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(Alliance News) - Share prices in London were higher in early trade on Thursday, as traders digest the latest batch of UK corporate earnings, strong equity price climbs in the Asia session, and a more hawkish tone from the US Federal Reserve late Wednesday.
Rentokil, Anglo American and Royal Dutch Shell were among London's blue-chip names in the green in early dealings, though BT and Smith & Nephew tumbled.
The FTSE 100 index was up 34.75 points, or 0.5%, at 7,051.38 early Thursday. The mid-cap FTSE 250 index was up 69.64 points, or 0.3%, at 23,076.09. The AIM All-Share index was up 2.73 points, 0.2%, at 1,244.50.
The Cboe UK 100 index was 0.5% higher at 702.34. The Cboe 250 was up 0.2% at 20,825.99. The Cboe Small Companies was 0.1% higher at 15,213.65.
The CAC 40 in Paris was up 0.9%, while the DAX 30 in Frankfurt was 0.1% higher.
Oil majors in Europe were higher early Thursday. BP rose 1.7%, TotalEnergies was up 1.2% in Paris and Eni climbed 0.8% early in Milan.
A barrel of Brent oil was changing hands at USD75.23, up from USD74.62.
Royal Dutch Shell's A and B stock were up 3.2% and 3.8%. Shell said it is "stepping up" shareholder returns.
It rebased its second quarter dividend to 24 US cents, up 38% quarter-on-quarter. For the second quarter of last year, it had declared a 16 cents payout. In addition, Shell is targeting USD2 billion in buybacks which it aims to complete by the end of 2021.
Chief Executive Ben van Beurden said: "We are stepping up our shareholder distributions today, increasing dividends and starting share buybacks, while we continue to invest for the future of energy."
He added: "Total shareholder distributions for 2021 are expected to be around the middle of the 20-30% range of [cash flow from operations] from the previous four quarters. Our progressive dividend policy to grow dividends per share by 4% annually, subject to board approval, remains unchanged."
In addition, Shell said it saw "another quarter of operational and financial delivery". It swung to a USD3.43 billion profit attributable to shareholders, from a USD18.13 billion loss a year earlier.
Shell posted pretax profit of USD4.13 billion, swinging from a USD23.91 billion loss a year prior. Second quarter total revenue, so including joint-ventures, surged 90% to USD61.76 billion from USD32.49 billion.
Hargreaves Lansdown analyst Susannah Streeter commented: "Patience has been the name of the game for Shell investors who have been forced to watch and wait as the energy giant has been undergoing a painful green metamorphosis while grappling with the price shock of the pandemic. That stoicism, was sorely tested, but is now being rewarded with a slap on the back of rising returns."
Anglo American also announced tantalising plans to boost returns. The miner unveiled an extra USD2 billion through a buyback and a special dividend.
It will return USD1 billion through a buyback and another USD1 billion through a special payout, at USD0.80 per share. In addition, Anglo lifted its regular half-year payout to USD1.71 per share, from USD0.28 a year earlier.
Anglo noted that including the buyback and special dividend, its interim payout is USD3.31 per share.
In the six months to June 30, Anglo American's revenue more than doubled to USD21.78 billion from USD10.19 billion. Pretax profit surged to USD10.70 billion from USD1.56 billion.
CEO Mark Cutifani said: "The first six months of 2021 have seen strong demand and prices for many of our products as economies begin to recoup lost ground, spurred by stimulus measures across the major economies."
Anglo American shares were 4.4% higher
Rentokil was the best blue-chip performer, however, rising 4.6%. It said revenue in the first half of 2021 climbed 13% annually to GBP1.46 billion from GBP1.29 billion. Ongoing revenue alone, so not including disposed or closed units, rose 14%.
Pretax profit surged to GBP148.8 million from GBP61.8 million a year earlier, the hygiene and pest control firm said.
It declared a 2.09 pence per share payout, having not paid a dividend in the first half of 2020. The interim dividend represents a 38% hike from its first half payout in 2019.
Smith & Nephew sat at the bottom of the blue-chip index, down 6.7%, despite the medical technology firm reporting improved first half earnings and keeping guidance unchanged.
Revenue rose 28% to USD2.60 billion in the six months to July 3, from USD2.04 billion a year prior. It swung to pretax profit of USD223 million from a USD34 million loss.
It left its annual underlying revenue growth outlook at 10% to 13% for the year and its trading profit margin guidance range remained between 18% to 19%.
Analysts at broker Shore Capital Markets commented: "The key question for S&N heading into H2 is whether surgery volumes will be unconstrained by Covid-19. This is clearly a difficult question to answer, as whether cases increase in the autumn or winter will depend upon the level of vaccinations; seasonality of the virus; how people behave and whether more infectious variants have appeared."
BT was in the red as well, down 5.8%. It said revenue in the first quarter ended June 30 fell 3.4% year-on-year to GBP5.07 billion from GBP5.25 billion. Pretax profit fell 4.5% to GBP536 million from GBP561 million.
Elsewhere in London, motor dealer Lookers rose 8.3%, with peer Pendragon up 10%.
Lookers raised its annual underlying pretax profit outlook to GBP50 million, following a GBP36.1 million loss in 2020.
In the six months to June 30, Lookers said like-for-like new units sales were up 45%, used units up 38% and aftersales revenue up 34%.
The dollar was weaker early Thursday.
The pound was quoted at USD1.3944 on Thursday morning in London, up from USD1.3881 at the equity market close on Wednesday. The euro was priced at USD1.1867, up from USD1.1807. Against the yen, the dollar weakened to JPY109.85 from JPY110.09.
The US Federal Reserve struck a more hawkish tone. The central bank said the US economy has made progress against its maximum employment and price stability goals for any QE tapering.
Indicators of economic activity and employment have continued to tick up, the central bank said, while it reiterated its belief that recent inflation strength is being driven by "transitory" factors.
Inflation could rise higher and stay there longer than expected as the US economy recovers from the downturn caused by the Covid-19 pandemic, Fed Chair Jerome Powell added.
In the Asia session, the Japanese Nikkei 225 index closed 0.7% higher, while the Shanghai Composite in China added 1.5%. The Hang Seng index in Hong Kong was 3.2% higher. In Australia, the Sydney's S&P/ASX 200 gained 0.5%.
Beijing moved to calm investors after a crackdown on some of China's biggest firms rattled markets, with regulators calling bankers in for a last-minute call Wednesday night, Bloomberg reported.
The call hosted by the China Securities Regulatory Commission included executives of international investment banks, Bloomberg said.
Gold advanced to USD1,816.75 per ounce early Thursday from USD1,800.47 late Wednesday.
Thursday's economic calendar has eurozone consumer confidence at 1000 BST and German inflation at 1300 BST, followed by US initial jobless claims and a US GDP reading at 1330 BST.
By Eric Cunha; ericcunha@alliancenews.com
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