Miners Fuel FTSE

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Wednesday, May 2: The FSTE 100 today opened higher despite Asian bourses broadly cooling on Wednesday after a mixed session on Wall Street yesterday. The index was lifted by miners after oil traded higher overnight, and investors awaited a busy day from various earnings releases including Sainsbury’s and Standard Charted, UK construction PMI figures for April, Eurozone GDP and the Fed’s rate decision later this afternoon. Yet with all this going on the main index in London managed to finish 0.3% higher to complete a 5-day win streak.

Beginning with Sainsbury’s, which has been no stranger to the limelight this week, they’ve released preliminary results for the year to 10 March 2018. These results have however been dwarfed by the Asda deal announced on Monday, with investors overlooking typically important areas of performance and choosing to prioritise areas with more relevance and exposure to impact from the deal such as synergies. Underlying PBT did return to growth as net debt reduced by £113m. Sainsbury’s bank profits also grew after consolidating Argos’ financial services, despite a competitive landscape. They have exceeded their 3-year target of £500m in savings and promise a further £500m worth of saving for the next 3 years.  Shares have dipped 3% today but are still 13% higher so far this week.

Standard Chartered reported first quarter pre-tax underlying profit jumped 20% to $1.26bn, beating forecasts, after strong performance from wealth management. They’re also very close to the 8% target return on equity set out in February, after 7.6% was achieved in the quarter. Shares closed 1% lower.

Also making the headlines early on following their earnings was Apple, the world’s most valuable company. And following the first quarter it has only become more valuable after announcing a $100bn buyback and 16% hike in its quarterly dividend. After Trump’s changes to corporate tax rates and the fact that Apple have a huge cash pile, this has made the buyback very logical for the iPhone producer. The main motive is the firm believes their shares are currently undervalued by the market, but there are other advantages to buybacks which include better use of cash that is sat ‘accumulating dust’. Overall iPhone sales climbed 3% and revenue from Apple Music and the App Store jumped by almost a third to $9.1bn. There has been worries surrounding the performance of their newest and priciest phone the iPhone X, but it was the best-selling model in every week of the quarter. So there. Now all we need is them to use that cash for batteries that work and happy days. Shares are currently around 3.5% higher on Wall Street.

Returning to the FTSE Paddy Power were also amongst those releasing their latest results, but after finishing at the foot of the index as shares declined over 6% investors were clearly a little miffed. Revenue dropped 2% in the first quarter and management have cut EBITDA guidance which has over shone a £500m buyback. The group have blamed customer friendly results and several racing fixtures cancelled from adverse weather conditions.

Away from corporate results, the construction PMI came out today with a read of 52.5 from March’s 20 month low of 47. Above 50 indicates growth where as below 50 means contraction for the sector. The rebound was inevitable after the weather during March, but growth was marginally stronger than some had expected. The data helped steady the pound which currently sits flat with the dollar at $1.361. Investors likely sitting on the impending Fed decision which is scheduled for 7pm GMT.

 

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