Stocks in London opened higher on Tuesday despite a profit miss and share price tumble by BP, as trading sentiment in Europe and the US improved.
The FTSE 100 index opened 10.76 points, 0.2%, at 7,338.15. The FTSE 250 was up 134.31 points, 0.8%, at 17,151.90, and the AIM All-Share was up 0.43 of a point, 0.1%, at 679.00.
The Cboe UK 100 was up 0.2% at 732.19, the Cboe UK 250 was up 0.9% at 14,910.61, and the Cboe Small Companies was up 0.2% at 12,658.57.
In European equities, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.3%.
After the shock departure of its CEO in September, oil major BP announced a further $1.5 billion share buyback for the third quarter. However, its shares fell 5.2% as its bottom line missed market forecasts.
Replacement cost profit fell to $3.29 billion from $8.15 billion on an underlying basis, which was behind company-compiled analyst consensus of $4.01 billion.
However, the underlying RC profit rose from $2.59 billion in the second quarter, which BP credits to ‘higher realized refining margins, lower level of refining turnaround activity, a very strong oil trading result, higher oil and gas production, partly offset by a weak gas marketing and trading result’.
Total revenue and other income fell to $54.02 billion from $57.81 billion a year before, but rose from $49.48 billion in the second quarter.
In the year as a whole, BP expects reported and underlying upstream production to be higher compared with 2022.
Meanwhile, oil prices retreated somewhat, as the market assessed the risk of potential disruption in the Middle East, and weak Chinese manufacturing data. Brent oil was trading at $87.78 a barrel early Tuesday, down from $88.31 on Monday.
Fellow oil major Shell dropped 1.0% in early dealings.
Israel said Tuesday its forces battled Hamas inside Gaza overnight and struck 300 targets after Prime Minister Benjamin Netanyahu categorically ruled out a ceasefire as a ‘surrender’ to the Palestinian militant group.
In the fourth night of major ground operations inside the north of the Palestinian territory, it reported ‘several engagements’ in which its forces came under anti-tank missile and machine gun fire.
On Monday, the World Bank forecast that global oil prices would average $90 a barrel this quarter. However, in a worst-case scenario where the conflict breaks out into the wider Middle Eastern region, it warned prices could jump as high as $150 a barrel.
Gold was quoted at $1,953.83 an ounce, lower than $2,000.32.
In further FTSE 100 news, telecommunications firm Vodafone and fellow London listing Zegona Communications announced a €5 billion deal for the sale of the former’s Spanish operations.
The consideration Zegona will pay is ‘at least’ €4.1 billion in cash, and a further €900 million in redeemable preference shares.
‘The sale of Vodafone Spain is a key step in right-sizing our portfolio for growth and will enable us to focus our resources in markets with sustainable structures and sufficient local scale,’ said Vodafone CEO Margherita Della Valle.
Shares in Vodafone fell 0.2%, while Zegona’s shares remained suspended from trading.
In the FTSE 250, IG Group rose 2.7% as it set out a cost savings drive.
The online trading provider said it will lay off 300 staff members, or 10% of its workforce, in a bid to save costs and become a ‘lean fintech company’.
It will undertake other ‘efficiency measures’, including expanding use of its global centres of excellence, and expects to deliver full run rate cost savings of £50 million per year over the medium term.
The week’s central bank decisions began on Tuesday, as the Bank of Japan announced a minor tweak to its unconventional policy of controlling government bond yields on Tuesday, stopping short of expectations and sending the yen lower.
Against the yen, the dollar was quoted at JP¥150.43 early Thursday, up from versus JP¥149.13 late Monday.
The BoJ has stuck with sub-zero borrowing costs to support the world’s number three economy. Instead, it has sought to keep interest rates at ultra-low levels by buying up huge quantities of government bonds in an attempt to keep a lid on yields.
A media report on Tuesday said officials might widen this as they see inflation rising and the yen tumble against the dollar but the BoJ said only that it ‘will conduct yield curve control with the upper bounds of 1.0% for those yields as a reference’.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed up 0.5%.
Meanwhile, the US Federal Reserve begins its two-day monetary policy meeting, with the market widely expecting there to be no interest rate hike announced on Wednesday.
‘The Fed members will still be raising their eyebrows given the strength of the recent economic data, the uptick in inflation and global uncertainty. But they won’t necessarily be raising the rates. Therefore, what they will say they will do will matter more for the market pricing than what they will do,’ said Swissquote Bank senior analyst Ipek Ozkardeskaya.
The Bank of England will follow on Thursday, with the market anticipating it will hold interest rates once again. The BoE is likely hoping the historically high rates will do their work to throttle inflation in the coming months, having previously emphasised the lag between monetary policy and its effects.
In a positive sign, UK shop price inflation has eased for the fifth consecutive month to its lowest rate since last August, figures show. Prices were 5.2% higher in October than a year earlier, down from September’s 6.2%, according to the British Retail Consortium-Nielsen shop price index.
Food inflation also slowed, to 8.8% from September’s 9.9% – its sixth consecutive deceleration and lowest rate since last July – while fresh food inflation slowed even further to 8.3%, down from 9.6% a month earlier.
Sterling was quoted at $1.2150 early Tuesday, higher than $1.2144 at the London equities close on Monday. The euro traded at $1.0622, up from $1.0607.
In China, the Shanghai Composite closed down 0.1%, while the Hang Seng index in Hong Kong closed down 1.7%. China’s factory activity fell back into contraction in October, official data showed, despite Beijing announcing a raft of policies aimed at shoring up the creaking economy.
The official manufacturing purchasing managers’ index – a key measure of factory output – stood at 49.5 in October, below the 50-point mark separating expansion from contraction, the National Bureau of Statistics said. The reading came after the index edged up to 50.2 in September, having shrunk for five consecutive months.
The S&P/ASX 200 in Sydney closed up 0.1%.
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average 1.6%, the S&P 500 up 1.2% and the Nasdaq Composite up 1.2%.
Still to come in Tuesday’s global economic calendar, there’s a eurozone gross domestic product reading and flash consumer price index data at 1000 GMT.
Copyright 2023 Alliance News Ltd. All Rights Reserved.
