FTSE 100 gains as Rolls-Royce and LSEG soar; but Trump warns tariffs hit next week

• FTSE 100 up 30 points to 8,762
• Rolls-Royce flies to new high as results impress
• Results also from Aviva, LSEG, WPP, Haleon, St James's Place and more
• Trump confirms tariffs start next week  

4.15pm: Solid day's work for the Footsie

Just prior to the close, the FTSE 100 was back on track for a reasonable day's gain, up 30 points.

To sum up, Rolls-Royce topped the risers as it brought back its dividend after a hiatus of several years, with the cherry of a £1 billion buyback on top, to celebrate a big rise in profits last year. 

A 15% surge for the engine maker also carried other aerospace, defence and airlines names in its wake, with BAE Systems, IAG, easyJet and Melrose among the risers. 

LSE Group, Aviva and Hiscox climbed 6.2%, 4.5% and 4.3% respectively on the back of their own annual results.

Fallers were led by WPP Group, with the advertising giant's outlook pointing to another tough year. 

Howden Joinery, Haleon, St James's Place and Taylor Wimpey also fell as their results did not hill all the right notes.

After US President Trump confirmed his tariff threats for Mexico, Canada and China, major currencies like the euro, pound, Canadian dollar and China's yuan all fell, "fuelling the risk-off tone", says market analyst Fawad Razaqzada at City Index.

He says the focus for many taders is the US PCE inflation data on Friday and ongoing Ukraine peace talks.

An inflation expectations survey last week revealed a 30-year high in long-term inflation expectations, reaching 3.5%, and if the PCE data comes in ahead of the expected 2.6% reading, "then that could trigger further volatility in the markets", says Razaqzada.

2.47pm: Wall Street mostly higher, Europe down on Trump tariff confirmation

US stocks have opened higher, as expected.

The Nasdaq Composite was the initial front-runner, up 0.7% at the open, but has since dropped into the red momentarily as it seems to search for direction in early trades.  

Nvidia, on the back of its earnings last night, is up 1%, while Apple is down 0.5%. 

The S&P 500 up 0.3% and Dow Jones 0.5%.

Salesforce is down 3.3% after its earnings overnight. 

Back in Europe, the FTSE 100 has flattened off in the past hour and also plopped into the red a short while ago.

Continential indices are also lower, with the DAX down 1% and France, Spain and Italy's benchmarks down between 0.8% and 1%.   

The US dollar rallied as President Trump announced on social media that Mexico, Canada and China tariffs will start on 4 March.

Trump has announced that his proposed tariffs on Mexico and Canada will go into effect on 4 March, dashing hopes of another delay.

"We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled," he exclaimed on his Truth Social platform.  

"China will likewise be charged an additional 10% Tariff on that date," he added, with the 2 April reciprocal tariff date also to "remain in full force".

2.21pm: UK government confirms commitment to biodiversity

Last night the UK government set out its national biodiversity strategy and action plan (NBSAP), a commitment to implement all of the UN's 23 biodiversity framework targets. 

The Department for Environment, Food & Rural Affairs (Defra) and Scottish, Welsh and Northern Ireland governments said the strategy included commitments to:

• Expand protected areas to at least 30% of the land and seas
• Reduce pollution from all sources to levels that are not harmful to biodiversity
• Enhance biodiversity and sustainability in agriculture, aquaculture, fisheries, and forestry
• Ensure sustainable, safe and legal harvesting and trade of wild species 

"The launch of the NBSAP is a signal of the UK’s commitment to match international co-operation on nature with domestic activity to protect and enhance our natural world," said Ruth Davis, the UK’s Special Representative for Nature.

"We will continue to play our part in achieving our international nature targets, while working with other nations to make a difference across the globe."

Rob Wreglesworth, associate ecologist at Environment Bank, a provider of BNG units, welcomed the long-awaited strategy.

"The recognition of biodiversity net gain as a cornerstone policy shows the government understands that development and nature recovery can work hand-in-hand," he said.

He said experience delivering BNG demonstrates that "regulatory certainty drives investment at scale" so to unlock the billions needed for nature recovery, "we need mandatory reporting through frameworks like TNFD to hardwire nature into financial decision-making."

Having pioneered nature markets globally with BNG scheme, he called for the creation of "comprehensive frameworks that channel private capital toward genuine ecological outcomes".

2pm: Sell Rolls-Royce?

Analysts at Berenberg say 'sell' Rolls-Royce, with guidance for 2025 suggesting a moderation in growth (due to a stronger-than-expected finish to last year), with the returned dividend offering around a 1% yield as of last night’s close price.

The say that while the results and guidance are comfortably ahead of a thin selection of sell-side forecasts, those on the buy-side (ie institutional investors and analysts) "have flagged their FCF estimates are well ahead of those of the sell side and we have often had figures cited to us of £4bn to £5bn in FCF, prior to the recent moves in FX".

Berenberg sees the shares, which are have doubled in the past 12 months and 600% since the end of 2022, they are now priced at around 30 times forecast earnings per share and 22 times operating profit, which are "US-tech like multiples" and "we think there is greater value elsewhere".

1.20pm: Calculating the economic damage of tariffs

The economies of both the European Union and US would contract as a result of Donald Trump's proposed 25% tariffs on European goods, Germany's Kiel Institute for the World Economy has calculated, with a sharper effect if Europe retaliates with its own tariffs.

The European economy would shrink by an average of 0.4% in real GDP terms within the first year, "a significant impact for a short-run scenario," the institute said in a note today. 

"The US itself would not be spared, experiencing a contraction of 0.17%."

If the EU retaliates with its own 25% tariffs, the economic damage to the US "would double", it added, with prices in the US likely to increase by up to 1.5%.

12.27pm: London and New York in buying mood

At lunchtime on Thursday, the FTSE 100 continues to stand above the parapet in Europe as the only blue-chip benchmark sitting higher. 

The London index is up 30 points or 0.3%, while its Frankfurt and Paris counterparts are down 0.5% and 0.3%, with Milan and Madrid also in the red. 

Car manufacturers are among those being hit in Europe, with Stellantis and BMW down around 3%, and Porsche, Volkswagen and Mercedes-Benz all down around 2% following Trump's tariff threat overnight, while Renault is up 0.8%.

US futures are pointing higher, helped by a pivot from Nvidia into green in premarket trading after heading lower after the earnings came out overnight. 

As a result of the chipmakers's 2.5% premarket gain, futures are indicating the Nasdaq 100 to rise 0.8%, with S&P 500 futures up 0.7% and those for the Dow Jones up 0.3%.

11.43am: Rolls impresses the City

Some views on Rolls: the results are "strong" says UBS, with profits and free cash flow well ahead of expectations, 2025 guidance also a "beat" and 2028 guidance "likely significantly ahead of investor expectations".

The Civil Aerospace arm's second-half performance beat the consensus by 15%, based on onerous contract provision reversals and catch-ups, which analysts said suggested "the quality of the beat is high".

Garry White at broker Charles Stanley says CEO Tufan Erginbilgic is "demonstrably having significant success", with cash management improved, waste eliminated and a return to the dividend list after a five-year post-Covid hiatus.

But he felt Erginbilgic also had a "substantial amount of 'luck' - which came in the strange form of Vladimir Putin and Donald Trump", as the invasion of Ukraine and the US reluctance to fund more defence spending on the Continent leading to "a perfect storm for sales teams in the defence industry".

11.22am: Ocado tumbles as M&S JV prepared for split

Ocado Group PLC (LSE:OCDO) shares have tumbled 14% even though results looked pretty good for the grocery delivery group, though there are wrinkles pointed out by analysts.  

UBS says revenue was slightly ahead of expectations and EBITDA at £153.3 million was a big beat of the £142.7 million average City forecast.

Analysts noted that Ocado is de-consolidating the Ocado Retail joint venture from April this year, pointing to preparations for M&S to take full control with a year.

Guidance on the Tech Solutions growth and margins "looks a little light at first glance to us and slightly disappointing as is the cash outflow of £200 million," they say, but reiterating positive cash flow for next year "helps".

But Russ Mould at AJ Bell says: "Being a shareholder in Ocado must feel like being kept waiting on a grocery delivery indefinitely as the promised profit never materialises" as the lack of cash generation is likely to make some investors nervous about the company’s level of borrowings.

"Ocado is reaching the point where more radical action is required, whether that involves a new management team being given a shot, or hiving off its retail venture with Marks & Spencer."

10.39am: A big AIM deal and another exit

A sizeable deal in London's junior market: ATOME PLC (AIM:ATOM), which has teed up a $100 million investment from Hy24, a hydrogen-focused private equity asset manager, for the AIM company's Villeta green fertiliser project in Paraguay.

Hy24 will be the anchor and lead equity investor in a funding round targeting $115 million, with its own fund committing to a minimum contribution of $100 million.

The equity investment is at the asset level, with ATOME maintaining the day-to-day management and operational responsibility of the project.

Elsewhere on AIM, CMO Group has crashed 80% as the online building materials retailer prepares to delist, saying it has failed to secure enough funding.

It is the latest business to join the exodus from the public markets, which has shown little sign of abating after a brutal 2024, which saw around 90 companies heading for the exit door.

10.15am: Eurpoean markets mostly in red still 

The FTSE 100 is the only major European index in green, with company results and maybe hopes that the UK will avoid European tariffs from the US boosting sentiment in London.

Germany's DAX is down 0.85% and Italy's FTSE MIB is 1.1% lower, while France's CAC 40 and Spain's IBEX are both down 0.2%. 

9.59am: FTSE in the green

The FTSE 100 has broken into positive territory as several heavyweight banks and commodities giants fallers have flipped from the red into the green. 

AstraZeneca, HSBC, Shell, BP and LSEG from the index top 10 are all higher. 

Rolls-Royce continues to top the leaderboard, with British Airways owner IAG (LSE:IAG), bringing other aerospace and defence group behind it, including BAE Systems PLC (LSE:BA.) and Melrose Industries PLC (LSE:MRO, OTC:MLSPF). 

London Stock Exchange Group PLC (LSE:LSEG) is up 2.6% on the back of its results, with a full year dividend of 130p that was 5% higher than expectations and announced a £500m share buyback to be completed in the first half of the year, promising a further update at interim results "depending on other uses of capital."

9.27am: Haleon and St James's Place

Haleon PLC (LSE:HLN, NYSE:HLN) shares are down 3% as there seemed to be little in the results to justify further gains at current valuations.

Full-year sales and profits met expectations, but analysts noted a lack of clear catalysts.

A £500 million share buyback and a 10% dividend increase were positives, but not enough to boost sentiment.

Elsewhere, St James's Place PLC (LSE:STJ) is down 4% as investors take profits following a strong rally from last year’s lows.

Full-year results were robust, including a swing back to a £398.4 million pre-tax profit and a £93 million share buyback, but like Haleon a seeming lack of fresh catalysts led some to cash in.

Analyst Stuart Duncan at Peel Hunt noted that key projects are all progressing and should be in line with expectations but the phasing of the project costs and guidance will be at the upper end, "suggesting modest downside to forecasts".

8.58am: Markets wallowing in first hour

All but six of the FTSE's 20 largest stocks are in the red this morning.

Three of the biggest fallers are Barclays, Diageo and Unilever, down 3.7%, 3.3% and 1.3% respectively.

But this is because their shares have gone ex-dividend today, meaning anyone who buys them today misses out on the upcoming dividend payment. 

Elsewhere, tariffs and trade are weighing. 

The spotlight is also on Keir Starmer’s trip to Washington to meet counterpart Donald Trump today, which market analyst Susannah Streeter at HL calls a "high-wire diplomatic balancing act as he "faces the supremely tricky task of trying to keep the US onside as a key NATO ally but demonstrate a stern enough demeanour to maintain support at home".

"He has a slightly stronger hand now, given the commitment to up military spending to 2.5% of GDP, with a pledge to raise to 3% during the next parliament but he may still be scolded for a lack of ambition," she adds. 

"Given the fracturing of Western relations over the past week, amid Trump’s siding with Putin, maintaining military partnership will be the most urgent topic of discussion.

"While talk is likely to turn to trade, given Trump’s tariff threats still dangling over the world, making progress on an agreement for a UK exemption or even a future deal, is likely to be wishful thinking."

8.27am: US tariff threat hits Europe

US tariffs are likely to be what's weighing on the FTSE this morning, with all European markets in the red.  

Goods made in the European Union will be hit with 25% tariffs, Donald Trump said last night in the first cabinet meeting of his new presidency.

"We have made a decision and we’ll be announcing it very soon. It’ll be 25%,” he said, threatening that that levies will be applied “generally”.

“And that’ll be on cars and all other things.”

8.13am: FTSE falters in early trade

The FTSE 100's early move was a 44-point drop but that has quickly been pared, with the blue-chip index now down 23 points at 8,708.

Leading the fallers initially is WPP PLC (LSE:WPP) after its fourth-quarter results met expectations but guidance was for flat to down-2% revenues this year.

Rolls is top of the leaderboard, up 15% to a new all-time high as investors celebrate £1 billion buyback and dividend return.

7.59am: Ocado bottom line improving

Ocado Group PLC (LSE:OCDO) has reported an increase in underlying profit on an EBITDA basis and trimmed its statutory losses, saying it remains confident of producing positive cashflows by next year. 

Results for 2024 from the grocery delivery group show revenues of £3.2 billion, down 14.1%.

Group adjusted EBITDA came in at £153.3 million, up from £51.6 million the year before, while the statutory loss was reduced to £374.3 million from £387 million, after adjusting items of £4.8 million.

There was an underlying cash outflow of £223.7 million, which was down from £472.5 million last time.

This year is expected to see another outflow of "around £200 million" as guidance was given for the core Technology Solutions arm to grow revenue 10% and the Ocado Retail joint venture with Marks and Spencer Group PLC (LSE:MKS) expands more than 10% with underlying EBITDA margins of around 4%. 

7.39am: Rolls brings out the returns 

Rolls-Royce Holdings PLC (LSE:RR.) brought back its dividend and announced a £1 billion share buyback on top as the engine maker upgraded profit and cashflow targets for the next four years. 

An underlying operating profit of £2.5 billion at a margin of 13.8% as revenue rose 17% to £17.85 billion.

As well as the buyback, a dividend of 6p per share was declared, based on a 30% payout ratio of underlying post-tax profit.

CEO Tufan Erginbilgic hailed growth from the three core divisions "despite a supply chain environment that remains challenging" and said the results build on the transformation plan he kicked off the previous year.

"We are moving with pace and intensity. Based on our 2025 guidance, we now expect to deliver underlying operating profit and free cash flow within the target ranges set at our capital markets day, two years earlier than planned."

7.26am: Avvia profits beat forecasts

Aviva PLC (LSE:AV.) seems to have delivered higher profits than expected for last year.

It's hard to tell as the life insurer's results are not presented in a simple format but only with a distracting lets-get-our-graphic-designer-on-this layout normally reserved for the final annual report and accounts.

From what I can tell, operating profit was £1.77 billion, up 20% on the previous year, while the analyst consensus was for £1.71 billion, per LSEG.

Aviva also announced a final dividend of 23.8p per share, making a total for the year of 35.7p, an increase of 7%, which is on top of a £300 million share buyback earlier in the year.

Other details when I can find them. 

7.11am: FTSE 100

The FTSE 100's direction on Thursday is likely to be driven by the sheer volume of constituent companies reporting results today, though futures markets are pointing to a decline at the open. 

After adding almost 63 points to finish at 8,731.5 yesterday, the index has been called 13 points lower this morning.  

Overnight, Wall Street produced a mixed session, ending with the S&P 100 marginally above flat, the Dow Jones down 0.4% and the Nasdaq Composite closing up 0.3%.

Earnings from Nvidia Corp after the closing bell beat analyst estimates as production of its latest server chip Blackwell was ramped up, but the stock fell 1.5% in out-of-hours trading. 

5am: What to watch on Thursday

It's a big day for results, especially in the financials sector.

Some analysts have warned Aviva PLC (LSE:AV.) could be on course to underwhelm in its results, though its shares were up over 3% yesterday... Read more

Profits, cash flow and commentary around complaints will be the focus when St James's Place PLC (LSE:STJ) updates... Read more

London Stock Exchange Group PLC (LSE:LSEG) approaches its results not long after having hit a record high... Read more

Signs of a recovery for the wider housing market will be watched for by Taylor Wimpey PLC (LSE:TW.) investors... Read more

A well-followed stock after its strong rises over the past two years, expectations on Rolls-Royce Holdings PLC (LSE:RR.) were running sky high once again before the results... Read more

Meanwhile, Haleon PLC (LSE:HLN, NYSE:HLN) results are expected to see some headwind from a weak start to the cold and flu season in the final quarter of 2024 but an upturn in recent trading... Read more

Announcements due on 27 February:  

Interims: Brooks Macdonald Group PLC, Bluefield Solar Income Fund Ltd, Genus PLC 

Finals: Aviva PLC, Cairn Homes PLC, Drax Group PLC, Greencoat UK Wind PLC, Haleon PLC, Hiscox Ltd, Howden Joinery Group PLC, Jupiter Fund Management PLC, London Stock Exchange Group PLC, MacFarlane Group PLC, Ocado Group PLC, PPHE Hotel Group Ltd, RHI Magnesita NV, Rolls Royce Holdings PLC, Serco Group PLC, Shaftesbury Capital PLC, Taylor Wimpey PLC, Winking Studios Ltd, WPP PLC, St James's Place PLC

US earnings: Viatris, HP 

AGMs: Active Energy Group PLC, Integrafin Holdings PLC, Schroders Capital Global Innovation Trust PLC, M&G Credit Income Investment Trust PLC, Oncimmune Holdings PLC 

Economic announcements: Car Production (UK), Consumer Confidence (EU), GDP (US), Durable Goods Orders (US) 

Ex-dividends to reduce FTSE 100 by: 10.05 points (Barclays, Diageo, Unilever)