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LONDON BRIEFING: Shell launches USD3.5 billion share buyback

2nd Nov 2023 07:43

(Alliance News) - Stocks in London are expected to rise on Thursday, following the interest rate decision in the US, with all eyes now on the Bank of England.

The BoE will announce its interest rate call at midday when it is expected to enact a second-successive pause and reiterate its "data dependent" outlook.

The UK central bank decided against a hike in its September meeting, maintaining bank rate at 5.25%, which is a more than 15-year high.

The dollar retreated following the interest rate announcement from the Federal Reserve, with the central bank leaving rates unchanged.

Fed Chair Jerome Powell said the bank remains "strongly committed" and "squarely focused" on getting inflation back to its 2% target, leaving the door ajar for a further interest rate increase.

He cautioned against reading too much into the idea that they are on an extended pause, saying no decision on what they will do at the December meeting has been made. Powell said the Fed had come "very far" in this rate-hiking cycle and would take meetings "one-by-one" and look at the data.

"While on the face of it, Powell was trying to come across as hawkish, markets weren't buying it especially since yesterday's economic data showed that the US economy appeared to be slowing," said CMC Markets UK's Michael Hewson.

In company news, Shell said profit in the third quarter more than doubled from the second. Empiric Student Property raised its dividend target, as the booking cycle for the current academic year came in ahead of its expectations.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called up 48.0 points, 0.7%, at 7,390.43

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Hang Seng: up 0.6% at 17,205.56

Nikkei 225: closed up 1.1% at 31,949.89

S&P/ASX 200: closed up 0.9% at 6,899.70

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DJIA: closed up 221.71 points, 0.7%, at 33,274.58

S&P 500: closed up 1.1% at 4,237.86

Nasdaq Composite: closed up 1.6% at 13,061.47

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EUR: up at USD1.0602 (USD1.0537)

GBP: up at USD1.2181 (USD1.2123)

USD: down at JPY150.38 (JPY151.07)

GOLD: up at USD1,985.41 per ounce (USD1,978.93)

OIL (Brent): down at USD85.52 a barrel (USD86.36)

(changes since previous London equities close)

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ECONOMICS

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Thursday's key economic events still to come:

09:55 CET Germany labour market statistics

09:55 CET Germany unemployment

09:55 CET Germany manufacturing PMI

12:00 GMT UK interest rate decision

07:30 EDT US Challenger job-cut report

08:30 EDT US unemployment insurance weekly claims report

16:30 EDT US foreign central bank holdings

16:30 EDT US federal discount window borrowings

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BROKER RATING CHANGES

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BofA initiates Unite Group with 'buy' - target 1,030 pence

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Berenberg raises BP price target to 525 (490) pence - 'hold'

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SocGen cuts Asos price target to 432 (714) pence - 'buy'

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COMPANIES - FTSE 100

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J Sainsbury said it expects underlying profit to come in at the upper range of its guidance for its financial year, reporting "strong volume and market share growth" in its first half. In the 28 weeks ended September 16, the grocer's group sales including value-added tax rose 2.9% annually to GBP18.67 billion from GBP18.34 billion. However, excluding fuel, they rose 7.7% to GBP15.81 billion from GBP14.67 billion. Pretax profit fell 27% to GBP275 million from GBP376 million, which the company said largely reflects non-cash movements and one-off income from legal settlements in the prior year. On an underlying basis, pretax profit was flat on-year at GBP340 million. The retailer expects the strength of its volume performance to drive annual underlying pretax profit to between GBP670 million and GBP700 million, the upper half of its previous guidance range. It also raised retail free cash flow guidance to at least GBP600 million from at least GBP500 million. "Food is firmly back at the heart of Sainsbury's. We've never been more competitive on price and our focus on value, innovation and service is giving more customers more reasons to shop with us," said Chief Executive Simon Roberts. The firm left interim payout unchanged at 3.9 pence.

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Shell announced a new share buyback programme, and reported an improved bottomline performance from the prior quarter. The oil major said third-quarter total revenue and other income dropped to USD78.01 billion from USD98.76 billion a year before. Pretax profit edged down to USD11.29 billion from USD11.44 billion annually on a reported basis, but more than doubled from USD5.35 billion in the prior quarter. Income attributable to shareholders rose to USD7.04 billion from USD6.74 billion a year before, and jumped from USD3.13 billion in the second quarter. Shell said this "mainly reflected higher refining margins, higher realised oil prices, higher LNG trading and optimisation results, and higher Upstream production, partly offset by lower Integrated Gas volumes". It raised its quarterly dividend to USD0.33 from USD0.25 a year before, and announced a new share buyback programme of USD3.5 billion to be completed by the announcement of its fourth-quarter results.

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COMPANIES - FTSE 250

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Empiric Student Property said the booking cycle for the academic year 2023/2024 has "exceeded all expectations", having achieved 99% revenue occupancy and like-for-like growth in average weekly rents of 11%. The student accommodation provider increased its annual dividend target to 3.5p per share, from the prior target of 3.25p. This would represent a 27% increase from the prior year. The company expects revenue occupancy to remain strong in the next academic year, and is targeting like-for-like weekly rental growth of at least 5%. "With demand and supply imbalance expected to continue for the foreseeable future, our premium accommodation offering and high quality customer service, positions us well for growth within this resilient and growing market," CEO Duncan Garrood.

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By Elizabeth Winter, Alliance News senior markets reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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