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(Alliance News) - Stocks in London ended higher on Tuesday as investors concentrated on the ongoing earnings season, with strong updates from Standard Chartered while BP pleased its shareholders with a dividend rise and share buyback.
The FTSE 100 index closed up 24.00 points, or 0.3%, at 7,105.72. The FTSE 250 ended up 80.98 points, or 0.4%, at 23,289.65. The AIM All-Share finished up 1.00 point, or 0.1%, at 1,258.61.
The Cboe UK 100 ended up 0.4% at 708.10, the Cboe UK 250 closed up 0.5% at 21,059.50, and the Cboe Small Companies ended up 0.1% at 15,240.90.
In Paris the CAC 40 ended up 0.7%, while the DAX 30 in Frankfurt ended down 0.1%.
"The FTSE 100 has fared slightly better largely due to a decent performance from BP, and the banks after some decent earnings numbers, this time from Standard Chartered. The FTSE 250 has once again made another record high, helped by decent numbers from Direct Line, as lower motor vehicle claims pushed half year profits before tax up, sending the shares to their best levels since April," said CMC Markets analyst Michael Hewson.
In the FTSE 100, BP ended the best performer, up 5.6%, after the oil major raised its second-quarter dividend and joined oil peer Royal Dutch Shell in setting plans for a big share buyback.
Shell 'A' and 'B' shares ended up 1.8% and 1.4% respectively.
In addition, BP sweetened the pot for shareholders as oil prices continue to recover from pandemic lows. For the second quarter of 2021, BP swung to a replacement cost profit attributable to shareholders of USD2.38 billion from a USD17.66 billion loss a year earlier.
Total second quarter revenue rose 81% year-on-year to USD37.60 billion from USD20.78 billion. BP lifted its dividend and unveiled a USD1.4 billion share buyback.
BP declared a dividend of 5.46 cents for the quarter, up 4.0% from 5.25 cents a year ago.
If oil prices are at around USD60 per barrel, BP expects to deliver buybacks of around USD1.0 billion per quarter. In addition, it plans to kick off a share buyback of USD1.4 billion using surplus cash flow from the first half.
Standard Chartered closed up 1.0% after the Asia-focused bank reported "encouraging" first half results, with profit improved thanks to a credit release, and expects the momentum to continue into the second half.
In the six months to June 30, the London-headquartered lender recorded pretax profit of USD2.56 billion, up sharply from USD1.63 billion a year before. Aiding the profit boost was a sharp drop in the bank's credit provision, which turned into a USD51 million release in the first half compared to the USD1.58 billion provision booked last year.
StanChart's operating income slipped 6% year on year to USD7.63 billion from USD8.10 billion. Net interest income fell 4% to USD3.38 billion from USD3.50 billion, while other income dropped 7% to USD4.24 billion from USD4.55 billion. The lender's net interest margin worsened to 1.22% from 1.40%.
StanChart declared an interim dividend of 3 US cents and plans a USD250 million share buyback, which is expected to start "imminently".
At the other end of the large-caps, Smiths Group ended the worst performer, down 10%. The engineer late Monday entered an agreement to sell its Smiths Medical unit to private equity firm TA Associates, prompting the engineer to return cash to shareholders as a result of the sale.
The deal values Smiths Medical at an enterprise value of USD2.3 billion, equivalent to GBP1.7 billion, plus an additional USD200,000 contingent on future performance of Smiths Medical.
Smiths said the deal is superior to all other proposals received during the separation process and is considered a "better outcome for shareholders than a demerger".
The UK conglomerate back in 2018 had outlined its intention to separate Smiths Medical, which makes specialist medical equipment and single-use devices, to become more focused on industrial technology, but opted to sell the unit instead of pursuing a demerger.
"The proposed disposal of Smiths Medical has been a long-time coming, and while the price may well be a touch disappointing, we sense some relief that this has reached some form of conclusion, and the market will actually be able to focus on the [sum-of-the-parts] of Smiths without the uncertainty of whether Medical will be sold. However, whether the new CEO can drive attractive organic constant currency growth at Smiths remains the key debate," said analysts at Jefferies.
In the FTSE 250, Hiscox ended the best performer, up 6.6%, after the insurer posted a return to first half profit and tipped this year's Covid-19 claims to be lower than expected.
In the six months to June 30, gross written premiums rose 8.5% annually to USD2.43 billion from USD2.24 billion. Hiscox swung to a pretax profit of USD133.4 million from a USD138.9 million loss a year prior.
The Hamilton, Bermuda-based firm declared an 11.5 cents per share dividend, its first payout since the onset of the pandemic.
Direct Line Insurance Group closed up 5.5%. The insurer said half year pretax profit climbed 11% from the same period last year, amid claims frequency, new car sales and new drivers entering the market remaining "below normal level".
Pretax profit for the six months ended June 30 climbed to GBP261.3 million from GBP236.4 million in 2020, helped by "benign" weather conditions and fewer motor accident and travel claims.
The Kent, England-based home, motor and pet insurer's combined operating ratio dropped to 84.2% from 90.3% for the half year, meaning underwriting profitability improved.
At the other end of the midcaps, Rotork was the worst performer, down 7.0%, after the valve actuators maker said Chief Executive Kevin Hostetler is resigning three years into his tenure, as it reported interim earnings.
Revenue grew 1.8% year-on-year to GBP288.3 million from GBP283.2 million, while pretax profit rose 8.4% to GBP54.1 million from GBP50.0 million.
The Oil & Gas unit lagged, with sales down 5.6% year-on-year to GBP129.6 million from GBP137.2 million. Water & Power revenue rose 5.9% to GBP77.5 million from GBP73.2 million, and Chemical, Process & industrial was up 12% to GBP81.2 million from GBP72.9 million.
Hostetler informed the board of his decision to return to the US with his young family next year, Rotork said. He is committed to a handover period, which is expected to finish by the end of June 2022. Rotork has started the search for a replacement and will consider internal and external candidates.
The pound was quoted at USD1.3895 at the London equities close, marginally lower from USD1.3900 at the close Monday.
The euro stood at USD1.1860 at the European equities close, down from USD1.1880 late Monday. Against the yen, the dollar was trading at JPY109.02, down from JPY109.30 late Monday.
Stocks in New York were mixed at the London equities close amid fears of the Covid-19 Delta variant on economic activity.
The DJIA was up 0.1%, the S&P 500 index flat and the Nasdaq Composite down 0.4%.
On the corporate front, Activision Blizzard dropped 3.2% as the video game maker unveiled a management shakeup following employee protests and a California state lawsuit alleging toxic workplace conditions and discrimination against women.
Brent oil was quoted at USD71.83 a barrel at the equities close, down sharply from USD73.58 at the close Monday.
Gold was quoted at USD1,809.00 an ounce at the London equities close, lower against USD1,814.25 late Monday.
The economic events calendar on Wednesday has services PMI readings from Germany, the eurozone and UK at 0855 BST, 0900 BST and 0930 BST respectively, with the US Markit PMI print at 1445 BST and the ISM report at 1500 BST.
The UK corporate calendar on Wednesday has interim results from brickmaker Ibstock, 185-year old insurer Legal & General Group and housebuilder Taylor Wimpey.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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