U.K. Stocks Advance on Earnings; Unilever, Shell Climb
U.K. stocks advanced for a third day, after swinging between gains and losses, as Unilever Plc and Royal Dutch Shell Group Plc posted financial results that beat forecasts, outweighing worse-than-expected economic reports in the U.S. and Europe.
Unilever, the world’s second-biggest consumer goods company, and Shell, Europe’s largest oil producer, climbed more than 2.5 percent each. AstraZeneca (AZN) Plc fell the most since 2010 after the drugmaker cut its profit forecast. Admiral Group Plc (ADM) dropped after reporting a slowdown in sales.
The FTSE 100 (UKX) Index rose 29.83 points, or 0.5 percent, to 5,748.72 in London after fluctuating between gains and losses at least 12 times. The measure has dropped 3.6 percent from its 2012 high in March as concern resurfaced that some countries in Europe will struggle to reduce deficits and service their debt. The FTSE All-Share Index added 0.5 percent today, while Ireland’s ISEQ Index slipped 0.4 percent.
“Indecision reigned today where a volatile session indicated just how investors are still unsure as to whether the good corporate earnings season is enough to discount the overriding storm clouds that still shroud the macro picture,” said Angus Campbell, head of market analysis at Capital Spreads in London.
A report today showed economic confidence in the euro area declined more than economists forecast in April, as the region’s slump showed signs of deepening. An index of executive and consumer sentiment fell to 92.8 from a revised 94.5 in March, the European Commission said. Economists had forecast a drop to 94.2, according to the median estimates in a Bloomberg survey.
Italy’s borrowing costs jumped at the sale of 8.5 billion euros ($11.3 billion) of six-month bills amid renewed concern about the spread of the region’s debt crisis. The Treasury sold the debt at a rate of 1.772 percent, up from 1.119 percent at the previous auction on March 28.
“We have been consistently bearish on European equities,” Stuart Richardson, who helps oversee $70 million at RMG Wealth Management in London, said in a phone interview. “For the next two to three years, we like several companies in the region whose growth drivers come from overseas, but we are just worried about the overall event risk in Europe.”
U.S. Jobless Claims
In the U.S., more people than forecast filed applications for unemployment benefits last week, a sign that the labor market is taking time to improve. Jobless claims fell by 1,000 to 388,000 in the week ended April 21 from a revised 389,000 the prior period that was the highest since early January, Labor Department figures showed today in Washington. The median forecast of 48 economists surveyed by Bloomberg News called for a drop to 375,000.
Unilever (ULVR) advanced 2.7 percent to 2,135 pence after reporting an 8.4 percent increase in underlying sales last quarter that beat the average analyst estimate for a 6.4 percent gain, according to a survey conducted by the company. Units sold increased 3.5 percent, more than double the forecast.
The company also said it’s “on track” to deliver a modest improvement in full-year core operating margin, weighted toward the second half of the year.
“However one cuts it, it’s a strong first quarter,” analysts at Deutsche Bank AG wrote in a report today. The company “will probably be one of a few to show recovery in volumes in spite of good pricing,” they added.
Shell Asset Sales
Shell increased 3.2 percent to 2,195.5 pence after first- quarter earnings beat estimates and the company raised a target for asset sales this year. Excluding one-time items and inventory changes, Shell posted a profit of $7.28 billion, compared with the $6.7 billion average analyst estimate.
Whitbread Plc (WTB) jumped 6.2 percent to 1,921 pence after the owner of Premier Inn budget lodges reported an 11 percent increase in full-year pretax profit. The company posted earnings per share of 134.1 pence, beating analyst estimates.
Taylor Wimpey Plc (TW/) gained 3.5 percent to 50.35 pence after the homebuilder reported a 23 percent increase in the value of its order book since the year end and said trading is at the “upper end of expectations.”
AstraZeneca fell 6.1 percent to 2,666.5 pence, the biggest drop since December 2010. The drugmaker cut its 2012 core earnings-per share target to $5.85 from $6.15, compared with a previous range of $6 to $6.30. The company said first-quarter revenue sank because of “challenging market conditions” and the loss of patent protection on several medicines.
The company also announced that Chief Executive Officer David Brennan will retire from his post, ending a six-year tenure after repeated failures in drug development left investors skeptical of the company’s earnings prospects.
Admiral lost 2.9 percent to 1,195 pence, paring the gain this year to 40 percent. The company said it made a “good start” to the year as first-quarter sales rose 9 percent to 586 million pounds ($948 million). The pace of growth declined from 20 percent in the fourth quarter of 2011 and 56 percent in the first quarter a year earlier, according to analysts at RBC Capital Markets.
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