The FTSE 100 ended Thursday slightly lower despite another busy day of earnings, with gains from Diageo, Admiral and Persimmon offset by heavyweight stocks trading without their latest dividend payments.
The blue-chip index closed down 0.2%, while the FTSE 250 added 0.3%, helped by a huge rebound in WPP and fresh takeover developments involving easyJet.
Diageo delivers the update investors wanted
Diageo was one of the day’s strongest performers, climbing 5.6% after new chief executive Dave Lewis unveiled his first set of annual results alongside a strategy aimed at getting the drinks giant growing more consistently again.
A central part of the plan is $1 billion of cost savings, with Lewis also saying he remains confident that demand for premium spirits and ready-to-drink products will continue to grow over the longer term.
For the 2027 financial year, Diageo expects broadly flat organic sales growth alongside low to mid-single-digit growth in operating profit.
The outlook was better than many investors had feared. Citigroup said the market had been preparing for earnings downgrades of between 5% and 10%, making the update a welcome surprise and likely leading to small upgrades to forecasts over the next two years.
Other notable movers
Admiral also enjoyed a strong session, rising 5.2% after saying recent pricing changes in its motor insurance business leave it well placed for an improvement in profitability during the second half of the year.
Housebuilder Persimmon gained 2.9% after reporting stronger-than-expected interim results. Underlying operating profit rose 10% to £189.1 million, while new home completions increased 13% to 5,189, comfortably ahead of market expectations.
The company still warned that affordability pressures and higher building costs continue to make conditions difficult across the housing market.
The FTSE 100 would have finished higher were it not for several heavyweight stocks trading ex-dividend. Relx fell 4.1%, Rolls-Royce lost 2.4% and AstraZeneca slipped 1.6%, moves that reflected dividend adjustments rather than a change in company fundamentals.
WPP stages comeback
The biggest move of the day came in the FTSE 250, where WPP surged 29% after backing its full-year guidance and reporting an improvement in second-quarter trading.
The advertising group has endured a difficult few years, having been relegated from the FTSE 100 last December after almost three decades in the index.
At its peak in 2017, WPP was worth around £24 billion. Today its market value stands closer to £4.1 billion, making Thursday’s rally one of its strongest sessions in years.
Elsewhere, easyJet gained 2.8% after accepting a takeover offer from Apollo, bringing a lengthy bidding battle closer to a conclusion after rival bidder Castlelake withdrew.
The offer values the airline at 715p per share and has the backing of founder Stelios Haji-Ioannou and his family.
European markets edge higher as Wall Street waits for jobs data
European markets enjoyed a steadier session, with the CAC 40 rising 0.4% and Germany’s DAX adding 0.1%.
Across the Atlantic, US stocks slipped as Treasury yields moved higher and investors worked through another wave of company earnings.
The Dow Jones Industrial Average fell 0.9%, ending its recent record-breaking winning streak, while the S&P 500 lost 0.2% and the Nasdaq Composite eased 0.1%.
Investors remain focused on whether technology companies can generate enough returns to justify enormous spending on artificial intelligence, with several recent earnings reports showing that simply beating forecasts is no longer enough to satisfy the market.
Attention now turns to Friday’s US non-farm payrolls report. A stronger-than-expected reading could revive expectations of another Federal Reserve rate rise, while weaker jobs data would strengthen the case for rates remaining on hold for longer.