FTSE Gains on HSBC and Shell Reports

The FTSE 100 pushed past the 7,270 mark on Thursday, as Shell reported on earnings growth, and HSBC announced profits that had exceeded analyst expectations.

shareprices.com - Thursday, May 04, 2017

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Royal Dutch Shell 'A'

The UK’s leading index has slipped slightly from its intraday high, but is still trading up 0.4 percent compared to yesterday’s close. Royal Dutch Shell delivered a positive report, confirming higher earnings, thanks in part to recovering oil prices. The firm has seen current cost of supplies earnings increase by 136 percent, up to $3.86 billion. Earnings from downstream activities, including refining, marketing and chemicals, increased by 52 percent, to $2.6 billion.

The anglo-dutch company’s update saw a positive reception from markets, and its share price increased by three percent. Chief executive officer Ben van Beurden explained that its first quarter had been a strong one, and that free cash flow of $5.2 billion would allow the energy company to reduce its debt and cover its cash dividend for the quarter.

The UK’s oil sector has an issue with many companies having high levels of debt, and this is something that has become a talking point with investors, who are concerned that repaying those debts could be unsustainable, and that they could seriously hinder the sector’s prospects over the coming months. Royal Dutch Shell, however, has a good track record of servicing its debt (and reducing it), which makes it a strong company in an area where so many investors are turning bearish about the overall prospects of the sector.


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