Next shares hit after warning; service-sector output rises
U.K. blue-chip stocks rose Thursday, helped by earnings-driven jumps for Royal Dutch Shell PLC and HSBC Holdings PLC, as data showed U.K. services-sector activity on the rise.
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The FTSE 100 index moved up 0.4% to 7,266.78. Oil and gas shares and the financial sector rose, but the basic materials, tech and utility sectors pulled lower. The London benchmark on Wednesday lost 0.2% (http://www.marketwatch.com/story/miners-sainsburys-yank-ftse-100-into-the-red-2017-05-03) .
Another wave of earnings reports came into the market Thursday, helping drive shares of HSBC, Shell and RSA Insurance Group PLC (RSA.LN) to the top of the benchmark.
Read:European shares are a buy -- but watch for this Trump risk: Eaton Vance (http://www.marketwatch.com/story/european-equities-a-buy-but-trump-policy-inaction-a-risk-eaton-vance-2017-05-03)
But Next PLC (NXT.LN) shares dropped by the most since January after the clothing retailer issued a fiscal-year warning.
Services update: The April services-sector activity reading from IHS Markit/CIPS came in at 55.8, up from 55.0 in March. That marked the fastest upturn in that sector's output since December 2016. Services make up nearly 80% of the U.K.'s gross domestic product.
The pound moved up to $1.2890, from $1.2867 late Wednesday in New York after the report.
"The strengthening of growth and the upturn in prices will bolster calls for higher interest rates. But weak growth in the consumer sector remains a concern, and is something which could intensify in coming months as consumer prices rise further," wrote Chris Williamson, chief business economist at IHS Markit.
In the first quarter, a slowdown in the services sector left GDP growth at 0.3% (http://www.marketwatch.com/story/uk-economy-slows-sharply-ahead-of-election-2017-04-28), less than the 0.7% rate in the fourth quarter of 2016, the Office for National Statistics said last week.
The dollar had been higher against the pound late Wednesday after the Federal Reserve left the door open for a June rate hike, saying the U.S. economy's first-quarter slowdown was likely the result of transitory factors (http://www.marketwatch.com/story/fed-holds-interest-rates-steady-dismisses-first-quarter-slump-as-transitory-2017-05-03).
Stock movers: HSBC shares (HSBA.LN) (HSBA.LN) climbed 3.4% after the lender posted a bigger-than-expected first-quarter profit of $3.13 billion (http://www.marketwatch.com/story/hsbc-profit-beats-views-spurring-buyback-hopes-2017-05-04), spurring anticipation the bank could buy back more shares this year.
Shell shares (RDSB.LN) (RDSB.LN) popped up 3% as the oil heavyweight said first-quarter net profit jumped to $3.4 billion (http://www.marketwatch.com/story/shell-profits-soar-as-oil-sector-makes-a-comeback-2017-05-04) from $814 million a year ago.
RSA Insurance picked up 1.6% after the insurer reported a 14% rise in net written premiums (http://www.marketwatch.com/story/rsa-insurance-sees-operating-profit-ahead-of-plans-2017-05-04) to GBP1.71 billion ($2.20 billion) for the first quarter, and said operating profit was ahead of its plans.
Shares of Next (NXT.LN) dropped 4.2% after the clothing, accessories and furnishings retailer cut its full-year sales and pretax profit forecast (http://www.marketwatch.com/story/next-warns-of-full-year-sales-profit-shortfall-2017-05-04). The move comes as first-quarter sales came in at the lower end of management's expectations.
Miners: A selloff in industrial metals including iron ore and copper this week continued to weigh on shares of miners. Analysts said metals prices are under pressure from strengthening in the U.S. dollar and concerns about reduce demand from China after factory output in April fell to a seven-month low. (http://www.marketwatch.com/story/chinas-factory-output-slows-to-7-month-low-2017-05-01)
Shares of iron ore producer and copper producer Anglo American PLC (AAL.LN) fell 3.6%, and iron ore heavyweights BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) Antofagasta PLC (ANTO.LN) and Rio Tinto PLC (RIO) (RIO) (RIO) lost 2.6% and 1.6%, respectively.
Glencore PLC (GLEN.LN) shares flopped down 3% after the company said metals output declined during the first quarter (http://www.marketwatch.com/story/glencore-lifts-marketing-earnings-outlook-2017-05-04) because of poor weather. The company did raise its full-year earnings view.
Fresnillo PLC (FRES.LN) fell 1.6% while Randgold Resources PLC (RRS.LN) clung to a fractional gain as gold prices slid more than 1% (http://www.marketwatch.com/story/gold-tumbles-1-after-fed-signals-confidence-in-the-us-economy-2017-05-04). Prices were crunched as the Fed's economic assessment spurred investors out of the haven asset.
Read:Chinese metals prices slide on demand fears (http://www.marketwatch.com/story/chinese-metals-prices-slide-on-demand-fears-2017-05-04)
(END) Dow Jones Newswires
May 04, 2017 08:11 ET (12:11 GMT)