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LONDON MARKET OPEN: BP jumps after unveiling share buyback

6th Feb 2024 08:53

(Alliance News) - The FTSE 100 in London opened higher on Tuesday, with oil major BP at the top of the index, thanks to its new share buyback programme.

The FTSE 100 index opened up 63.97 points, 0.8%, at 7,676.83. The FTSE 250 was up 66.54 points, 0.4%, at 19,085.09, and the AIM All-Share was up 3.73 points, 0.5%, at 754.10.

The Cboe UK 100 was up 0.9% at 767.92, the Cboe UK 250 was up 0.3% at 16,495.54, and the Cboe Small Companies was up 0.2% at 14,708.44.

In European equities on Tuesday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up 0.1%.

The US services economy made a strong start to 2024, two business surveys showed, as the world's largest economy continued to demonstrate resilience in the face of high interest rates.

The seasonally adjusted final S&P Global US services PMI business activity index posted 52.5 in January, up from 51.4 in December, but slightly lower than the earlier released 'flash' estimate of 52.9.

In a separate report, the Institute of Supply Management said economic activity in the services sector expanded in January for the 13th consecutive month, beating market expectations. The services PMI registered 53.4 in the month, accelerating from 50.5 in December. December's figure was revised downwards from 50.6.

"The latest ISM data printed yesterday showed that US services grew at their biggest pace in four months, screaming that the US economy is too resilient and too healthy for the Fed to start cutting the rates in a hurry," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

The pound was quoted at USD1.2560 early on Tuesday in London, higher compared to USD1.2527 at the equities close on Monday. The euro stood at USD1.0758, up against USD1.0728. Against the yen, the dollar was trading at JPY148.57, lower compared to JPY148.80.

In the FTSE 100, BP jumped 5.3% to the top of the index.

In its fourth quarter, revenue fell to USD52.59 billion from USD70.36 billion a year earlier. The oil major reported that pretax profit fell to USD1.10 billion from USD16.90 billion.

Over the whole year, revenue dropped to USD213.03 billion from USD248.89 billion on-year. Pretax profit fell to USD23.75 billion from USD15.41 billion.

On the back of the results, BP paid out a quarterly dividend per share 7.27 US cents, up versus 6.61 US cents. This brings the full-year dividend to 28.42

cents, up from 24.08 cents.

It said it has completed a USD1.5 billion share buyback on February 2, and now intends on initiating a USD1.75 billion buyback, prior to reporting its first quarter results. It intends to buy back USD3.5 billion in shares for first half of 2024.

Fellow oil major Shell rose 1.1% in a positive read across the board.

Elsewhere in the FTSE 100, retailers got a boost. JD Sports was up 0.8%, Frasers Group up 0.8%, and B&M up 0.6%.

Data from the British Retail Consortium and KPMG showed Tuesday, showed that retail sales growth in the UK slowed in January. Total retail sales in the UK between December 31 and January 27 grew by 1.2% year-on-year, slowing down from growth of 4.2%.

In the FTSE 250, Renishaw rose 2.4%.

Renishaw said that in the six months ended December 31, revenue fell 5% to GBP330.5 million from GBP347.7 million a year earlier. Statutory pretax profit fell 27% to GBP56.5 million from GBP77.8 million.

On the back of the results, Renishaw left its dividend unchanged at 16.8p.

CEO 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 AIM, Beeks Financial Cloud surged 30%.

The Glasgow-based 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."

The S&P/ASX 200 in Sydney closed down 0.6%.

Australia's central bank has decided to leave the cash rate target unchanged at 4.35%, with the interest rate paid on Exchange Settlement balances steady at 4.25%.

"Higher interest rates are working to establish a more sustainable balance between aggregate demand and supply in the economy. Accordingly, conditions in the labour market continue to ease gradually, although they remain tighter than is consistent with sustained full employment and inflation at target," the Reserve Bank of Australia said.

In Asia on Tuesday, the Nikkei 225 index in Tokyo was down 0.5%. In China, the Shanghai Composite was up 3.2%, while the Hang Seng index in Hong Kong was up 4.0%.

In the US on Monday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.7%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.2%.

Brent oil was quoted at USD78.16 a barrel early in London on Tuesday, up from USD77.11 late Monday. Gold was quoted at USD2,026.11 an ounce, higher against USD2,019.86.

Still to come on Tuesday's economic calendar, there is a UK construction PMI reading at 0930 GMT.

By Sophie Rose, Alliance News senior reporter

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