Standard Chartered propels FTSE but China woes cap gains

UK shares power ahead as Standard Chartered jumps more than 10% but Sainsbury’s warns on cost-of-living crisis. Global trust Manchester & London rallies 7% following recent US tech stock results.

The FTSE 100 was propelled higher by a double-digit jump in Standard Chartered (STAN) shares but concerns about a Chinese slowdown and a cautious tone from Sainsbury’s (SBRY) capped gains for UK stocks.

The blue-chip index was up 0.9%, or 63 points, at 7,488 as it neared the 7,500 mark following a selloff earlier in the week.

Standard Chartered was the biggest riser, with the Asia-focused lender’s shares soaring 11.6%, or 55p, to 535p, after it reported a 6% jump in first-quarter profit thanks to a favourable interest rate environment, as well as raising earnings guidance for the full year.

Barclays (BARC), with results also out, saw profits hit by a jump in litigation and conduct charges after a messy first quarter, including a bond issuance blunder in the US, though strong investment banking revenues somewhat cushioned the blow. Its shares rose 2.2% to 145p, while Lloyds (LLOY) was also up 1.9% at 46.6p, adding to gains made yesterday.

‘Investors in Standard Chartered are weighing up the tailwind from rising interest rates against the fallout from the war in Ukraine, which has created a notable slowdown in dealmaking in the industry,’ said Victoria Scholar, head of investment at Interactive Investor.

‘On top of that, Standard Chartered is grappling with the threat of further lockdown measures in China, which is already eating into its wealth management income.’

China was again a cause of wider market concern with e-commerce hub Hangzhou set for more disruption as the government confirmed its more than 12 million residents will undergo coronavirus testing, a move which Hargreaves Lansdown senior investment analyst Susannah Streeter said was ‘a precursor to the hugely disruptive Shanghai shutdown’.

‘Beijing has also reported an increase in cases, with some residential areas sealed off,’ she said.

‘The worry is that China is committed to its zero-Covid-19 policy for the long haul and that is set to mean ongoing disruption for trade.’

Concerns about a result drop in demand for fuel in the world’s second-largest economy also helped push Brent crude back down to around $104 a barrel.

Back in the UK, Sainsbury’s also limited gains on the FTSE, with its shares dropping 4.8%, or 11p, to 227p, after the supermarket warned profits will be hit by the cost-of-living crisis this year.

While profit before tax for the year to the end of March jumped to £730m from £357m the year before, allowing the group to increase its dividend by nearly a quarter, it followed Tesco (TSCO) in forecasting lower profits in the coming year as it limits price rises for straitened consumers.

But Whitbread (WTB) rallied 4.3% to £28.75 as the Premier Inn owner resumed dividend payments to shareholders and said its future bookings had exceeded pre-pandemic levels. It will pay a 34.7p on 1 July.

The FTSE 250 also advanced, gaining 0.9%, or 176 points, to reach 20,613. Insurer Lancashire (LRE) led the mid-caps higher, adding 10.4%, or 41p, to trade at 440p after estimating manageable losses in Ukraine at $20m-30m and saying any further losses from Russia or Ukraine were ‘within our risk tolerances’.

That helped pull peer Beazley (BEZ) higher, as the specialist insurer climbed 4.7%, or 20p, to 438p.

Sunny Manchester

Manchester & London (MNL ) jumped 7.4% to 408.25p as recent results from Microsoft and other US tech stocks boosted the global portfolio, which closed yesterday on an 18% discount to net asset value.

In other investment trust trading, BlackRock Greater Europe (BRGE ) and Smithson (SSON ) both gained over 2% after falling to unusual discounts of 2.6% and 6% yesterday.

Private equity trusts Chrysalis (CHRY ) and HgCapital (HGT ) were in favour, both advancing 3.2%.

BMO Real Estate Investments (BREI ) rose 2.5% to 98.8p from a 20% discount after posting a 6.6% total investment return in the first three months of the year.

Nippon Active Value (NAVF ) rose 2.3% to 112.5p on a 7% discount after the activist investor increased its buyout offer for drug researcher Intage Holdings.

Vietnam Enterprise (VEIL ) firmed 1.6% to 740.9p from an 18% discount after annual results confirmed a 47.1% investment return for last year, beating its Vietnam Index benchmark by 8.1%.

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