• FTSE 100 falls back after bright start
• Barclays (LON:BARC), BT (LON:BT) head south after trading updates
• Anglo American (LON:AAL) gains despite fall in profits
FTSE 100 fell back after a bright start to trading as investors digested a hefty batch of corporate news from a number of index heavyweights.
At 9.00am the FTSE 100 was just 1.81 points higher at 7,350.04 with the broader FTSE 250 index 143.02 points to the good at 19,782.11.
The market was given an early lift by a strong finish in the US following reassuring comments by Federal Reserve Chairman, Jerome Powell on the state of the US economy and the likely pace of any future US interest rate increases.
Anglo American led the FTSE 100 risers despite a slump in half year underlying EBITDA to US£8.7bln from $12.1bln and a 27% cut to the interim dividend.
The number still topped City forecasts and sent shares in the global mining group 4.07% higher.
Not such good news at BT as shares in the telecoms and media group slumped 4.91% to 167.45p following a trading update for the three months to June.
The telecoms and media group held full year guidance with no changes to the outlook for the full year but highlighted challenging market conditions in its Enterprise division.
Revenue of £5.1bln was up 1% due to improved pricing and trading in Consumer and Openreach, while profit before tax was down 10% to £482m.
Barclays PLC (LSE:BARC) slipped after warning that full year operating costs would be much higher than expected after taking a £1.9bln pound hit in the first half, including a £1.3bln cost related to what the bank calls the “over-issuance of securities” in the US.
The news marred the figures and sent the shares 1.83% lower to 154.78p.
On the upside the banking giant reiterated its guidance that fully year return on tangible equity would be above 10% better than the market consensus of 8.3% leaving scope for full year forecasts to be raised.
Richard Hunter, Head of Markets at interactive investor, commented:
“The numbers have unsurprisingly received a lukewarm response, with the share price dip adding to a decline of 7% over the last year, as compared to a gain of 4.7% for the wider FTSE100 index. Investors have been choosing to look through the current issues with the benefits of a longer-term view in mind and, despite a mildly disappointing update, the market consensus of the shares as a strong buy remains intact.”
Smith & Nephew PLC (LSE:SN) slumped after reporting a 3.1% fall in revenue to $1,293m, down from $1,335m, with falls in the Orthopaedics and Sports Medicine & ENT divisions.
Full year guidance was held with revenue growth expected of between 4% to 5% and the trading profit margin is now expected to be around 17.5% reflecting the prolonged impact of the inflationary environment and continued external supply challenges.
Oil heavyweight, Shell (LON:RDSa) PLC (LSE:SHEL, NYSE:SHEL), rose in early trading after reporting Q2 income of US$18,040mln, up from US$7,116mln in Q1 boosted by a tripling of refining profits and strong gas trading.
The company also announced a share buyback programme of $6bln billion for the current quarter, but did not raise its dividend of 25c. It said shareholder returns would remain "in excess of 30% of cash flow from operating activities".
Michael Hewson (Chief Market Analyst commented: “Today’s Q2 numbers have gone one better, posting another record quarter, even though the bar had been raised earlier this month when Shell announced it was revising up the value of its oil and gas assets on the back of higher refining margins, as it generated higher returns from higher prices.”
Shares advanced 1.8% on the news to 2,156.50p.
The market warmed to full year results from Diageo (LON:DGE) after upbeat comments going forward.
Shares in the beverage company rose 1% to 3,802.50p as Chief Executive Ivan Menezes said he remained confident that the business was “well-positioned to deliver our medium-term guidance for fiscal 23 to fiscal 25 of organic net sales growth consistently in the range of 5% to 7% and organic operating profit growth sustainably in the range of 6% to 9%.”
He made his comments as the group reported full year numbers which showed a 21% increase in sales to £15.5bn with growth broad-based across categories, with particularly strong growth of scotch, tequila and beer.
Basic EPS rose by 23.2% to 140.2p and the final dividend by 5% to 46.82p.
8.30am: FTSE 100 makes bright start as investors digest plethora of news
FTSE 100 kicked off Thursday in positive fashion boosted by reassuring comments by the Federal Reserve Chairman, Jerome Powell, about the state of the US economy, and as investors digested a hefty batch of results.
At 8.30am the FTSE 100 was up 23.22 points at 7,371.45 while the broader FTSE 250 rose 136.56 points to 19,782.72.
Powell said “He did not believe the US is in a recession, noting that “There are too many areas of the economy that are performing too well.”
He also indicated rate rises might slow in the coming months.
Barclays PLC (LSE:BARC) slipped after warning that full year operating costs would be much higher than expected after taking a £1.9bln pound hit in the first half, including a £1.3bln cost related to what the bank calls the “over-issuance of securities” in the US.
The news marred the figures and sent the shares 1.83% lower to 154.78p.
On the upside the banking giant reiterated its guidance that full year return on tangible equity would be above 10% better than the market consensus of 8.3%.
Shore Capital analyst Gary Greenwood said this leaves scope to increase his full year EPS forecast closer to 30p from his current 27p.
The bank also announced plans for a 3500m share buy back, better than Greenwood expected.
BT shares fell back sharply as a trading update for the three months to June disappointed.
The telecoms and media group held full year guidance with no changes to the outlook for the full year.
Revenue of £5.1bn was up 1% due to improved pricing and trading in Consumer and Openreach, while profit before tax was down 10% to £482m.
The group said market conditions remain challenging in the Enterprise division.
Shares fell 3.72% on the news to 169.55p.
Oil heavyweight, Shell PLC (LSE:SHEL, NYSE:SHEL), rose in early trading after reporting quarter two income of US$18,040mln, up from US$7,116mln in quarter one boosted by a tripling of refining profits and strong gas trading.
The company also announced a share buyback programme of $6bln billion for the current quarter, but did not raise its dividend of 25c. It said shareholder returns would remain "in excess of 30% of cash flow from operating activities".
Michael Hewson (Chief Market Analyst commented: “Today’s Q2 numbers have gone one better, posting another record quarter, even though the bar had been raised earlier this month when Shell announced it was revising up the value of its oil and gas assets on the back of higher refining margins, as it generated higher returns from higher prices.”
Shares advanced 0.5% on the news to 2,127.00p.
The market warmed to full year results from Diageo after upbeat comments going forward.
Shares in the beverage company rose 1% to 3,802.50p as Chief Executive Ivan Menezes said he remained confident that the business was “well-positioned to deliver our medium-term guidance for fiscal 23 to fiscal 25 of organic net sales growth consistently in the range of 5% to 7% and organic operating profit growth sustainably in the range of 6% to 9%.”
He made his comments as the group reported full year numbers which showed a 21% increase in sales to £15.5bn with growth broad-based across categories, with particularly strong growth of scotch, tequila and beer.
Basic EPS rose by 23.2% to 140.2p and the final dividend by 5% to 46.82p.
7.40am: FTSE set for strong start
FTSE 100 expected to make a strong start to trading on Thursday after a positive finish to trading in the US following the Federal Reserve’s widely expected decision to raise interest rates by 75 basis points.
Spread betting companies are calling the FTSE 100 around 40 points higher in early trading.
What reassured the US markets were comments by Fed Chairman Jerome Powell that rate hikes could slow in the coming months.
Powell also commented that he did not believe the US is in a recession, noting that “there are too many areas of the economy that are performing too well.”
The Dow closed Wednesday up 436 points, 1.4%, at 32,198, the Nasdaq Composite jumped 470 points, 4.1%, to 12,032 and the S&P 500 added 103 points, 2.6%, to finish at 4,024.
Another busy day of corporate news in the UK will also provide direction with a number of FTSE 100 heavyweights reporting results.
Oil heavyweight, Shell PLC (LSE:SHEL, NYSE:SHEL), reported quarter two income of US$18,040mln, up from US$7,116mln in quarter one reflecting higher realised prices, higher refining margins, and higher gas and power trading and optimisation results, partly offset by lower LNG trading and optimisation results.
This included a US$4.3bn net impairment charge following revision og the group’s mid and long-term commodity price assumptions.
Barclays PLC (LSE:BARC) announced plans for a further £500m share buy back scheme as it announced a half year attributable profit of £2.5bn against £3.8bn in the first half of 2021.
But the banking giant said additional litigation and conduct charges in quarter two meant that full year 2022 total operating expenses would now be around £16.7bln against previous guidance of £15.0bln.
Group income was £12.4bn, up 10% year on year, driven strong client activity in Markets, recovery in both Consumer, Cards and Payments (CC&P) and Barclays UK more than offsetting the impact of a weak fee pool in Investment Banking.
BAE Systems (LON:BAES) held full year guidance and launched a new three-year share buyback programme as it reported half year numbers this morning.
Sales in the six months to June were £10,581mln, up from £10,035mln in the six months to June 2021.
It said it expects full year sales growth of between 2% to 4%, underlying EBIT growth of 4% to 6% and underlying EPS to rise by between 4% to 6%.
Charles Woodburn, Chief Executive said "Good operational performance, execution on our strategy and confidence in the outlook enables us today to announce a 5% increase in the interim dividend as well as initiating a new, three-year share buyback programme for up to £1.5bn."
Diageo PLC (LSE:DGE) chief executive Ivan Menezes remained confident that the business was “well-positioned to deliver our medium-term guidance for fiscal 23 to fiscal 25 of organic net sales growth consistently in the range of 5% to 7% and organic operating profit growth sustainably in the range of 6% to 9%.”
He made his comments as the group reported full year numbers which showed a 21% increase in sales to £15.5bn with growth broad-based across categories, with particularly strong growth of scotch, tequila and beer.
Basic EPS rose by 23.2% to 140.2p and the final dividend by 5% to 46.82p.
6.50am: FTSE seen higher, busy day of corporate news
The FTSE 100 is seen starting Thursday on the front foot, though much of this morning’s attention will be on company announcements as several blue-chip report on their second quarters.
CFD firm IG Markets has the FTSE 100 about 30 points stronger, making a price of 7,380 to 7,382 with just over an hour to go until the open.
Blue-chip investors will be getting their teeth into updates from the likes of Shell, Barclays, BAE, Centrica (LON:CNA), and ITV (LON:ITV).
Last night, on Wall Street, the Dow Jones gained 436 points or 1.37% as the Federal Reserve raised US interest rates by 75 basis points, as expected.
The S&P 500 gained 2.62% to 4,023 whilst the Nasdaq rallied stronger, rising just over 4% to 12,032. And the small-cap Russell notched 2.39% higher to 1,848.