Rolls-Royce lifts mid-term guidance, Taylor Wimpey revenues fall

London open The FTSE 100 is expected to open 20 points lower on Thursday, having closed up 0.72% on Wednesday at 8,731.46.

Stocks to watch

Rolls-Royce on Thursday lifted mid-term guidance and unveiled a £1bn share buyback as annual profits jumped, driven by its civil aerospace unit. The company said it expects to deliver 2025 underlying operating profit of £2.7bn-£2.9bn and free cash flow £2.7bn-£2.9bn, two years earlier than planned. Annual operating profit last year surged to £2.9bn from £1.94bn. Upgraded mid-term targets include underlying operating profit of £3.6bn-£3.9bn and free cash flow of £4.2bn-£4.5bn.

Taylor Wimpey posted a fall in annual revenues and profits on Thursday, but said it had seen a "robust" start to the new year as demand picked up. The blue chip housebuilder completed 10,593 homes in 2024, down on the previous year’s 10,848, while the average selling price fell to £356,000 from £370,000. As a result, revenues eased 3.2% to £3.4bn, while operating profits fell 11.5% to £416.2m. Pre-tax profits were down 32.4% at £320.3m.

Aviva reported a 20% increase in operating profit to £1.77bn for 2024 on Thursday, supported by strong growth across its insurance, wealth, and retirement businesses, as well as higher cash remittances and improved sales in both UK and Canadian markets. The company said it was continuing to shift towards capital-light businesses, with the segments now contributing 56% of operating profit, and expected that to exceed 70% following the proposed acquisition of Direct Line, set to complete in mid-2025. Aviva said it remained confident in its outlook, maintaining its targets for 2026, including £2bn in operating profit and £1.8bn in Solvency II own funds generation, while continuing to optimise pricing and risk management in its general insurance and protection businesses.

Newspaper round-up

Sadiq Khan, the mayor of London, has announced an ambitious plan to add more than £100bn to the capital’s economy within a decade. Unveiling what he is calling the London growth plan, Khan said he was allocating hundreds of millions of pounds in devolved funding in an attempt to return the annual productivity growth of the London economy to the levels seen before the 2008 financial crisis. – Guardian

England’s most polluting water provider “isn’t good enough” at trying to stop sewage dumping, its boss has admitted to MPs. The chief executive of United Utilities defended her £1.4m pay packet, including a £420k bonus, despite the company behind historic spills in Lake Windermere having been found to have polluted more than any other in 2023. – Guardian

Amazon is to start charging a monthly fee for a revamped version of Alexa as the e-commerce giant upgrades its decade-old voice assistant so it can order groceries, make a restaurant booking and hold a conversation with users. The online retailer’s new Alexa+ service, which will cost as much as $19.99 (£15.74) per month, will be able to understand complicated requests, order items online and manage smart home gadgets. – Telegraph

Nvidia has forecast first-quarter sales ahead of Wall Street expectations as the American artificial intelligence chipmaker recorded strong demand for its next-generation Blackwell chip. The Santa Clara-based company sought to allay investor fears about AI chip demand as it predicted revenue of $43 billion for the next quarter, plus or minus 2 per cent. Analysts had forecast first-quarter revenue of $42.1 billion. – The Times

House values have risen three times faster than those of flats since the beginning of the pandemic, with would-be buyers put off by worries over cladding and service charges. On average, house prices in the UK have risen by 24 per cent over the past five years, compared with a 7 per cent increase in the price of flats, data from Zoopla, the property search website, shows. Flats have risen in value by 0.5 per cent over the past year, while house prices are up by 2.2 per cent, on average, over that time. – The Times

US close

Major indices turned a mixed performance on Wednesday as investors digested earnings from AI-darling Nvidia after the close.

At the close, the Dow Jones Industrial Average was down 0.43% at 43,433.12, while the S&P 500 advanced 0.01% to 5,956.06 and the Nasdaq Composite saw out the session 0.26% firmer at 19,075.26.

The Dow closed 188.04 points lower on Wednesday, reversing gains recorded in the previous session despite weaker-than-expected consumer confidence numbers.

Disappointing retail figures, as well as the consumer sentiment reading, have increased investors' fears regarding the state of the US economy of late.

However, quarterly numbers from bellwether Nvidia after the close looked set to be the next major market catalyst, with the chipmaker posting Q4 earnings that beat Wall Street estimates on both the top and bottom lines and telling investors that Q1 revenues were also likely to come in ahead of current consensus estimates.