The FTSE 100 made promising steps forward on Thursday after several upbeat earnings releases by constituent companies helped compound a general wave of optimism sparked by Nvidia’s better-than-expected earnings release last night.
A strong session in Asia also helped boost mood.
There was a lot riding on Nvidia’s earnings release with a global equity market rally relying on the AI boom to support sentiment. The chipmaker delivered, beating estimates and helping Europe to a strong start on Thursday. Nvidia was trading over 10% higher in the US.
“Crisis has been averted after Nvidia smashed expectations with its latest results. Markets were braced for potential disappointment given how its shares were weak in the run-up to the numbers, but a large beat on both earnings and sales has put a new rocket under the stock,” said Russ Mould, investment director at AJ Bell.
“Nvidia last year implied the artificial intelligence boom was a significant moment in tech history and chief executive Jensen Huang now says we are at a tipping point for accelerated computing and generative AI.
“Nvidia’s better than expected results last night could help to keep investor sentiment high and that positivity has spread to other parts of the market.”
The FTSE 100 was 0.3% higher as broad European equity indices broke to fresh record highs on Thursday. Japan’s Nikkei also touched record highs overnight.
“It’s a record-breaking day for stocks and shares after two major indices hit new highs. Japan’s Nikkei 225 and Europe’s Stoxx 600 pushed ahead to new record levels,” said Russ Mould.
Rolls Royce
Rolls Royce was the FTSE 100’s standout performer with a 10% gain after the company said operating profits doubled in 2023. The company also set out positive guidance for the year ahead which, if met, would support the engine maker’s current valuation.
“From burning platform to booming platform. After a year of convincing the market of the merits of his turnaround plan and using colourful words to describe Rolls-Royce’s predicament, 2024 was time for Tufan Erginbilgiç to start delivering. Its latest full-year results represent a good start,” Russ Mould said.
Not only is Roll Royce’s turnaround resulting in higher profits, it opens the doors to the company resuming dividend payments in the coming periods.
“Now profit is on a very different trajectory with the firm set to build on 2023’s success with higher guidance for this year. This is not surprising as we are seeing no let-up in demand in civil aviation as well as defence spending, both areas in which Rolls-Royce has a strong foothold. If this comes to fruition, then it won’t be long before the dividend is back also,” said Adam Vettese, Market Analyst at eToro.
Anglo American gained 4% as underlying EBITDA fell 31% but averted the worst-case scenario in the midst of a slowdown in China.
Lloyds was also among the top risers after reversing early losses following the release of mixed full year results. Underlying profit rose but the company set aside £450m for motor financing provision as the FCA conducts an investigation.
