A stunning rebound continues to confound many seasoned investors. Here are the stocks leading the way.
A return above 6,000 for the FTSE 100 index owed much to the resilience of GlaxoSmithKline (LSE:GSK), AstraZeneca (LSE:AZN) and Standard Chartered (LSE:STAN) today as the Q1 corporate earnings season continued without the Covid-19 shocks many investors had been fearing.
It wasn't just heavyweight stocks fighting back, with updates from marketing group WPP (LSE:WPP) and retailer Dixons Carphone (LSE:DC.) also triggering significant share price rises. Among other FTSE 250 companies reporting, ii Winter Portfolio stock Synthomer (LSE:SYNT) rose more than 4%, with little more than one day until the seasonal portfolio ends at close of play on 30 April.
BP (LSE:BP.) and Royal Dutch Shell (LSE:RDSB) were also higher after a rebound in oil prices, meaning the FTSE 100 index outperformed European counterparts with a 1% rise that took it above the 6,000 threshold for the first time since early March.
In fact, the blue-chip index traded as high as 6,100 early afternoon Wednesday. The top-flight had been as low as 4,900 on the day Britain went into lockdown on 23 March. That's a gain of 1,200 points, or 25% in just one month.
FTSE 100 top 10 risers
|Company||Ticker||Price (p)||Share price change today (%)||Market Cap (£m)||Share price change in 2020 so far (%)||Subsector|
|Carnival||CCL||1,132.25||13.6||8,045||-68.9||Travel and Tourism|
|Melrose Industries||MRO||101.95||8||4,953||-57.5||Electrical Components|
|Evraz||EVR||262.75||6.4||3,815||-35||Iron and Steel|
|InterContinental Hotels Group||IHG||3,852.50||6.2||7,037||-26||Hotels and Motels|
The improved risk appetite, which is being underpinned by the support of the US Federal Reserve and other central banks, meant defensive stocks were generally out of favour.
However, AstraZeneca and GlaxoSmithKline bucked the trend in the wake of their Q1 results. The performance of Astra was particularly noteworthy as its shares surged 2% to another record high after reporting strong demand for its newer medicines, such as lung cancer drug Tagrisso.
Unlike most other companies in the current crisis, Astra was still able to provide investors with guidance for the year ahead. This continues to feature revenues growth in the high single-digits or better, with core earnings per share up by a mid-to-high teens percentage.
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CEO Pascal Soriot said “he could not be prouder” of how the company has responded to the challenges of Covid-19. He added:
“We moved quickly to maintain continuity of care, contribute to society, and use our scientific expertise to fight the pandemic.”
GlaxoSmithKline shares are spiking in and out of positive territory, but are still higher than where they were prior to the market sell-off in February, even though its performance lags the pace shown by Astra.
Shares were initially 1% higher after Q1 results showed a 19% jump in sales, helped by strong demand for its Shingrix shingles vaccine and the impact of stockbuilding for many of its products.
While it performed “strongly” in the quarter, it said there were significant internal and external risks to its outlook. For now, the company is sticking by guidance for the year, which currently points to an earnings per share (EPS) decline in the range of 1% to 4%.
For investors deprived of so much income in recent weeks, Glaxo confirmed it will pay an unchanged dividend for the quarter of 19p a share on 9 July.
Astra's next dividend will be announced with its half-year results in the summer.
Standard Chartered and Barclays, who both reported Q1 figures today, have already agreed not to pay dividends this year following a request from the Prudential Regulation Authority.
Barclays shares jumped as much as 11%, while Standard was 8% higher despite reporting a significant and bigger-than-expected rise in credit impairments due to Covid-19's impact on the Asian economies it serves.
Analysts were impressed, however, that revenues for the quarter still beat consensus by 12%, with the mood further helped by the company's assessment that an economic recovery later in 2020 should be driven by the markets in its footprint.
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WPP appeared to back this up when it said that its offices in China were seeing around 90% occupancy, amid expectations for a rapid recovery in economic activity in the country.
However, the impact of the pandemic meant global revenues for the first quarter were down almost 5%, despite US$1 billion of new business in the period.
CEO Mark Read believes his company is well placed to benefit as clients rapidly shift emphasis and budget into digital media and direct-to-consumer channels.
“We have witnessed a decade’s innovation in a few short weeks, with the way people meet, shop, work and learn increasingly reliant on technology.”
WPP has already suspended its dividend and share buyback as part of substantial actions to protect cash flows. It reported average net debt of £2.1 billion and £4.4 billion of cash and undrawn facilities.
Among other blue-chips reporting today, Persimmon shares were 1% higher at 2,231p after its AGM heard that the housebuilder was responding to the pandemic “from a position of strength”.
Its current forward sales position, including legal completions, is £2.4 billion, with customer enquiries remaining at “good levels” throughout the lockdown.
The spectacular surge for shares in FTSE 250-listed Dixons Carphone (LSE:DC.) came after it said its UK and Ireland online business had recovered around two-thirds of the sales lost by its closed stores.
This follows strong demand for home office equipment as people and communities work remotely during the lockdown.
Source: TradingView Past performance is not a guide to future performance
Gaming and TV sales were also strong, along with kitchen products such as breadmakers. Despite weaker sales of home appliances due to the lack of house market activity, UK online sales jumped 166% in the final five weeks of the company's financial year to 25 April.
Dixons, which has just closed 531 standalone Carphone Warehouse stores, has extended its committed debt facilities but won't be announcing a dividend with full-year results in June.
Chemicals company Synthomer joined Dixons on the FTSE 250 risers board after it reported a solid start to the year, with underlying earnings up 5% in the three months to 31 March.
The group continues to operate 37 of its 38 global manufacturing sites, with speciality chemicals designated as key industrial assets. While it has experienced no major issues with raw material supplies or the availability of staff, the uncertainty around Covid-19 means Synthomer is withdrawing guidance for 2020 trading until there is better visibility.
Shares in the company, which is one of the world’s biggest suppliers of aqueous polymers, have risen from 193p on 23 March to 290p today.
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