Business
The latest blockbuster results by semiconductor giant Nvidia have given global markets a lift, with the Nikkei 225 at a record high early today.
The FTSE 100 index lagged gains elsewhere as traders reviewed more blue-chip results, including the latest encouragement for Rolls-Royce shares.
Profits of £7.8 billion by Lloyds Banking Group failed to lift shares after it set aside £450 million in relation to the City regulator’s car loans investigation.
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Shares in Rolls-Royce topped the FTSE 100 today, after the world-famous engine maker’s annual profit more than doubled.
The rebound was powered by the return of jets to the skies and a strategy overhaul from its tough-talking chief executive, Tufan Erginbilgic.
He said the turnaround plan was behind the “record performance” as “we focused on commercial optimization and cost efficiencies across the group”.
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The resurgent Nikkei 225 index today jumped to a new record after results by Nvidia triggered a fresh wave of buying of technology stocks.
The Tokyo benchmark is up by about 17% this year and lifted another 2% this morning to break 39,000 for the first time, beating a landmark set on the last trading day of 1989.
Wall Street’s semiconductor giant Nvidia provided the spark for the latest rally after another set of knockout earnings revealed no let-up in AI demand.
Its shares recovered from pre-results jitters to put back 9% in after-hours dealings, while Japan’s SoftBank jumped 5% on the read-across to its major stake in Arm Holdings.
Beneficiaries in London included Allianz Technology Trust, which has Nvidia as one of its largest holdings. Shares rose 3% or 9.2p to 334.2p in the FTSE 250.
The performance of the FTSE 100 was anything but headline grabbing, but the rise of 3.75 points to 7666.26 masked some big individual stock movements.
Alongside a jump of 7% for Rolls-Royce, cyber insurance firm Beazley surged 9% or 52p to 634p after promising an additional capital return of about $300 million (£236 million) in next month’s full-year results.
Mining giant Anglo American also rose 66p to 1788.2p and Hikma Pharmaceuticals surged 4% or 80.5p to 2078p following their annual figures.
The FTSE 250 lifted 71.74 points to 19,190.71, with photobooth and laundry services firm ME Group up 5% or 7.2p to 140p after profits rose 25.7% to £67.1 million during a record year.
New stats from the ONS suggest businesses are becoming more optimistic
22% of businesses expect their turnover to increase in Mar 2024, up 4 percentage points from expectations for Feb 2024.
This is the largest proportion reported since the question was introduced in Apr 2022. pic.twitter.com/A3BxQgBuGu
Hargreaves Lansdown’s new boss today insisted he has a good relationship with truculent co-founder Peter Hargreaves, who has lately been highly critical of the business.
The investment platform saw £1 billion of new business in the half-year and attracted another 20,000 clients, taking the total to 1.82 million.
Dan Olley, CEO for six months, said of Hargreaves: “I think we are building a good relationship. He has some great ideas and we listen — we don’t always agree with them.”
Profit slipped 8% to £182 million, with the dividend up 4% to 13.2p. That’s worth a few million to Hargreaves and Stephen Lansdown, still big shareholders.
The cost of living crisis has seen many investors pull back from the stock market, either to put money in cash instead, or else to sell shares to pay for household expenses.
Olley said: “As markets pick up, people will move back into equities.”
HL took an impairment charge of £14.4 million on the write-down of some software tools.
Alex Kerr, UK economist at Capital Economics, looks at the PMI prices data.
Kerr says: “The shipping disruptions in the Red Sea led to a further lengthening in suppliers’ delivery times. But the manufacturing input prices balance actually decelerated from 52.5 to 52.3. This implies core goods CPI inflation will slow from 2.7% in January to around 0.0% later this year. However, the services output prices balance rose from 57.2 to 58.5, which survey respondents attributed to continued higher labour costs. This is consistent with services CPI inflation easing only gradually from 6.5% in January to just above 5.0% in six months’ time.
“This will add to the Bank of England’s unease about lingering domestic price pressures. At the margin this may mean the Bank won’t rush to cut interest rates. But we still think overall CPI inflation will fall below 2.0% in April and that the Bank will be in a position to start cutting rates this summer.”
After the latest PMI figures, Michael Brown, market analyst at Pepperstone, said: “This morning’s UK PMI figures further serve to dispel some of the ‘doom and gloom’ that has surrounded the UK economic narrative of late, particularly after Q4 GDP data this time last week confirmed the onset of technical recession at the tail end of 2023. Per the PMIs, it is likely that said recession is already over, with the composite output gauge once more printing comfortably north of the 50 handle, and above market expectations at 53.3.”
Fresh evidence emerged that the UK’s recession will be the shortest one possible, as the S&P Global Flash United Kingdom ‘Flash’ PMI hit a nine-month high in February.
The composite PMI reading rose to 53.3, comfortably ahead of the 50 mark that represents stagnation. That is slightly ahead of forecasts and up from a 52.9 reading in January.
The dominant services sector continued to grow with a 54.3 reading. Manufacturing remained in decline for the 12th straight month at 47.3.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said: “UK economic growth has accelerated in February, with the early PMI survey data pointing to the largest rise in business activity for nine months. This is by no means a one-off improvement, as faster growth has now been recorded for four straight months after a brief spell of decline late last year.
“The survey data point to the economy growing at a quarterly rate of 0.2-3% in the first quarter of 2024, allaying fears that last year’s downturn will have spilled over into 2024 and suggesting that the UK’s ‘recession’ is already over.
The Eurozone private sector is still in decline, but at the slowest pace in eight months, according to the latest PMI survey.
The Eurozone ‘flash’ PMI for February came to 48.9, up from January’s 47.5. However, that’s still below the 50 mark that separates growth from decline.
aNorman Liebke, Economist at Hamburg Commercial Bank, said: “There is a glimmer of hope as the eurozone inches towards recovery. This is particularly noticeable in the services sector. The corresponding HCOB PMI is now 50 points and has therefore stopped shrinking for the first time since July last year. The latest PMI print gives hope for a recovery in the eurozone, which is why we are sticking to our annual HCOB forecast of 0.8% for 2024. There is also a certain optimism in the latest employment figures, which rose at a faster pace than in the previous month.”
WPP saw a 70% slump in profits for the year as big tech pulled back on advertising amid a sluggish global market.
The ad giant behind agencies Grey, Ogilvy and Wunderman Thompson is betting £250 million on AI to drive future business.
CEO Mark Read said: “We don’t see AI replacing human creativity. But computers can write copy, take photos and create videos to help us produce work more efficiently.”
The company will need “different types of people” on staff, but not necessarily fewer, says Read.
Profits tumbled from £1.16 billion to £346 million, partly a retrenchment after two strong years as the world emerged from Covid.
WPP was behind four of the top five Superbowl ads, including one for Verizon featuring Beyonce.
The Superbowl – won by the Kansas City Chiefs – was the highest watch TV show ever since the moon landings.
WPP and Read in particular have come under fire from former CEO Sir Martin Sorrell, who said in November of his successor, “He’s been at it for five years, so when is he going to take responsibility?”
Sorrell’s S4 Capital has got its own problems lately.
At WPP revenue for the year was up 2.9% to £14.8 billion
The boss of Mexican restaurant chain Tortilla, Richard Morris, is leaving after 10 years with the business.
He will be replaced by current CFO Andy Naylor from the end of March.
Tortilla chair Emma Woods said: ““On behalf of everyone here at Tortilla I would like to thank Richard for his significant contribution to the business over the last 10 years. Under Richard’s leadership Tortilla has expanded from 14 to 89 restaurants, including franchises in the Middle East and UK travel locations, establishing itself as the nation’s largest fast casual Mexican brand with a strong and expanding portfolio of exciting growth opportunities both in the UK and overseas.”
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