LONDON MARKET OPEN: FTSE 100 overcomes Barclays slip; Darktrace surges

(Alliance News) - Share price gains for AstraZeneca and Smurfit Kappa were helping buoy the FTSE 100 in opening dealings on Friday, offsetting some weak Chinese economic data and a tumble for Barclays after its first-quarter results release.

Cybersecurity firm Darktrace exorcised the ghost of Deliveroo on its London debut, shares trading nearly 40% higher than its IPO price.

The FTSE 100 index was up 22.72 points, or 0.3%, at 6,984.20 early Friday. The mid-cap FTSE 250 index was up 64.26 points, or 0.3%, at 22,457.20. The AIM All-Share index was flat at 1,274.62.

The Cboe UK 100 index was up 0.3% at 694.97. The Cboe 250 was up 0.2% at 20,084.81, and the Cboe Small Companies up 0.5% at 14,669.26.

In mainland Europe, the CAC 40 in Paris was up 0.3%, while the DAX 30 in Frankfurt was 0.4% higher early Friday.

Markets in Europe managed to shake off a disappointing Asia session in the wake of mixed Chinese data.

In China, the Shanghai Composite ended down 0.8%, while the Hang Seng index in Hong Kong was down 2.0% in late trade.

Factory activity in China slowed in April as a global shortage of shipping containers hindered the movement of goods, official data showed Friday, but wider demand remained robust as the domestic economy rebounds from the coronavirus pandemic.

The purchasing managers' index, a key gauge of manufacturing activity, came in at 51.1 points this month, lower than in March but still above the 50-point mark separating growth from contraction, according to the National Bureau of Statistics.

But challenges remained, with some companies reporting problems "such as chip shortages, blockages in international logistics, a lack of containers, and rising freight rates", said NBS senior statistician Zhao Qinghe in a statement.

The non-manufacturing PMI fell to 54.9 points, down from 56.3 in March, with activity in the construction sector easing, although the service industry continued its recovery.

The S&P/ASX 200 in Sydney ended down 0.8% on Friday, and the Japanese Nikkei 225 index closed down 0.8% as it reopened from Thursday's holiday.

Against the yen, the dollar fell to JPY108.85 on Friday versus JPY108.94 late Thursday. The au Jibun Bank Japan manufacturing purchasing managers' index rose to 53.6 points in April from 52.7 in March, supported by a solid expansion in production volumes.

Gains for AstraZeneca and Smurfit Kappa were helping the FTSE 100 nudge up at the end of the week, offsetting a share price slide for Barclays.

AstraZeneca shares rose 2.7% as the pharmaceutical firm retained its full-year guidance as profit grew in the first quarter, expecting an "acceleration" in performance as the pandemic eases in the second half of this year.

Total revenue for the first three months of the year was up 15% year-on-year at USD7.32 billion, with Product Sales revenue rising 15% to make up the bulk of group revenue at USD7.26 billion, while Collaboration revenue rose 43% to GBP63 million.

Revenue from Astra's beleaguered Covid-19 vaccine totalled USD275 million for the quarter. The jab's use has been restricted by age in many countries over links to rare blood clots - with this also listed as a side effect for the Johnson & Johnson Covid-19 vaccine - but regulatory agencies have stressed that the benefits outweigh the risks.

Pretax profit for the quarter jumped 72% to USD1.61 billion from USD935 million a year ago.

"We delivered solid progress in the first quarter of 2021 and continued to advance our portfolio of life-changing medicines. Oncology grew 16% and New CVRM grew 15%. New medicines contributed over half of revenue and all regions delivered encouraging growth. This performance ensured another quarter of strong revenue and earnings progression, continued profitability, and cash-flow generation, despite the pandemic's ongoing negative impact on the diagnosis and treatment of many conditions," said Chief Executive Pascal Soriot.

"Given the performance in the first quarter, in line with our expectations, we reiterate our full-year guidance. We expect the impact of Covid to reduce and anticipate a performance acceleration in the second half of 2021."

Smurfit Kappa was up 2.3% as earnings grew in the first quarter of 2021, shaking off cost pressures.

The packaging firm said underlying revenue rose 6% EUR2.27 billion in the first three months of the year. Earnings before interest, tax, depreciation and amortisation were 1.6% higher year-on-year at EUR386 million from EUR380 million.

Barclays tumbled 5.3%, meanwhile, despite posting a sharp rise in quarterly profit.

Pretax profit was a "record" GBP2.40 billion for the first quarter of 2021, up sharply from GBP913 million a year ago, even as total income fell 6% to GBP5.90 billion. Credit impairment charges were cut by 97% to GBP55 million from GBP2.12 billion.

"This may have been a record quarterly profit, but under the bonnet the situation is not as straightforward," commented Richard Hunter at Interactive Investor.

"Unlike its peers, Barclays did not make a provisions release but rather a significantly smaller impairment charge, of GBP55 million. This compares to GBP2.1 billion a year ago, and is the key driver for a somewhat cosmetic boost to the profit number. In terms of actual trading, income fell and costs rose, with the inevitable effect of a worsening cost/income ratio, up to 61% from 52% the previous year," Hunter said.

Elsewhere in London, Darktrace got off to a bright start to life in London, shares charging up 37% to 342 pence as conditional dealings commenced from an IPO price of just 250p.

The UK tech startup, founded in 2013, provides cybersecurity services to businesses using artificial intelligence.

Sky News last week reported that Darktrace was cutting the value of its initial public offering to avoid a repeat of Deliveroo's calamitous float - a plan that appears to have worked well as Darktrace's GBP1.7 million market capitalisation on admission turned into a valuation of GBP2.3 billion at its current share price.

Even with a market capitalisation of just GBP1.7 billion, Darktrace would comfortably slip into the FTSE 250 in the next quarterly index review. Unconditional dealings begin on May 6.

The economic events calendar on Friday has eurozone economic growth figures at 1000 BST. The euro traded at USD1.2107 ahead of the figures, easing from USD1.2120 late Thursday.

Sterling was quoted at USD1.3916 early Friday, down on USD1.3950 at the London equities close on Thursday.

Gold was quoted at USD1,770.72 an ounce early Friday, slightly up on USD1,768.68 on Thursday. Brent oil was trading at USD68.32 a barrel, edging down from USD68.35 late Thursday.

By Lucy Heming; lucyheming@alliancenews.com

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