London open: Stocks in the black as Next rallies after profit upgrade

London stocks rose in early trade on Thursday, with a profit upgrade from Next and US President Joe Biden’s $2trn infrastructure plan helping to underpin sentiment, amid rising Covid cases and tighter restrictions in Europe.

At 0900 BST, the FTSE 100 was up 0.5% at 6,745.05, on what is set to be a fairly quiet day ahead of the long Easter weekend.

On the data front, Markit’s manufacturing PMI for March is due at 0930 BST.

Spreadex analyst Connor Campbell said: "Despite the Dow Jones failing to finish March at an all-time high, the European indices had a spring in their step on the first day of April.

"Climbing half a percent, the FTSE found its way back above 6,750 after the bell. The index spent the final week or so of March repeatedly hitting its head on 6,775 before retreating, even with the confidence boost of Monday’s re-opening. And Thursday doesn’t look like it is going to offer up the kind of surge in energy the UK index needs to firmly cross that level pre-Easter.

"There was some good news from the retail sector, however, as Next unexpectedly lifted its guidance for this year."

Next rallied after saying it now expects profits of £700m, up £30m after a boom in sales during February and March. It also reported a slump in annual profits, but this was expected.

Steve Clayton, fund manager of the Hargreaves Lansdown Select funds, which holds Next shares, said: "Profits may have more than halved, but to be reporting any sort of profit at all as a fashion retailer after a year like 2020 is a remarkable achievement.

"But Next is a remarkable business. The group saw the potential of online retailing years before their rivals took it seriously. As a result Next was earning most of its money online, even before the pandemic struck. That has left it in a far stronger position than rivals like M&S (loss-making), or Arcadia and Debenhams (both now bankrupt).

"When Next does reopen their doors they will be perhaps the strongest of the survivors and Britons have saved up a lot of spending money during lockdown. We see Next as incredibly well positioned to generate profit and cash in the years ahead."

Elsewhere, travel-related stocks were on the rise following a Financial Times report that ministers are planning a traffic light system to unlock foreign travel. GKN owner Melrose Industries, British Airways owner IAG, engine maker Rolls-Royce, SSP - which operates food and beverages outlets at travel locations - and Tui were all higher.

Quilter gained after agreeing to sell its international business to life assurance company Utmost for around £483m as it looks to simplify the group and focus on its higher growth UK wealth management business.

Airtel Africa advanced as it said Mastercard will invest $100m in its mobile money business, Airtel Mobile Commerce.

On the downside, Phoenix Group and Smith & Nephew were both weaker as their stock went ex-dividend.

Market Movers

FTSE 100 (UKX) 6,745.05 0.47%
FTSE 250 (MCX) 21,642.60 0.58%
techMARK (TASX) 4,232.82 0.25%

FTSE 100 - Risers

Melrose Industries (MRO) 173.20p 3.77%
Next (NXT) 8,120.00p 3.23%
Rolls-Royce Holdings (RR.) 108.44p 2.98%
Informa (INF) 576.20p 2.93%
International Consolidated Airlines Group SA (CDI) (IAG) 203.95p 2.85%
Ashtead Group (AHT) 4,427.00p 2.31%
Aveva Group (AVV) 3,501.00p 2.31%
JD Sports Fashion (JD.) 843.60p 2.30%
Weir Group (WEIR) 1,817.50p 2.28%
Whitbread (WTB) 3,493.00p 1.96%

FTSE 100 - Fallers

Phoenix Group Holdings (PHNX) 710.40p -3.24%
Smith & Nephew (SN.) 1,357.50p -1.49%
British American Tobacco (BATS) 2,749.50p -0.88%
Avast (AVST) 452.80p -0.70%
Severn Trent (SVT) 2,291.00p -0.65%
AstraZeneca (AZN) 7,201.00p -0.63%
Tesco (TSCO) 227.65p -0.52%
National Grid (NG.) 859.70p -0.50%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,655.00p -0.49%
GlaxoSmithKline (GSK) 1,282.20p -0.45%

FTSE 250 - Risers

Trainline (TRN) 477.20p 3.97%
SSP Group (SSPG) 385.90p 3.63%
Babcock International Group (BAB) 236.80p 3.59%
Cineworld Group (CINE) 99.92p 3.57%
Quilter (QLT) 165.35p 3.44%
Victrex plc (VCT) 2,278.00p 3.08%
Carnival (CCL) 1,633.40p 3.02%
Petropavlovsk (POG) 24.54p 2.89%
TUI AG Reg Shs (DI) (TUI) 377.40p 2.78%
Airtel Africa (AAF) 81.50p 2.77%

FTSE 250 - Fallers

Royal Mail (RMG) 490.80p -2.73%
Elementis (ELM) 122.30p -2.55%
XP Power Ltd. (DI) (XPP) 4,600.00p -2.13%
JPMorgan American Inv Trust (JAM) 595.00p -1.82%
Energean (ENOG) 835.00p -1.74%
Contour Global (GLO) 201.00p -1.47%
Convatec Group (CTEC) 193.50p -1.33%
Finsbury Growth & Income Trust (FGT) 851.00p -1.28%
Murray International Trust (MYI) 1,194.00p -1.16%
Mitie Group (MTO) 62.20p -1.11%