FTSE 100 close: London index slides into red despite Rolls-Royce scaling more than 20 per cent
London’s FTSE 100 fell further away from the 8,000 point mark again today despite investors pouring into aerospace giant Rolls-Royce.
The premier index shed 0.29 per cent to close at 7,907.71 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, jumped 0.59 per cent to 19,790.49 points.
Profits at Rolls-Royce climbed 57 per cent in 2022 to £652m, the company announced today, sending its share up more than a fifth and to the top of the FTSE 100, helping to arrest a steady decline in interest from traders.
“Investors have fallen out of favour with Rolls-Royce in recent years given its bumpy ride with shares shedding more than 60 per cent over the past five years,” Victoria Scholar, head of investment at interactive investor, said.
“However that could be set to change with the CEO shake-up potentially reinvigorating the bull case if he can spearhead a much-needed drastic overhaul,” she added.
Tufan Erginbilgic, who joined the firm as chief in January, vowed today to turnaround years of underperformance.
Fellow aerospace company BAE Systems, which reported underlying earnings per share up 9.5 per cent to 55.5 pence for 2022, ahead of analysts’ expectations, advanced slightly today in Rolls-Royce’s slip stream.
Shares in advertising giant WPP also jumped towards the top of the FTSE 100 after the company upgraded its 2023 organic growth guidance to between three and three per cent. The firm founded by advertising tycoon Martin Sorrell eventually closed up nearly four per cent.
Scholar said: “While advertising spending tends to be a cyclical outlay that ebbs and flows with the economic cycle, encouragingly customers have continued to invest in marketing in the final quarter of the year at WPP despite the macroeconomic headwinds.”
Miners dragged the premier index into the red today after Anglo American said it has suffered a more than £1bn hit from on a mine in Yorkshire. Fellow sector big wigs Antofagasta and Rio Tinto slid more than two per cent.
The pound weakened more than 0.2 per cent against the US dollar despite a Bank of England rate setter warning that borrowing costs will have to keep rising to tackle inflation.
Catherine Mann, who joined the rate setting group in September 2021 as an external member, said at an event hosted by the Resolution Foundation that she does not think the current level of rates are “in a restrictive stance”.
The Bank has lifted rates ten times in a row to a 15-year high of four per cent.