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LONDON BRIEFING: Shell profit falls; announces USD3.5 billion buyback

1st Feb 2024 07:42

(Alliance News) - Stocks in London are set to follow New York into the red, after the US Federal Reserve quashed hopes of a March cut to interest rates and ahead of the Bank of England interest rate decision.

The Bank of England will make its first interest rate decision of the year on Thursday at 1200 GMT. Alongside the decision, there will also be the BoE's latest monetary policy report, with economic projections, as well as a press conference with Governor Andrew Bailey half an hour later.

Like the US Federal Reserve and European Central Bank, the BoE is expected to keep interest rates unchanged.

New York ended lower on Wednesday, after Fed Chair Jerome Powell derailed market hopes for a March cut in interest rates.

Speaking after the Federal Open Market Committee voted to leave interest rates unchanged for the fourth meeting in a row, Powell said a rate cut in March, is not the "most likely case."

"I don't think it's likely that the committee will reach a level of confidence by the time of the March meeting, to identify that March is the time to do that," Powell told reporters at a press conference.

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

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MARKETS

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FTSE 100: called down 0.3% at 7,606.80

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Hang Seng: up 0.4% at 15,553.55

Nikkei 225: closed down 0.8% at 36,011.46

S&P/ASX 200: closed down 1.2% at 7,588.20

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DJIA: closed down 317.01 points, 0.8%, at 38,150.30

S&P 500: closed down 79.32 points, 1.6% at 4,845.65

Nasdaq Composite: closed down 345.88 points, 2.2% to 15,164.01

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EUR: down at USD1.0801 (USD1.0846)

GBP: down at USD1.2670 (USD1.2715)

USD: up at JPY146.84 (JPY146.29)

Gold: down at USD2,043.40 per ounce (USD2,050.57)

(Brent): down at USD80.55 a barrel (USD81.03)

(changes since previous London equities close)

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ECONOMICS

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Thursday's key economic events still to come:

09:30 EST Canada manufacturing PMI

10:00 CET eurozone manufacturing PMI

11:00 CET eurozone CPI

11:00 CET eurozone unemployment

09:50 CET France manufacturing PMI

09:55 CET Germany manufacturing PMI

09:30 GMT UK manufacturing PMI

12:00 GMT UK interest rate decision

07:30 EST US challenger job cuts

08:30 EST US initial jobless claims

08:30 EST US nonfarm productivity

09:45 EST US S&P Global manufacturing PMI

10:00 EST US ISM manufacturing PMI

10:00 EST US construction spending

10:30 EST US EIA natural gas storage

12:00 EST US 15-year fixed rate mortgage average

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EU leaders will grapple with Hungary's Prime Minister Viktor Orban at a crunch summit meeting Thursday to try to overcome his veto on EUR50 billion in financial aid for Ukraine. Orban – Russia's closest ally in the EU – sparked fury from his 26 counterparts in the bloc by thwarting a deal in December to keep the desperately needed funds flowing to Kyiv nearly two years into Moscow's invasion. The Hungarian populist has been accused of holding Ukraine's future hostage in a bid to blackmail Brussels into releasing billions of euros in frozen EU funds for Budapest. EU officials have been trying to thrash out a compromise with Hungary to get agreement on the four-year package for Ukraine as part of a broader overhaul of the bloc's budget.

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BROKER RATING CHANGES

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Barclays cuts Next to 'equal weight' (overweight)

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Berenberg raises Marshalls to 'buy' ('hold') - target 420 (320) pence

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Berenberg cuts Pets At Home to 'hold' (buy) - price target 390 (440) pence

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COMPANIES - FTSE 100

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Shell ups dividend despite profit nearly halving amid sharp drop in quarterly profit and revenue due to lower oil and gas prices. In the fourth quarter of 2023, the oil firms pretax profit fell to USD1.64 billion from USD16.44 billion a year earlier. Revenue dropped to USD78.73 billion from USD101.30 billion. Despite this, Shell upped its dividend to USD0.34 from USD0.29. This brings the full-year dividend to USD1.29 from USD1.04. Shell also said it has completed its USD3.5 billion share buyback and will now launch a new USD3.5 billion share buyback programme. "Shell delivered another quarter of strong performance, concluding a year in which we made good progress across the targets outlined at our Capital Markets Day. As we enter 2024 we are continuing to simplify our organisation with a focus on delivering more value with less emissions," said Chief Executive Wael Sawan. Shell expects a cash capital expenditure of USD22 billion to USD25 billion for 2024, compared to USD24.39 billion in 2023 and USD24.83 billion in 2022.

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BT said it is on track for its full-year financial outlook, after growth in revenue and Ebitda during its third quarter ended December 31. Third quarter adjusted revenue rose 3% annually to GBP5.34 billion from re-presented revenue of GBP5.21 billion. Adjusted Ebitda edged up 1% to GBP2.03 billion from re-represented GBP2.01 billion. "BT Group has delivered another quarter of revenue and EBITDA growth, while rapidly building and upgrading customers to our full-fibre broadband and 5G networks, and we continue to be on track to achieve our financial outlook for the year," said Chief Executive Allison Kirkby. "We are providing great digital connectivity and services, while laying the foundations for future growth that will benefit our customers, investors and the UK.

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GSK confirmed it has reached a confidential settlement with David Browne, resolving the case he filed in California state court. The litigation related to its heartburn medication Zantac, also known as ranitidine. The pharmaceutical company said the case was set to go to trial on February 20, and instead will now be dismissed. "The settlement reflects the company's desire to avoid the distraction related to protracted litigation in this case. GSK does not admit any liability in this settlement and will continue to vigorously defend itself based on the facts and the science in all other Zantac cases," GSK said.

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COMPANIES - FTSE 250

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AG Barr said that in its financial year ended January 28, revenue jumped 26% to GBP400 million from GBP317.6 million in the 52 weeks ended January 29, 2023. Adjusted pretax profit is now expected to be about GBP49.5 million, up 14% on the prior year's result of GBP43.5 million and slightly ahead of previous market expectations. AG Barr also named Euan Sutherland as its new chief executive officer. For the role will be effective from May 1. Most recently, Sutherland was CEO of Saga. As announced in August last year, Roger White will step down from the board at the end of April 2024 and will remain available until the end of July to support a smooth leadership transition as planned. Chair Mark Allen said: "On behalf of the board, I am delighted that Euan is joining AG Barr. He has substantial experience across several consumer-facing businesses and will be a strong addition to the board. He is well placed to lead AG Barr through the next exciting phase of its development and to ensure the continued long term success of the business."

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OTHER COMPANIES

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Gresham House Energy Storage Fund said it continues to be impacted by a "weak revenue environment." It noted the slower than expected pace of commissioning of new projects to date, due to elongated grid connection times; battery energy storage systems being significantly under-utilised in National Grid ESO's Balancing Mechanism; and the excessive use of legacy gas-fired electricity generation by ESO to provide the BM with flexible generation which in turn causes oversupply in the wholesale electricity market. Chair John Leggate said: "The challenging environment continues to persist for the battery storage industry in Great Britain as it transitions to a trading-focused business model, having been focused on frequency response until Q1 2023. These conditions, and their effect on revenues, are not unique to GRID."

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By Sophie Rose, Alliance News senior reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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