Another day and another fresh intraday high for the FTSE 100. The wind is certainly in the sails of London’s leading index, with HSBC and Whitbread providing the uplift on Tuesday.
The FTSE 100 hit highs of 8,199 before retreating to trade at 8,176 at the time of writing.
“The spigot has been opened since it attained its new record high and the FTSE 100 continued to flow higher on Tuesday amid a raft of corporate announcements,” said Russ Mould, investment director at AJ Bell.
“The index took its cue from gains on Wall Street with the next key test of the relative optimism displayed by the market coming tomorrow with the latest meeting of the US Federal Reserve.
“While the Fed is expected to maintain the status quo on interest rates, commentary on its current thinking on the trajectory of rates in the remainder of the year will likely have a significant impact on markets.”
A strong start to the session was amplified by upbeat earnings from Whitbread and HSBC. HSBC gained 4.3%, adding a significant number of points to the index, after announcing Q1 earnings that beat analyst estimates.
HSBC
HSBC has fallen in behind most other FTSE 100 banks that have reported Q1 earnings by marginally beating income and profit estimates.
In addition to earnings, investors gained insight into the bank’s progress in delivering a strategy to move away from non-core assets. The sale of their Canadian assets is complete, but the bank recorded $1.1bn write-down on its Argentinian business as it prepares it for sale.
A fairly solid set of Q1 results was overshadowed by the news that the HSBC CEO was planning to retire, raising questions about the direction of the company in the coming years. That said, investors clearly weren’t too upset with the news, given the reaction in shares today.
“HSBC has thrown a spanner in the works. News that CEO Noel Quin plans to retire came as a surprise. Change at the top usually causes a wobble, more so when it’s unexpected, and this does raise some questions about how the strategy will evolve from here. The HSBC portfolio is going through a reshuffle, and Quin’s far from completing his mission to get costs under control,” said Matt Britzman, equity analyst, Hargreaves Lansdown.
Whitbread
Whitbread was the FTSE 100’s top gainer as investors cheered a record year for profit before tax in 2024FY and signalled great focus on its hotels in business in the future.
Revenue jumped 13%, and profit before tax rose to 36% to £561m as the German Premier Inn business stormed ahead from a low base amid soggy food sales in the UK.
“Whitbread’s served up a set of record beating results for the 12 months ending 29 February 2024. Premier Inn UK has continued to outperform the rest of the market and management are seizing the opportunity to convert 112 restaurants into 3,500 new room extensions,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“This appears to be a shrewd way to optimise the current real estate footprint and a capital efficient method to help reach the 2029 target of an estate of at least 97,000 rooms.
“The comps are getting harder for Whitbread though. Food & Beverage is struggling so far this year, with sales 2% behind last year and it’s some of these weaker performing branded restaurants, which include the likes of Beefeater and Brewers fayre, that Whitbread has put forward for conversion.”
Prudential
Prudential was firmly at the bottom of the index on the news of poor sales in China.
“Shares in Asia-focused insurer Prudential were under pressure after a decidedly mixed first-quarter update. While there was evidence of a recovery in some key markets, its mainland Chinese venture CITC Prudential Life saw a significant year-on-year decline in sales,” Russ Mould said.
Prudential shares were down 5% at the time of writing.
