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LONDON MARKET MIDDAY: BP tops FTSE 100 index on buyback promise

6th Feb 2024 12:10

(Alliance News) - The FTSE 100 was higher at midday Tuesday, despite lingering unease in equity markets on US interest rate worries, while BP led the way among London's large-caps as it announced a buyback plan.

The FTSE 100 index was up 32.62 points, 0.4%, at 7,645.48. The FTSE 250 was down 15.49 points, 0.1%, at 19,003.06, and the AIM All-Share was up 0.24 of a point at 750.61.

The Cboe UK 100 was up 0.5% at 765.04, the Cboe UK 250 was down 0.1% at 16427.56, and the Cboe Small Companies was down 0.1% at 14,671.14.

The pound was quoted at USD1.2548 at midday on Tuesday in London, higher compared to USD1.2527 at the equities close on Monday. The euro stood at USD1.0732, up slightly against USD1.0728. Against the yen, the dollar was trading at JPY148.71, lower compared to JPY148.80.

The downturn in the UK construction sector eased slightly at the start of the year, survey data showed on Tuesday, with optimism reaching its highest level for two years.

The S&P Global UK construction purchasing managers' index rose to 48.8 points in January from 46.8 points in December. This marks the highest reading since August 2023 and is higher than FXStreet market consensus of 47.3 points.

That said, the index remained below the crucial 50.0 no-change threshold for the fifth month running.

Giulia Bellicoso at Capital Economics said the data was "driven by improvements in both the housing and commercial balances."

"But even so, both readings remained below the 50 no-change mark, and this weakness is set to continue over the next few months as the impact of high interest rates continues to pass through," Bellicoso warned.

Housebuilders edged slightly higher on the back of the data. Persimmon and Taylor Wimpey both rose 0.4%. Barratt Developments edged up 0.2%.

Elsewhere in the FTSE 100, BP jumped 5.3% to top the index.

BP said revenue fell to USD52.59 billion in the fourth quarter of 2023 from USD70.36 billion a year earlier. Quarterly pretax profit dived to USD1.10 billion from USD16.90 billion.

For all of 2023, revenue dropped by 14% to USD213.03 billion from USD248.89 billion in 2022. However, pretax profit jumped by 54% to USD23.75 billion from USD15.41 billion.

Pretax profit rose despite the fall in revenue, as BP spent USD119.31 billion on purchases in 2023, down 15% from USD141.04 billion in 2022. Furthermore, net impairment and loss on sale of businesses slimmed significantly to USD5.86 billion from USD30.52 billion.

BP said it completed its USD1.5 billion share buyback on Friday, and now intends to initiate a new USD1.75 billion buyback, prior to reporting its first quarter results which are due on May 7. It intends to buy back USD3.5 billion in shares for the first half of 2024.

BP added that it plans to conduct share buybacks worth at least USD14 billion through 2025, as part of its commitment to return at least 80% of surplus cash flow to shareholders.

"Although 2023 full year profits were shy of estimates, the strong Q4 performance suggests that the company gathered steam at the end of last year, which is a good backdrop for 2024's performance. There was good news on gas trading and its profitable convenience line, which saw gross margins soar, the company also jumped on the AI bandwagon," XTB analyst Kathleen Brooks commented.

Shell edged up 1.0% in a positive read across.

On the other hand, bookmaker Entain lost 2.8%, pushing it to the bottom of the index. Barclays cut Ladbrokes owner's stock to 'equal weight' from 'overweight'.

In the FTSE 250, Renishaw surged 19%.

The Gloucestershire, England-based provider of manufacturing technologies, analytical instruments and medical devices said pretax profit fell 27% to GBP56.5 million in the six months that ended December 31 from GBP77.8 million a year before.

Revenue declined 4.9% to GBP330.5 million from GBP347.7 million a year earlier.

Despite the worse results, Renishaw left its dividend unchanged at 16.8 pence per share.

Looking ahead, Chief Executive Officer William Lee said: "We expect an improvement in our trading performance in the second half of the financial year as market conditions improve, and as we continue to pursue a range of growth opportunities. To support our through-cycle growth strategy, we are continuing to focus on productivity and to make targeted investments in our people, our production facilities, and our new product pipeline."

On London's AIM, Beeks Financial Cloud surged 34%.

The cloud computing and connectivity provider said it has won a number of competitive tenders in the first half of financial 2024, and now expects trading in financial 2025 to be "significantly" ahead of previous board expectations.

Beeks noted that it has signed a USD2.3 million Proximity Cloud expansion contract, as well as a conditional contract with "one of the largest exchange groups globally."

In European equities on Tuesday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was down 0.1%.

Stocks in New York were called to open mixed. The Dow Jones Industrial Average was called down 0.2% and the S&P 500 index down 0.1%. Meanwhile, the Nasdaq Composite is called up 0.2%.

Brent oil was quoted at USD78.25 a barrel at midday in London on Tuesday, from USD77.11 late Monday. Gold was quoted at USD2,025.69 an ounce against USD2,019.86.

By Sophie Rose, Alliance News senior reporter

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