella said: “Across the Microsoft Cloud, we are the platform of choice to help customers get the most value out of their digital spend and innovate for this next generation of AI.”

Google and YouTube owner Alphabet also reported momentum on the cloud side of the business as it beat revenues expectations for the first quarter with a 6% rise at constant currency rates to $69.8 billion (£56.2 billion).

Alphabet shares were 2% higher after the closing bell as it emerged that Google Cloud recorded an operating profit for the first time with a surplus of $191 million (£153.7 million).

Hargreaves Lansdown analyst Sophie Lund-Yates said: “This is a feat that has undoubtedly been accelerated by the recent uplift in demand and excitement around artificial intelligence.

“Despite not necessarily being the front runner in this space, the changing tech landscape is a tide that lifts all ships – all ships that can afford a seat at this table, of which there are very few.”

Reckitt Benckiser appoints company insider Kris Licht as new CEO

FTSE 100 consumer products giant Reckitt Benckiser has chosen a company insider as its next chief executive, ending a seven-month search.

Kris Licht will become CEO designate from the start of May, taking over from temporary chief Nicandro Durante by the end of the year.

The Slough-based multinational lost its previous permanent CEO, Laxman Narasimhan, in September after just three years in charge, when the former PepsiCo executive was poached to run Starbucks, the global coffee chain.

Licht is the president of Reckitt’s health business and has been its chief customer officer since July 2020. He is also a former PepsiCo employee. He said it was an “honour” to take the top job at the maker of Finish dishwasher tablets and Cillit Bang cleaning products.

Reckitt said today that group like-for-like revenue rose almost 8% in the first quarter to £4 billion, and predicted growth for the full year in a range between 3% and 5%.

Standard Chartered posts highest profit in nine years

Emerging market-focused bank Standard Chartered posted its highest quarterly profit since its tumultous 2014, thanks in part to rising interest rates.

The business made $1.7 billion (£13.7 billion) in profit, the biggest profit it has made since the first quarter of 2014. That quarter was the last of a high point for the bank, before repeated profit warnings amid a slowdown in growth in its core markets.

“We have delivered another strong set of results in the first quarter of 2023, with income up 13% year-on-year and underlying profit before tax up 25%, CEO Bill Winters said. “Business performance continues to improve across our markets and products and has been achieved in what continues to be an uncertain environment.

“We remain optimistic about our continued strong performance and now expect 2023 income to grow around 10 per cent, the top end of our range, and remain confident in the delivery of all of our financial targets, including our return on tangible equity targets.”

Shares have risen by 1.3% today in Hong Kong.

Heathrow slams CAA price cap ‘clear errors’ as it posts another quarter of losses

Heathrow Airport has slammed the Civil Aviation Authority’s “clear errors” as it posted yet another quarter of losses.

The firm posted an adjusted loss of £139 million in the first three months of 2023, despite a 58% jump in sales to £814 million.

Last month, the CAA published its final decision to set an average price cap of £23.06 at Heathrow. The airport said it had appealed the decision to the competition regulator.

The firm said: “Heathrow has not yet returned to profit with adjusted losses of £139 million in Q1 due to the revenue allowance in the CAA’s H7 settlement being set too low.”

Heathrow said there were “a number of areas in which the CAA has made clear errors which will undermine the investment needed to deliver the airport service and resilience consumers want.”