London close: Stocks finish higher amid more earnings, data

London stocks were in the green at the close on Friday after another tsunami of corporate news, as well as a raft of inflation indicators in the US and a very large and positive surprise on second quarter euro area gross domestic product.

The FTSE 100 ended the session up 1.06% at 7,423.43, and the FTSE 250 was ahead 1.56% at 20,164.90.

Sterling was in the red, meanwhile, last trading down 0.2% on the dollar at $1.2156, and weakening 0.03% against the euro to change hands at €1.1942.

“European stocks look to be closing out the week on a high today, with a raft of positive GDP releases easing fears of an impending contraction in the region,” said IG senior market analyst Joshua Mahony.

“With both core and headline eurozone inflation continuing to push well above target, the risk of further rate hikes from the European Central Bank helped to drive the euro higher across the board today.

“However, the strength seen across French, Spanish and Italian second quarter growth does help alleviate fears that the weakness seen for the likes of Germany is indicative of the entire EU.”

Mahony noted that tech was leading the US in the wake of a “welcome outperformance” from both Amazon and Apple overnight.

“Despite failing to maintain the kind of momentum traders have grown accustomed to, outperformance on both profits and revenues for these two tech giants highlight that market pessimism has been largely overblown this earnings season.”

In economic news, consumer credit expanded more quickly than expected in the UK last month amid a jump in credit card use, but mortgage lending fell short of forecasts.

According to the Bank of England, total lending to individuals increased by £7.1bn to reach 1,805.7bn or 0.4% month-on-month, with the latter roughly matching the clip of growth observed over the preceding quarter.

Within that, consumer credit growth re-accelerated to a 0.9% pace on the month, rising by £1.8bn - well ahead of expectations for a £1bn rise - to £203.9bn.

Across the channel, euro area second quarter gross domestic product growth left economists' forecasts in the dust.

According to preliminary figures from Eurostat, in seasonally adjusted terms GDP was ahead by 0.7% quarter-on-quarter.

Consensus among economists had been for an increase of 0.1%.

The previous estimate for GDP growth covering the first three months of 2022, meanwhile, was marked down from 0.6% to 0.5%.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, predicted that Friday's print would be revised lower and nearer to his estimate for 0.2% growth on the quarter come early September.

"Looking ahead, business surveys for July, such as S&P Global's composite PMI, suggest that GDP will fall sharply in the third quarter and leading indicators suggest surveys will drop further over the coming months, supporting our view that the eurozone economy will be in recession by the end of the year, lead predominantly by downturns in Germany and Italy.”

Euro area inflation, meanwhile, edged past economists' forecasts during the second quarter, underpinned by the cost of food, alcohol and tobacco, as well as services.

According to Eurostat, the annual rate of increase in the single currency bloc's harmonised consumer price index picked up from 8.6% in June to 8.9% for July, beating forecasts for 8.7% growth.

It was a similar story at the so-called 'ECB core' level, which excludes energy, food, alcohol, tobacco and energy.

Turning stateside, US households continued to dip into their savings last month in order to finance their purchases amid continued price pressures.

According to the Department of Commerce, personal incomes and expenditures rose at a month-on-month pace of 0.6% and 1.1% in June, respectively.

That compared to economists' projections for increases of 0.5% and 0.8%.

A broad measure of workers' compensation, meanwhile, increased modestly more quickly than anticipated over the three months to June.

According to the US Department of Labor, the Employment Cost Index advanced at a quarter-on-quarter clip of 1.3% during the second quarter.

Economists had anticipated an advance of 1.1%.

Finally on data, US consumer confidence was a tad stronger than expected last month, the results of a very closely-followed survey revealed.

The University of Michigan's headline consumer confidence index for July was revised up to 51.5, versus a preliminary estimate of 51.1 and June's print of 50.0.

However, the improvement versus June centred entirely on the sub-index for current economic expectations, which rose from 53.8 in June to 58.1.

On London’s equity markets, NatWest leapt 8.09% after beating analysts' estimates for both operating pre-tax profit and total income for its second quarter.

The lender posted pretax profits of £1.4bn on £3.21bn of revenues while net profit came in at £1.05bn.

Net interest margins improved by 26 basis points against the prior quarter to 2.72%, and a dividend payout of 3.5p per share was declared for the quarter.

Chemicals company Croda International rose 4.89% after it said profits had surged in the six months ended 30 June, driven by improved interim sales and margins.

Croda said interim pre-tax profits were up 211% at £636.5m, operating profits were 32.1% higher at £288.6m, and basic earnings per share had grown 254% to 389.6p, driven by a 20.7% increase in revenues to £1.12bn.

UK luxury sports car maker Aston Martin Lagonda managed gains of 0.59% after it said first-half losses had widened as supply chain constraints hit production.

The company reported a pre-tax loss of £285.4m in the six months to 30 June, compared with a loss of £90.7m a year ago.

It sold 2,676 vehicles wholesale, compared with 2,901 a year earlier.

Aston Martin, which was pinning its hopes on the lucrative Chinese market, said it expected the supply chain issues to unwind in the second half and forecast higher sales after ramping up production of its DBX707 and the V12 Vantage.

On the downside, Standard Chartered slipped 0.46% despite delivering a "strong" set of first half figures, announcing a new $500m share buyback programme and expressing confidence on its full-year targets.

Income for the half was ahead by 8% to $8.2bn or by 10% at constant currencies and during the second quarter it was 11% higher at constant currencies.

That saw a 10% jump in statutory pre-tax profits for the latest six months to $2.8bn.

Drugmaker AstraZeneca was off 0.24% after it raised full-year revenue guidance and provided details of its "strong" first trading half, while announcing that Michel Demaré would take over as its chairman in April next year.

The company reported a 48% increase in interim revenues to $22.16bn, and said total revenues were now expected to increase by "a low twenties percentage", up from previous estimates in the "high teens".

British Airways and Iberia owner IAG descended 2.59% even though it returned to profit in the second quarter, with its Spanish airlines boosted by post-Covid pandemic demand.

The company said operating profits for the three months to 30 June came in at €293m, compared with a loss of €967m a year earlier.

IAG posted an operating loss for the half year of €438m, significantly lower than 2021’s €2.03bn.

Reporting by Josh White at Sharecast.com. Additional reporting by Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,423.43 1.06%
FTSE 250 (MCX) 20,164.90 1.56%
techMARK (TASX) 4,377.64 0.98%

FTSE 100 - Risers

NATWEST GROUP PLC ORD 100P (NWG) 248.60p 8.09%
Ocado Group (OCDO) 839.40p 6.82%
Fresnillo (FRES) 737.40p 5.67%
Aveva Group (AVV) 2,357.00p 5.65%
Croda International (CRDA) 7,482.00p 4.82%
Barclays (BARC) 157.18p 4.55%
Ashtead Group (AHT) 4,591.00p 4.41%
Antofagasta (ANTO) 1,158.50p 3.85%
Hargreaves Lansdown (HL.) 846.00p 3.84%
B&M European Value Retail S.A. (DI) (BME) 424.30p 3.74%

FTSE 100 - Fallers

British American Tobacco (BATS) 3,220.50p -4.51%
Avast (AVST) 465.00p -4.08%
International Consolidated Airlines Group SA (CDI) (IAG) 118.74p -2.59%
Compass Group (CPG) 1,914.50p -1.97%
Intertek Group (ITRK) 4,376.00p -1.97%
Smith & Nephew (SN.) 1,047.50p -1.87%
Imperial Brands (IMB) 1,804.00p -1.83%
Centrica (CNA) 87.70p -1.28%
BAE Systems (BA.) 770.00p -1.21%
Pearson (PSON) 756.60p -1.20%

FTSE 250 - Risers

Vesuvius (VSVS) 359.80p 10.71%
Baltic Classifieds Group (BCG) 164.40p 9.77%
Kainos Group (KNOS) 1,365.00p 6.97%
Hammerson (HMSO) 24.99p 6.79%
IP Group (IPO) 86.30p 5.70%
IntegraFin Holding (IHP) 273.60p 5.56%
Ashmore Group (ASHM) 215.80p 5.47%
Tullow Oil (TLW) 51.40p 5.20%
Morgan Advanced Materials (MGAM) 318.50p 5.12%
Moonpig Group (MOON) 207.60p 4.95%

FTSE 250 - Fallers

Moneysupermarket.com Group (MONY) 204.00p -2.77%
Jupiter Fund Management (JUP) 125.40p -2.41%
Rathbones Group (RAT) 1,810.00p -2.37%
Fidelity China Special Situations (FCSS) 254.00p -2.11%
Wizz Air Holdings (WIZZ) 2,214.00p -1.60%
HGCapital Trust (HGT) 376.50p -1.18%
Babcock International Group (BAB) 342.40p -1.04%
ASOS (ASC) 1,041.00p -0.76%
ICG Enterprise Trust (ICGT) 1,158.00p -0.68%
Shaftesbury (SHB) 502.00p -0.59%