Member Article

FTSE 100 0.5% higher amid mixed corporate results

There was little in the way of significant European economic data today, although a weaker than expected Eurozone wide business and consumer survey didn’t help broader sentiment. From the US the major news of the day was initial jobless claims that unfortunately came in higher than expectations. New applications for unemployment benefit fell by a mere 1,000 to 388,000 in the week ending the 21stApril, highlighting continuing underlying issues in the labour market. The news led to a slight pull back in stock market indices, although this wasn’t significant and they were generally trading higher on the day.

The major headlines were however on a stock specific basis, with a plethora of companies reporting first quarter results across Europe today. From the UK, Barclays results were slightly better than expected, with a £2.45 billion first quarter pre-tax profit (on an adjusted basis), although making a £475m loss on a reported basis in part due to a £300m provision relating to the misspelling of payment protection insurance. Whilst the first quarter results were encouraging, there was a note of caution regarding UK and European markets for the remainder of the year, limiting the gains with the shares finishing 1%% higher at 213p.

The market was less receptive to the release form AstraZeneca that showed its net profit had fallen to $1.64 billion from $2.9 billion in 2011 and significantly below analyst’s forecasts, given weakness in western markets, generic competition and restructuring costs. In a shock move the CEO Mark Brennan took the opportunity to jump ship, although many say this is before he was pushed as shareholders have become increasingly frustrated about the company’s ageing pipeline and the lack of progress on replenishing it. Management also revised earnings per share guidance down to $5.85-6.15 for the full year (from $6.0-6.30), sparking heavy selling in the stock that closed the day at the bottom of the FTSE 100 with a significant 175p (6.1%) fall to £26.67.

The UK’s FTSE100 finished the day up 0.5% at 5789, matching gains seen in Europe and the US.

This was posted in Bdaily's Members' News section by James .