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(Alliance News) - European equities opened in a slightly nervy fashion on Thursday, as traders await a pair of central bank updates, though the FTSE 100, in what is becoming a recurring theme in the early part of 2022, outperformed.
Contract caterer Compass and telecommunications operator BT bookended the FTSE 100. Shell made solid gains after announcing it will up shareholder returns. Playtech topped the FTSE 250 index as its takeover saga took another turn.
The FTSE 100 index was up 8.26 points, or 0.1%, at 7,591.26 early Thursday. The mid-cap FTSE 250 index was down 21.98 points, or 0.1%, at 22,227.42. The AIM All-Share index was down 2.34 points, 0.2%, at 1,103.08.
The Cboe UK 100 index was marginally higher at 754.07. The Cboe 250 was down 0.2% at 19,874.38, and the Cboe Small Companies was 0.1% lower at 15,472.02.
In mainland Europe, the CAC 40 stock index in Paris was down 0.2% and the DAX 40 in Frankfurt was 0.4% lower. Asian equities fell on Thursday.
In Tokyo, the Nikkei 225 closed 1.1% lower on Thursday, while the S&P/ASX 200 in Sydney fell 0.1%. The Hong Kong and Shanghai exchanges remained closed for the Lunar New Year holiday.
"Asian stock markets mostly declined, following gains earlier in the week. After-hours earnings reports from some US technology companies were disappointing, as markets await key policy updates from the Bank of England and the ECB later today," analysts at Lloyds Bank commented.
Facebook owner Meta Platforms reported fourth-quarter net income slipped 8.6% to USD10.26 billion from USD11.22 billion a year before. This resulted from a 38% increase in costs and expenses of USD21.09 billion from USD15.30 billion. The rise in costs eclipsed a 20% jump in revenue to USD33.67 billion from USD28.07 billion.
Meta shares fell 23% in after-hours trade in New York.
The BoE reveals its latest interest rate decision at 1200 GMT. The ECB reports at 1245 GMT, before a press conference with President Christine Lagarde at 1330 GMT.
Daiwa Capital Markets Europe analyst Chris Scicluna tips the ECB to leave its policy unchanged, but expects President Christine Lagarde to "acknowledge the need for flexibility over coming months" after a hot January eurozone inflation report.
The BoE, meanwhile, will hike the Bank Rate to 0.5%, Scicluna said.
Ahead of the two announcements, sterling surrendered ground against the dollar, but the euro advanced. Sterling was quoted at USD1.3554, down from USD1.3560 at the London equities close on Wednesday. The single currency stood at USD1.1300, up from USD1.1295.
Against the yen, the dollar was trading at JPY114.64, up from JPY114.33.
Elsewhere, UK energy watchdog will reveal its latest price cap at 1100 GMT on Thursday. A rise of as much as 50% has been forecast by analysts.
The regulator brought forward the announcement, which was initially penned for next week Monday. The current yearly price cap, which is in effect until March 31, stands at GBP1,277.
In London, Shell shares rose 1.4%.
The oil major, fresh from simplifying its share structure and dropping 'Royal Dutch' from its name, posted substantially stronger annual earnings and an increased payout.
For the fourth quarter of 2021, total revenue, so including joint-ventures and interest income, more than doubled annually to USD90.22 billion from USD45.03 billion. Fourth-quarter pretax profit multiplied to USD16.27 billion from USD1.19 billion.
For the whole of 2021, revenue increased by 49% to USD272.66 billion from USD183.20 billion. Shell swung to an annual pretax profit of USD29.83 billion from a USD26.97 billion loss in a Covid-damaged 2020.
At USD19.29 billion, up sharply from USD4.85 billion, adjusted earnings for the year topped market consensus of USD18.01 billion.
Shell said it will increase the pace of its share buybacks to USD8.5 billion in the first half of 2022, including the remaining USD5.5 billion proceeds from its Permian disposal.
Shell also increased its annual dividend by 37% to USD0.8935 per share, from USD0.6530 in 2020. The company will raise its first quarter dividend to USD0.25 per share from the USD0.24 declared for the fourth quarter of 2021.
Compass topped the FTSE 100, rising 6.5%. The contract caterer said its revenue grew 39% on an organic basis in the first quarter ended December 31.
"The quarterly improvement was largely driven by new business, continued strong client retention along with some ongoing recovery in the base business. The emergence of the Omicron variant had a limited impact on the group during the period," the company said.
First-quarter revenue hit 97% of pre-virus levels. In North America alone, it topped levels seen in 2019.
Compass warned of a currency hit, however. If currency movements continue as they have been, the company will see a GBP75 million hit to revenue and GBP3 million to operating profit.
"Our guidance for FY22 remains unchanged. We expect full-year organic revenue growth of 20% to 25%, with quarterly growth rates moderating through the year, reflecting more challenging comparatives," Compass added.
BT sat at the other end of the index, down 4.3%.
The telecommunications operator posted weaker year-to-date earnings following the conclusion of its third quarter. It also unveiled a possible joint-venture for its sports broadcasting unit, after "a detailed process to identify the best way to generate investment".
It has entered into exclusive talks with the US's Discovery, which owns Eurosport UK.
"The new business would be a 50/50 joint venture, bringing together BT Sport with Eurosport UK. The new combined business would remain committed to retaining BT Sport's existing major sports broadcast rights while BT Sport customers would get access to Discovery's sport and entertainment content, including the discovery+ app," BT said.
It is aiming to conclude the discussions in "early Q1", eyeing the JV being operational later this year.
BT said revenue in the nine months to December 31 fell 2.4% to USD15.68 billion from USD16.06 billion a year earlier. Pretax profit declined 3.4% to USD1.54 billion from USD1.59 billion.
In addition, BT noted it has reached a deal in principle with pay-television operator Sky for a "new longer-term reciprocal channel supply deal to beyond 2030".
BT had long been rumoured to sell BT Sport. In January, Reuters reported BT was close to selling the unit to streaming service DAZN in a deal worth roughly USD800 million.
"It's disappointing to see other areas of the business looking less bright as Covid disruption and supply issues continue. The telecoms giant is weighed down by a number of legacy products that have been falling out of favour for a while. The issue with being an internet or phone service provider is that the main differentiator on product, is price. That's a tough place to be," Hargreaves Lansdown analyst Sophie Lund-Yates commented.
Playtech shares surged 10%, the best mid-cap performer.
The gambling software firm, fresh from having its takeover by Australia's Aristocrat Leisure rejected by shareholders on Wednesday, confirmed that TTB Partners, an affiliate of Gopher Investments, approached Playtech asking for consent to make a possible offer.
Playtech said it granted the release from restrictions under the UK takeover code to allow a bid. Gopher, which is buying Playtech's financial trading arm Finalto, had previously decided against making an offer for the entire company, resulting in the code restrictions on a new approach.
Playtech said any offer from TTB would be in cash, but noted there is not certainty an offer will be made.
An offer from TTB could stave off the possibility of a break up. Playtech on Wednesday said it is "evaluating attractive M&A proposals it has received from third parties in respect of [its] B2B and B2C businesses".
The company has had a long list of admirers, including Gopher and Aristocrat, as well as JKO Play, controlled by Keith O'Loughlin and Eddie Jordan, the former boss of a Formula One team. However, a possible takeover of Playtech has proved complicated so far.
Gold stood at USD1,804.90 an ounce early Thursday, down from USD1,808.75 at the London equities close on Wednesday. Brent oil was quoted at USD89.32 a barrel, up from USD89.02.
Aside from a busy day for central banks and energy price regulation, the economic events calendar on Thursday has PMI readings from Germany, the eurozone, the UK and US at 0830 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively.
By Eric Cunha; ericcunha@alliancenews.com
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