UK markets were weaker on Thursday with the FTSE 100 down 0.5% to 7,545 despite a much-anticipated cut in US interest rates overnight.
The major US stock indices lost more than 1% after the chairman of the US Federal Reserve said that the 0.25% rate cut did not mark the beginning of a lengthy easing cycle.
The Hong Kong central bank cut rates by 0.25% in line with the Federal Reserve.
Royal Dutch Shell (RDSA) shocked the market as it reported its worst quarterly earnings for over two years as lower oil and natural gas prices and weak refining margins put a dent in its recovery.
Second quarter net income dropped 24% to $3.6bn against a company-compiled consensus of $4.9bn. Shell’s lower earnings compare with BP’s (BP.) forecast-beating profits earlier this week.
Its shares fell 4.5% to £24.92 despite the positive news that the company will buy back a further $2.75bn of stock between now and the end of October.
Shares in Barclays (BARC) added 2% to 158 despite reporting a 16% drop in first-half profits from £3.7bn a year ago to £3.1bn in the six months to 30 June due to lower returns across all its divisions.
The UK retail banking business continued to experience margin pressure, especially in mortgage lending, while the international business which includes the investment banking arm reported lower income and lower customer activity.
On the plus side the bank is pushing down on costs and hopes to beat its £13.6bn target for the full year. It also raised the interim dividend by 0.5p to 3p and said it would ‘supplement the ordinary dividend with additional cash returns, including share buybacks when appropriate’.
Shares in rival Standard Chartered (STAN) traded up 3.5% to 700p after first-half earnings for the Asia-focused lender beat forecasts. Pre-tax profits rose to $2.41bn against estimates of £2.23bn.
Chief financial officer Andy Halford cautioned that ‘concerns surrounding the potential escalation of trade tensions have affected sentiment and central bank commentary is indicating a reversal of monetary policy normalisation’.
Meanwhile Rio Tinto (RIO) shares traded down 2% to £25.95 despite the Anglo-Australian miner reporting its best first-half profit in five years and declaring a special dividend.
Strong iron ore prices helped drive underlying earnings to $4.93bn but this was only in line with market forecasts and even news of a $1bn bonus pay-out wasn’t enough to move investors.
Shares in British American Tobacco (BATS) climbed 1.8% to £30.05 after it delivered an upbeat half-year report with revenue, market share and earnings all above year-ago levels. Although cigarette volumes declined in line with the industry, group sales grew 4.6% to £12.17bn bolstered by higher prices and growth in its New Categories which includes vaping products.
Despite higher investment in New Categories, operating margins were up 1.1% to 42.9% due to higher prices and tight cost control, leading to a 4.9% increase in earnings per share.
London Stock Exchange (LSE) was the biggest FTSE gainer, climbing another 7% to £70.96 after it confirmed plans to buy financial data firm Refinitiv in a $27bn deal transforming the exchange into one of the world’s leading market data and analytics providers.
Infrastructure services firm Kier Group (KIE) warned that revenue will be £100m lower than last year as a result of property and land-led transactions which did not complete in June as anticipated.
Kier said this will have an impact on profitability broadly in line with its historic gross margins. Despite the warning its shares jumped 27% to 78p.
Stocks going ex-dividend include Beazley (BEZ), Fuller Smith & Turner (FSTA), Hipgnosis (SONG), Inchcape (INCH), Moneysupermarket.com (MONY) and Qinetiq (QQ.)
