The FTSE 100 outperformed other indices in London on Tuesday thanks to bumper profits from oil major BP.
The FTSE 100 index closed up 28.00 points, or 0.4% at 7,864.71 on Tuesday. The FTSE 250 ended down 220.38 points, or 1.1%, at 20,189.00. The AIM All-Share closed down 4.66 points, or 0.5%, at 879.13.
The Cboe UK 100 ended up 0.4% at 786.29, the Cboe UK 250 closed down 1.1% at 17,604.98, and the Cboe Small Companies ended up 0.2% at 13,804.16.
BP climbed 7.0% after it said its underlying replacement profit more than doubled in 2022 and was also higher in the fourth quarter, in line with increasing natural gas and oil sales from rising prices.
2022 underlying replacement cost profit was $27.65 billion, multiplying from $12.82 billion in 2021, or to $46.04 billion from $22.34 billion before interest and tax.
In addition, BP announced a further $2.75 billion share buyback and raised its fourth quarter dividend by 21% year-on-year to 6.61 cents per share. The annual dividend totalled 24.082 cents, up 11% from 21.630 cents in 2021.
Oil peer Shell - which had announced bumper profit of its own last week and a $4 billion share buyback - finished 2.3% higher in a positive read-across.
Brent oil was quoted at $82.75 a barrel at the London equities close on Tuesday, up sharply from $79.90 late Monday.
The FTSE 100’s banking constituents also helped lift London’s flagship index on Tuesday.
Barclays added 1.5%, HSBC 1.4%, Lloyds 1.4%, and NatWest 1.0%.
AJ Bell’s Russ Mould said: ‘Over the past month or so, investors have become more optimistic that we’re near the top of the rate rise cycle, hence why you’ve seen higher-risk companies do well on the stock market. If this optimism turns out to be misplaced then we’ll likely see investors flock back to sectors where you can typically find value stocks such as banking, energy and tobacco. In a way, today’s movement on the FTSE 100 already reflects this investor thinking.’
The Bank of England’s Catherine Mann squashed hopes of a dovish pivot from the UK’s central bank on Monday, saying that interest rates in the UK will likely need to rise further despite early signs of a ‘turning point’ in the battle against sky-high inflation.
In a speech at the Lamfalussy Lectures Conference in Budapest, Hungary, Mann said: ‘We need to stay the course, and in my view the next step in bank Rate is still more likely to be another hike than a cut or hold.’
In the FTSE 250, Ferrexpo plunged 9.6% as it announced the Ukrainian courts have granted an order to freeze one of its subsidiary’s bank accounts amid accusations of a ‘potential underpayment.’
The ongoing investigation relates to its Ferrexpo Poltava Mining subsidiary and the ‘potential underpayment’ of iron ore royalty payments during the years 2018 to 2021.
Ferrexpo denies all accusations made as part of the investigation.
The company said that it has consistently operated in accordance with the legal and fiscal frameworks of Ukraine, and it is therefore seeking to resolve matters through the Ukrainian legal system and will appeal the decision.
Auction Technology jumped 9.5%. The online auction operator said it bought Vintage Software, trading as estatesales.net, for $40 million in total.
The company said the acquisition of the US estate sales listing site expands Auction’s ‘immediately addressable market into the growing and fragmented US estate sales market’.
Chief Executive Officer John-Paul Savant said: ‘As a leading US estate sale listing site, estatesales.net is a natural fit for ATG as we unlock further areas of value within the secondary goods market and facilitate another part of the circular economy.’
Elsewhere in London, Superdry dropped 5.0%. The clothing retailer was hit following new data which showed a slowdown in UK retail sales.
According to the latest British Retail Consortium-KPMG tracker, UK retail sales rose by 4.2% year-on-year in January. Growth slowed markedly from 12% a year earlier. It was also down on the three-month average of 5.2%.
BRC Chief Executive Helen Dickinson commented: ‘The coming months will continue to be challenging for retailers and their customers. Consumer confidence remains stubbornly low and looming rises in household bills and mortgages mean discretionary spending will remain weak. With ongoing cost pressures and labour shortages increases in sales don’t convert into increases in profits or cash.’
In European equities on Tuesday, the CAC 40 in Paris ended down 0.1%, while the DAX 40 in Frankfurt ended down 0.2%.
The euro stood at $1.0700 at the European equities close on Tuesday, lower against $1.0737 at the same time on Monday.
The dollar remained strong on the back of a red-hot US jobs print and ISM PMI report on Friday. The surprisingly strong US data has seen markets expect interest rates to remain high.
The pound was quoted at $1.2015 at the London equities close on Tuesday, down from $1.2026 at the close on Monday. Against the yen, the dollar was trading at JP¥131.17, lower compared to JP¥132.80.
Gold was quoted at $1,875.35 an ounce, higher against $1,868.01 at the close on Monday.
Stocks in New York were mixed at the London equities close, with the Dow Jones Industrial Average down 0.4%, the S&P 500 index down 0.1%, and the Nasdaq Composite up 0.2%.
Focus on Wall Street will be on Federal Reserve Chair Jerome Powell, who speaks at the Economic Club of Washington at 1740 GMT. Investors will be hoping Powell offers clues on the future of US monetary policy.
In Wednesday’s UK corporate calendar, there are half-year results from housebuilder Barratt Developments and consumer goods and healthcare product firm PZ Cussons.
In the economic calendar, KPMG’s reports on UK jobs will be released overnight.
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