FTSE 100 gained Friday with strong corporate update and positive mining stocks offsetting the losses on the index from banking shares provoked by investor concerns over the Bank of England’s meeting next week.
The Ukraine conflict, China’s COVID restrictions, and rising inflation have all weighed on the global economy, causing uncertainty ahead of the Bank of England’s widely anticipated meeting next week, that could see interest rates rise for the fourth time in a row.
“The UK stock market continued its recovery from the big falls seen at the end of last week and beginning of this week amid some solid corporate updates and strong trading in Asia and on Wall Street,” said Russ Mould, Investment Director, AJ Bell.
Mining stocks continued to support the FTSE 100 with gains across the sector during times of volatility caused by China’s lockdown and Russia’s invasion.
Mining stocks such as Anglo American, Glencore, Antofagasta and Rio Tinto saw shares climb between 0.8% to 1.9%, where Anglo American, Glencore, Antofagasta and Rio Tinto shares rose to 3,517p, 489p, 1,548p and 5,677p respectively.
Smurfit Kappa shares rose 4.2% to 3,411p after the company reported YoY revenue growth of 33% to €3.02bn and EBITDA at €514m despite headwinds at the start of the year, in the first quarter of 2022.
Pearson shares gained 2.5% to 790p after the group reported a 7% underlying sales growth in its first quarter on a strong contribution of 22% from its Assessment & Qualifications and English Language Learning divisions.
Pearson also announced the acquisition of Mondly on Friday which is expected to deliver mid-teens margins for the English Language Learning division by 2025.
Reckitt Benckiser shares rose 0.5% to 6,235 despite the company reporting a slip in revenue of 2.3% to £3.4bn from £3.51bn in the first quarter of 2022. However, the group’s expectations of net revenue growth remaining at the upper end of its guidance supported the stock.
Hikma Pharmaceutical shares tumbled 6% to 1,903p after the group announced that its Generics business has experienced some headwinds due to increased competition and a challenging pricing environment, resulting in a “slow” start to the year. However, the group expects full-year Generics revenue growth between 8% to 10% for 2022.
Hikma reported a good performance in its Injectables and Branded businesses, and the company expects Branded revenue to be in line with 2021 as it maintains its focus on key therapeutic areas and chronic medications.
NatWest shares dropped 3.8% to 214p as the company reportedly booked a £38m credit provision release in the first quarter, down from a £98m in 2021, in times when peers are beginning to prepare for potentially slowing economic growth.
However, the banking group is confident in securing income above £11bn in 2022 from its core operations.
NatWest noted a 41% surge in operating pretax profit to £1.25bn from £885m in Q1 2022, and attributable profit rose 36% to £841m from £620m.
“Like several of its rivals NatWest smashed forecasts but for investors the focus is much more on the outlook, which despite the boost to profit implied by rising interest rates, is heavily clouded by the risk of an increase in bad debts linked to the cost-of-living crisis,” added Mould.
AstraZeneca shares fell 1% to 10,462p after the company reported a decrease of 66% to £553m from £1.6bn in pretax profit in 2022. The company however did record a rise in revenue of 56% to £11.39bn from £7.32bn in 2021 due to the 21% contribution from its oncology arm.
Travis Perkins shares were trading down 1.5% to 1,248p despite the company posting a 14% rise YoY in sales during its Q1 trading update. However, an uncertain outlook for 2022 due to material inflation hindered the stock.
Russ Mould stated, “The most encouraging takeaway from building materials supplier Travis Perkins was its apparent ability to pass on an increase in raw material costs amid strong demand for housing.”
“Crucially while prices are still high, the supply chain issues which affected the sector throughout 2021 are beginning to ease.”
BP gained 0.2% to 388p after the oil and gas company announced the strategic partnership with Volkswagen AG to “boost” the adoption of electric vehicles across Europe. The pair plans to “rapidly” build a fast-charging EV network across Europe by 2024.
However, BP’s peer Shell saw its shares dip 0.8% to 2,167p on Friday despite oil prices rising 1.8% to $109 a barrel.
Price Targets
Smith & Nephew shares were trading up 0.4% to 1,316p after UBS and Citigroup raised the company’s rating to ‘neutral’ and increased its price target to 1,295p and 1,430p respectively.
Glencore’s price target was raised by Barclays and Goldman Sachs to 730p, however, JPMorgan cut it to 630p.
Barclays also raised the price target of other miners such as Anglo American, Antofagasta, Endeavour Mining and Fresnillo to 3,400p; 1,645p; 3,000p; and 880p respectively, however, cut Rio Tinto to 4,800p.
Standard Chartered shares dipped 0.8% to 543p despite Goldman Sachs, Berenberg and Barclays raising their price target to 945p, 750p and 700p respectively, and upgrading it to a ‘buy’ rating.
Barclays shares rose 1.4% to 148p after Credit Suisse raised its price target to 240p from 205p.
Aveva shares gained 4.6% to 2,149p despite facing cuts in its price target from Deutsche Bank and Bank of America to 2,400p and 3,000p.
GlaxoSmithKline shares dropped 1% to 1,791p despite Barclays raising its price target to 1,800p from 1,775p and giving it an ‘equal weight’ rating.
Dechra Pharmaceuticals shares gained 2.5% to 3,664p despite Jefferies cuttin its target from 4,600p to 3,630p.
AB Foods gained 0.3% to 1,620p despite facing price cuts from Deutsche Bank and Credit Suisse to 1,900p and 2,410p respectively.