(Alliance News) - Stock prices in London opened slightly higher on Thursday with BT, Royal Dutch Shell and Lloyds driving a small gain in the FTSE 100 following a sharp sell-off on Wednesday.
Global stocks plunged Wednesday on rising worries about coronavirus lockdowns, as France and Germany announced tough new restrictions and US cases continued to climb.
French President Emmanuel Macron announced that bars, restaurants and non-essential businesses will be forced to close for at least a month, a decision that came only hours after German Chancellor Angela Merkel announced similar measures in Europe's largest economy.
In London early Thursday, the FTSE 100 index was up 7.46 points, or 0.1%, at 5,590.26. The blue-chip index closed down 146.19 points, or 2.6%, at 5,582.80 Wednesday - its lowest level in six months.
The FTSE 250 was up 40.55 points, or 0.3%, at 17,289.46. The AIM All-Share was down 0.1% at 948.03.
The Cboe UK 100 was up 0.7% at 557.08. The Cboe 250 was up 0.1% at 14,530.56. The Cboe Small Companies was flat at 9,472.09.
In Paris the CAC 40 was up 0.4%, while the DAX 30 in Frankfurt was up 0.7%.
In the FTSE 100, BT Group was the best performer, up 7.1% after the telecommunications company said it delivered interim results in-line with expectations and raised earnings guidance.
For the half year ended September 30, revenue fell 7.6% to GBP10.59 billion, from GBP11.47 billion last year, and pretax profit declined 20% to GBP1.06 billion from GBP1.33 billion.
BT decided against paying an interim dividend, having paid out 4.62 pence last year, but plans to reinstate dividends in the 2021-22 financial year.
The former state monopoly said it was firmly on track with the delivery of its modernisation programme and delivered GBP352 million in cost savings during the first half of the year.
BT raised the lower end of its earnings before interest tax, depreciation, and amortisation outlook range for the current year, financial 2021, to GBP7.3 billion for a revised range of between GBP7.3 billion and GBP7.5 billion.
Looking further ahead, BT expects EBITDA of at least GBP7.9 billion in financial 2023.
BT said it was boosted by a strong expansion of fibre to the premises orders through its Openreach digital network business, noting a "strong increase" in the second quarter.
"The growth in EBITDA underpins the planned reinstatement of our dividend next year whilst ensuring that we can continue to drive value-creating investments in our networks and products," BT Chief Executive Philip Jansen said.
Royal Dutch Shell 'A' and 'B' shares were up 2.9% and 2.8% respectively after the oil major announced a new cash allocation framework which it said will enable the oil company to reduce debt, increase distributions to shareholders, and allow for disciplined growth.
The energy firm is London's largest company by market capitalisation.
Shell said the cash allocation framework includes a target to reduce net debt to USD65 billion from USD73.5 billion as of September 30. Upon achieving this milestone, Shell targets to distribute a total of 20% to 30% of cash flow from operations to shareholders.
Increased shareholder distributions will be achieved through a combination of Shell's progressive dividend and share buybacks. Remaining cash will be allocated to "disciplined and measured" capital expenditure growth and further debt reduction, it added.
The Anglo-Dutch firm declared a third quarter dividend of 16.65 US cents, down 65% from USD0.47 paid out in the third quarter last year. However, it was up 4.0% from the 16.00 cents paid for the second quarter, and Shell confirmed on Thursday it will grow the dividend annually as part of its progressive dividend policy.
For the third quarter ended September 30, Shell reported attributable income of USD489 million, down 92% from USD5.88 billion in the third quarter last year. Current cost of supply earnings for the period were USD177 million, down 97% from USD6.08 billion.
Lloyds Banking Group was up 2.5% after the high street lender said it saw an encouraging business recovery in the third quarter and, with impairments significantly lower, a return to profitability in the third quarter.
For the quarter ended September 30, net income was down 25% to GBP988 million from GBP1.32 billion last year, and net interest income was down 16% to GBP2.62 billion from GBP3.13 billion. Pretax profit for the quarter was GBP1.04 billion, up from just GBP50 million in the third quarter last year.
The bank said activity levels picked up in the third quarter of 2020 after contraction in the first six months, particularly mortgage applications and consumer spending. It received its biggest quarterly surge in mortgage applications since 2008, booking new mortgage lending of GBP3.5 billion.
Looking ahead, Lloyds said net interest margin is expected to remain broadly stable around 240 basis points in the fourth quarter, resulting in a full year margin of 250 basis points. It also expects its 2020 impairment charge to be at the lower end of the GBP4.5 billion to GBP5.5 billion previously guided range.
"Lloyds has earned some breathing space by comfortably beating forecasts for the quarter on most fronts. It is clear to see why the bank is often described as a barometer of the UK economy," commented Interactive Investor's Richard Hunter.
"Performance for the first six months of the year was ravaged by the effects of the pandemic. The third quarter saw something of a return to form as restrictions were eased and some signs of a tentative recovery emerged. However, with lockdowns being reintroduced in an effort to prevent a real second wave and with UK-EU negotiations reaching a conclusion, the outlook for the final quarter is highly uncertain. This in turn largely feeds into Lloyds' prospects, which could see the third quarter as being an exception for the year as a whole," Hunter added.
At the other end of the large caps, Standard Chartered was the worst performer, down 4.0% after the Asia-focused bank reported a sharp drop in third-quarter profit but believes its ongoing transformation will allow the bank to weather the pandemic in "good shape".
In the three months to September 30, StanChart recorded pretax profit of USD435 million, down 61% year on year from USD1.11 billion. The lender booked a USD358 million credit impairment in the third quarter, up from USD280 million a year before, but noted it is down from the USD611 million credit charge taken in the second quarter.
Operating income dipped 11% to USD3.51 billion from USD3.96 billion, as net interest income declined 16% to USD1.62 billion from USD1.94 billion.
The Japanese Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite ended up 0.1%, while the Hang Seng index in Hong Kong closed down 0.5%.
The pound was quoted at USD1.2990 Thursday morning, flat from USD1.2985 at the London equities close Wednesday.
The euro was priced at USD1.1757, flat from USD1.1756, ahead of the European Central Bank's interest rate decision at 1245 GMT.
Against the yen, the dollar was trading a JPY104.37, flat from JPY104.34 late Wednesday in London.
Brent oil was quoted at USD38.78 a barrel Thursday morning, down from USD39.12 late Wednesday. Gold was trading at USD1,878.21 an ounce, down from USD1,883.33
The economic events calendar on Thursday has US GDP readings at 1230 GMT and Germany inflation figures at 1300 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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