Strong earnings forecasts, miners lift FTSE 100 to 3-week highs

FILE PHOTO: Pedestrians leave and enter the London Stock Exchange in London
·2 min read

By Bansari Mayur Kamdar

(Reuters) -UK's FTSE 100 rose to a three-week highs on Tuesday, boosted by mining stocks and positive earnings outlooks, with global markets taking relief from receding concerns about the Omicron variant of the coronavirus.

The commodity-heavy FTSE 100 ended 1.5% higher with base metal miners leading gains as copper prices were boosted by monetary policy easing in top consumer China. [MET/L]

Plumbing parts distributor Ferguson advanced 5.9% and was among the top gainers on the index after a strong revenue growth forecast.

Rental equipment provider Ashtead Group PLC rose 3.9% after raising dividend and saying it expects full-year results ahead of previous estimates.

"Ferguson spun-off its UK-based operation Wolseley, so it's now just a U.S.-based company, and Ashtead also has a very big presence in the U.S.," said Michael Hewson, chief markets analyst at CMC Markets.

"They're essentially leveraging a decent recovery in the U.S. economy and that's why they are posting decent gains."

The FTSE 100 has rebounded to levels touched before the detection of the Omicron variant in late November after experts said the new strain might not be as severe as feared.

The domestically focussed mid-cap index advanced 1.6%, with travel and leisure stocks recovering 1.2% after getting hammered recently on fears of tighter travel restrictions.

British American Tobacco gained 1.0% after reiterating its full-year profit and sales forecasts, as more people switched to its Vuse vaping and Velo oral nicotine products.

"It's just a start but, given the regulatory, investor and political pressure associated with the sale of traditional cigarettes it is a modest step in the right direction for the business," said Russ Mould, investment director at AJ Bell.

Heavyweight drugmaker AstraZeneca declined 1.7% after brokerage Jefferies downgraded the stock saying its earnings per share is set to decline to single-digit growth beyond 2026.

(Reporting by Bansari Mayur Kamdar and Amal S in Bengaluru; Editing by Subhranshu Sahu, Uttaresh.V, and Angus MacSwan)