BP Share News (BP.)

(Alliance News) - London stocks lagged the rest of Europe at the open on Tuesday, weighed down by Flutter Entertainment and Standard Chartered.

The mood was cautious as investors look ahead to a central bank heavy week, with decisions from the US Federal Reserve and Bank of England due on Wednesday and Thursday respectively.

The FTSE 100 index was down 36.29 points, or 0.5%, at 7,252.33 early Tuesday. The mid-cap FTSE 250 index was down 49.56 points, or 0.2%, at 23,161.66. The AIM All-Share index was down 1.08 points, or 0.1%, at 1,227.83.

The Cboe UK 100 index was down 0.6% at 718.91. The Cboe 250 was down 0.3% at 20,749.05, and the Cboe Small Companies up 0.2% at 15,627.88.

In mainland Europe, the CAC 40 in Paris was flat while the DAX 40 in Frankfurt was up 0.3% early Tuesday. The German index was boosted by a 14% share price surge for Hello Fresh after the meal kit firm lifted its revenue outlook.

It was a mixed start in Europe as investors brace for a central bank heavy week. Ahead of this, there are a raft of manufacturing PMIs out of the continent, including Germany at 0855 GMT and the eurozone at 0900 GMT.

The euro traded at USD1.1604 early Tuesday, higher than USD1.1589 late Monday.

The pound underperformed overnight as the Bank of England's Thursday meeting loomed. Sterling was quoted at USD1.3652 early Tuesday, slipping from USD1.3675 at the London equities close on Monday.

"What was unthinkable in the beginning of the year, is now a real possibility. Will the BoE raise the bank rate or not? Investors have more or less fully priced in a 15bp rate hike while economists are evenly divided between unchanged and a 15bp rate hike," said Danske Bank.

A day before the BoE comes a Federal Reserve monetary policy decision on Wednesday. The US central bank is expected to make a formal taper announcement.

Against the yen, the dollar fell to JPY113.66 versus JPY114.02.

In Asia on Tuesday, the Japanese Nikkei 225 index ended down 0.4%. In China, the Shanghai Composite closed down 1.1%, while the Hang Seng index in Hong Kong ended down 0.2%. The S&P/ASX 200 in Sydney closed down 0.6%.

Dragging on the FTSE 100 in early trade was Flutter Entertainment, down 6.3% after the betting firm lowered its full-year earnings guidance range after a string of punter-friendly sports results in October.

Total revenue for the third quarter of the year was GBP1.44 billion, up 9% on GBP1.33 billion a year ago. Online revenue growth of 13% at constant currency was driven by Australia, up 20%, and the US, up 85%.

However, the betting operator noted that it has seen unfavourable sports results in first 24 days of October. This has hit earnings before interest, tax, depreciation and amortisation by around GBP60 million.

Combined with an expected GBP10 million hit from a temporary Netherlands exit, it now expects adjusted Ebitda for 2021, for its operations excluding the US, in a range of GBP1.24 billion to GBP1.28 billion, versus prior guidance of GBP1.27 billion to GBP1.37 billion.

In the US, net revenue guidance was unchanged but Flutter now expects an adjusted Ebitda loss of between GBP250 million and GBP275 million, versus a prior range of GBP225 million to GBP275 million. This includes a GBP15 million hit from adverse sports results in October.

Chief Executive Peter Jackson stressed: "While a run of customer-friendly results in October have resulted in win margins being below expected levels in the quarter to date, the underlying strength of our business is clear; we have grown our online recreational player base by 46% in just two years. With more international jurisdictions and US states on the path to regulation, we look forward to sustainably growing our global player base further in 2022."

Standard Chartered was down 5.7% despite reporting a jump in third quarter profit. Operating income rose to USD3.77 billion in the third quarter, up 7% year-on-year. Pretax profit jumped 44% to USD1.08 billion, helped as StanChart's credit impairment charge was reduced to USD107 million from USD353 million.

"We delivered a return to top-line growth in the third quarter and achieved further progress against our strategic priorities, with strong performance in our Financial Markets and Trade businesses and ongoing positive momentum in Wealth Management," said Chief Executive Bill Winters.

The emerging markets-focused bank said it continues to expect full-year income "similar" to that achieved in 2020 on a constant currency basis. It expects credit impairment to remain at low levels in the fourth quarter.

Its CET1 ratio at the full-year is seen around the top of the 13% to 14% range. This compares with 14.6% as at September 30.

BP dipped 1.0% despite unveiling a fresh USD1.25 billion share buyback on an oil price boost.

Underlying replacement cost profit for the third quarter of 2021 rose to USD3.32 billion from just USD86 million year-on-year.

"This has been another good quarter for BP - our businesses are generating strong underlying earnings and cash flow while maintaining their focus on safe and reliable operations. Rising commodity prices certainly helped," said Chief Executive Bernard Looney.

However, BP's reported loss for the quarter was USD2.54 billion, widening from USD450 million a year ago. This was due to "significant adverse fair value accounting effects of USD6.1 billion pre-tax, primarily due to the exceptional increase in forward gas prices towards the end of the quarter."

Nonetheless, the oil company plans a further share buyback worth USD1.25 billion. It expects to complete this before announcing its fourth-quarter results, and will outline plans for the final tranche of buybacks for 2021 surplus cash flow when releasing the results.

It said: "On average, based on BP's current forecasts, at around USD60 per barrel Brent and subject to the board's discretion each quarter, BP continues to expect to be able to deliver buybacks of around USD1.0 billion per quarter and have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025."

Brent oil was trading at USD85.10 a barrel on Tuesday, up from USD84.65 late Monday.

Elsewhere in commodities, gold was quoted at USD1,791.02 an ounce early Tuesday, higher than USD1,790.75 on Monday.

By Lucy Heming; lucyheming@alliancenews.com

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