BP figures fail to impress | THG slides on shares sale
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5pm: Miners and BP drag FTSE 100 lower
Danni Hewson, AJ Bell financial analyst comments on today’s markets:
“London markets seem to have left the party early with all indices failing to make gains. Miners and BP (down 12.05p or 3.4% at 344.95p) have kept the FTSE 100 in the doldrums, the former responding to commodity prices and the latter failing to delight investors who question how long revenues can be buoyed up by the current climate.
“With COP26 grabbing global headlines it probably shouldn’t be a surprise that car rental giant Avis is planning for electric vehicles to play a big part in their future plans, though no detail was added to a rather flimsy comment, but what has been a surprise to many is how quickly its share price shot up.
“Its earnings were good but not the kind of stellar performance that would justify the stock doubling in value, but it did for a while before returning to a less extreme level, though still up significantly.
“At the other end of the scale, speculation that Tesla’s tie up with Hertz isn’t the done deal markets had believed saw its shares take a hefty tumble.
“Overall, Wall Street is still enjoying a last dance before the Fed muscle in on the action. US investors fairly happy that when the music stops all the chairs will be in the same place whilst those in the UK are wondering if the Bank of England might pull one away after all when it sets rates later this week.”
THG shares slump on Blackrock sale
Shares in THG fell to an all-time low today after it emerged that its largest shareholder Blackrock sold half of its stake in the online retail group.
Blackrock offloaded 58m shares in the e-commerce retailer at a price of 195p each, valuing the deal at £113.1 million, according to its bookrunner Goldman Sachs.
Scottish entrepreneur Sir Tom Hunter holds a small stake in the company.
The FTSE 100 closed off its lows at 7,274.81, down 13.81 points (0.19%).
10am: SSE in wind farm stake sale
SSE is selling a 10% stake in Dogger Bank C to Eni for £70m.
Dogger Bank will be the world’s largest offshore wind farm when completed.
9.30am: More on BP…
Russ Mould, investment director at AJ Bell says: “BP’s results (see below) may have been better than forecast but one could argue this isn’t really a surprise given the strength of commodity prices during the period in question.
“The oil major did have a sweetener up its sleeve for investors, committing to an additional share buyback and effectively introducing a rather smart mechanism where it will buy back $1 billion worth of shares a quarter if oil prices are trading above $60 per barrel.
“The decision to leave the ordinary dividend unchanged suggests the company is wary of overcommitting on this front and being left exposed by further volatility in energy prices.
“There is no suggestion that BP will respond to higher oil and gas prices by investing in lots of new fossil fuel projects, however the temptation to keep fields running a bit longer when they are generating such high levels of cash could creep in, particularly given the long-term nature of its net zero targets and the much shorter typical tenures of the people in charge.”
9am: Market dips on commodity prices
Miners and commodities companies pulled the FTSE 100 lower to trade at 7,243.90, down 44.72 points (0.61%).
Victoria Scholar, head of Investment at Interactive Investor, said: “European markets have kicked off Tuesday’s session on a negative note driven by declines in basic resources as iron ore extends losses to hit a 16-month low.”
Investors are mainly focused on activity around the central banks with the potential for hawkish moves from the US Federal Reserve and the Bank of England as soon as this week.
Declining copper and iron ore prices saw falls for BHP, Anglo American, Rio Tinto and Glencore.
Paddy Power owner Flutter Entertainment also slipped after it posted a jump in third-quarter revenue but downgraded its earnings guidance for the year.
Standard Chartered was weaker, despite saying that underlying pre-tax profit rose 44% to $1.08bn in the third quarter.
BP‘s rise in profit and shares buyback could not prevent a 2.2% slide (7.8p) to 349.4p.
7am: BP lifted by oil price
BP posted a sharp rise in third quarter profit, lifted by stronger oil and natural gas prices that have risen sharply this year as economies recover from the pandemic.
The oil giant’s underlying replacement cost profit – the company’s definition of net earnings – reached $3.32 billion in the third quarter, exceeding analysts’ expectations for $3.06bn.
That compares with $2.8bn in profit in the second quarter and $86 million a year earlier, when energy demand and prices collapsed due to the coronavirus epidemic.
The company unveiled another $1.25bn (£915m) of share buybacks, which it said will be completed before its full-year results announcement.
Chief executive Bernard Looney described the results as reflecting “another good quarter” for the firm.
He said: “Our businesses are generating strong underlying earnings and cash flow while maintaining their focus on safe and reliable operations.
“Rising commodity prices certainly helped, but I am most pleased that quarter by quarter, we’re doing what we said we would – delivering significant cash to strengthen our finances, grow distributions to shareholders and invest in our strategic transformation. This is what we mean by performing while transforming.”
7am: Napiers acquired
Samarkand Group, an e-commerce technology and consumer brand group, has acquired Napiers the Herbalists which was founded in Edinburgh in 1860.
The combined assets of Napiers generated £1m of revenue in the year ended 31 March 2021 and an EBITDA of £0.24m on an unaudited basis.
7am: Scotgold chairman steps down
Scotgold Resources has announced that Nathaniel Le Roux is stepping down from his position as non-executive chairman of the company, a position he has held since March 2015.
Mr Le Roux will remain on the board as non-executive director and major shareholder of the company, as he continues to support Scotgold’s progress as the first commercial gold miner in Scotland.
He will be replaced as chairman by Peter Hetherington, a non-executive director of the company with immediate effect.
US markets appeared to be positive towards the Federal Reserve’s position on managing inflation. On Wednesday it is expected to approve plans to scale back its $120 billion monthly bond-buying program put in place to support the economy
Wall Street ended higher, with the Dow Jones Industrial Average ending up 0.3%, the S&P 500 up 0.2% and the Nasdaq Composite up 0.6%.
The Dow briefly jumped above 36,000 points for the first time in early trade as all three major averages set fresh record closes.
Asia markets did not follow the US lead. Japan’s Nikkei 225 index ended down 0.4%. In China, the Shanghai Composite was down 1.3%, while the Hang Seng index in Hong Kong was down 0.1%. The S&P/ASX 200 in Sydney closed down 0.6%.