By Barbara Kollmeyer
London stocks moved higher on Wednesday, thanks to well-received results from Lloyds Banking Group and WPP, while gains for energy companies and a weak pound also helped boost the FTSE 100.
The index /zigman2/quotes/210598409/delayed UK:UKX -1.90% rose 0.5% to 6,976.35, with the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.8832% down 0.3% against the dollar, as the greenback rose across the board ahead of the outcome of a Federal Open Market Committee meeting later. A weak pound works in favor of U.K. exporters that derive revenue from abroad.
The yield on the 10-year U.K. bond /zigman2/quotes/211347177/realtime BX:TMBMKGB-10Y 0.00% was up 4 basis points to 0.821%, rising in step with U.S. Treasury bond yields /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y 0.00% .
Rising oil prices /zigman2/quotes/211629951/delayed CL.1 -0.20% gave a lift to heavily weighted energy companies, with shares of BP /zigman2/quotes/207305210/composite BP -3.97% /zigman2/quotes/202286639/delayed UK:BP -2.67% up 2.7% and Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA -3.13% /zigman2/quotes/205095589/composite RDS.A -5.26% up 1.5%. Gains also came a day after BP earnings surged past forecasts .
Headlining the earnings action, Lloyds Banking Group /zigman2/quotes/200709414/composite LYG -3.07% /zigman2/quotes/202285510/delayed UK:LLOY -3.17% reported a sharp rise in first-quarter pretax profit and beat expectations thanks to an impairments credit. The U.K. bank improved its outlook for the year and shares rose 3%.
“The £459 million [$636 million] retrieved from the bad debt provisions helped lift profits to an impressive £1.9 billion,” said Joshua Mahony, senior market analyst at IG, in a note to clients. “While the economic crisis remains ongoing, the release of funds does highlight the success of [Chancellor of the Exchequer] Rishi Sunak’s policies aimed at limiting the fallout of the [COVID-19] pandemic over the past year. “
Elsewhere, shares of WPP /zigman2/quotes/203813176/composite WPP -3.53% /zigman2/quotes/202300097/delayed UK:WPP -3.01% climbed 4%, after the largest advertising group in the world by revenue crushed sales expectations in the first quarter of 2021. It marks the first return to growth for WPP since the COVID-19 pandemic began.
“Economic recovery around the world will give companies confidence to increase advertising activities,” said Russ Mould, investment director at AJ Bell, in a note to clients.
Another FTSE 100 heavyweight, British American Tobacco /zigman2/quotes/210207837/composite BTI -2.04% /zigman2/quotes/209116881/delayed UK:BATS -1.91% , reported a 3.3% rise in first-quarter revenue , above its revised guidance range of 1% to 3%. The tobacco maker also backed its full-year guidance. Shares rose 0.3%.
Shares of GlaxoSmithKline /zigman2/quotes/200381158/delayed UK:GSK -0.84% /zigman2/quotes/209463850/composite GSK -1.80% edged up 0.5%, after the drug company delivered a profit beat , but reported disappointing sales.
A leader on the downside, J Sainsbury /zigman2/quotes/206038250/delayed UK:SBRY +0.31% shares fell 3%. The British grocer swung to a pretax loss for fiscal 2021, as the pandemic increased costs and offset growing revenue.
“Supermarkets have done a stellar job of keeping their shelves stocked during the pandemic and expanding online capacity, but this hard work is not translating into a sharp rise in profit as some people might have expected,” said Mould.
Another decliner was Reckitt Benckiser /zigman2/quotes/206856088/delayed UK:RKT -3.02% , which reported a slight fall in first-quarter revenue, despite strong results from its hygiene unit amid the pandemic. Within its look-ahead, the owner of the Dettol, Harpic and Durex brands said it sees improving business conditions for its health unit. Shares dropped 2% in London.