4th Feb 2021 09:03
(Alliance News) - Stock prices in London opened higher on Thursday, with the FTSE 100 helped by weakness in the pound and some well-received corporate earnings.
The internationally exposed FTSE 100 index was up 44.32 points, or 0.8%, at 6,552.14. The mid-cap FTSE 250 index was up 119.89 points, or 0.8%, at 20,872.33. The AIM All-Share index was flat at 1,197.91.
The Cboe UK 100 index was up 0.4% at 648.35. The Cboe 250 was up 0.3% at 18,338.31 and the Cboe Small Companies was flat at 12,359.54.
In mainland Europe, the CAC 40 in Paris was up 0.4% while the DAX 30 in Frankfurt was up 0.3%.
In the FTSE 100, Barratt Developments was the best performer, up 4.0%, after the housebuilder reported positive interim results and resumed dividend payments.
For the half year ended December 31, revenue rose 10% to GBP2.49 billion from GBP2.27 billion at the same time in 2019 and pretax profit was up 1.7% at GBP430.2 from GBP423 million.
Barratt declared an interim dividend of 7.5 pence against none in the prior year.
Royal Dutch Shell's A and B shares were up 1.6% and 1.5% respectively as the oil major pointed to higher dividends in the first quarter, despite swinging to a hefty annual loss.
Shell, which is London's biggest company by market capitalisation, was contributing 1.4% to the large cap index's rise.
Brent oil was quoted at USD58.90 a barrel Thursday morning, up from USD58.64 at the London equities close Wednesday. The North Sea benchmark was trading around USD68 a barrel at the start of 2020, but had collapsed to a low of USD15.97 in April due to the global economic impact of the virus and a Russia-Saudi Arabia output war later resolved.
For 2020, Shell swung to a loss attributable to shareholders of USD21.68 billion from a profit of USD15.84 billion in 2019. Adjusted earnings were USD4.84 billion, down 71% from USD16.46 billion - missing consensus forecasts for USD5.05 billion.
For the fourth quarter alone, Shell swung to a loss attributable to shareholders of USD4.01 billion from a USD965 million profit in 2019.
Free cash flow for 2020 was USD17.63 billion, down 12% from USD20.1 billion in 2019. Net debt increased by USD1.9 billion to USD75.4 billion in the fourth quarter, hurt by lower free cash flow, including a small working capital outflow.
Shell slashed its fourth quarter payout 65% to USD0.1665 from USD0.4700. Its annual dividend was down 65% to USD0.6530. However, Shell expects that the first quarter dividend will be USD0.1735, up 4.2%.
At the other end of the large caps, Unilever was the worst performer, down 3.8%. The consumer goods firm said it delivered a strong set of annual results "under the most difficult of circumstances" brought about by the coronavirus pandemic.
For 2020, Unilever posted revenue of EUR50.72 billion, down from USD51.98 billion in 2019, just missing forecasts of EUR50.81 billion.
Underlying operating profit was EUR9.34 billion in 2020, down from EUR9.94 billion in 2019. The company posted underlying sales growth of 1.9%. Free cash flow was EUR7.7 billion in 2020, up from EUR6.1 billion in the prior year.
The Anglo-Dutch firm declared a quarterly dividend of EUR0.4268, which it noted was up 4%. The third quarter's payout was EUR0.4104. This takes Unilever's total payout in respect to 2020 to EUR1.6580, about GBP1.4643, improved 1.0% from 2019's EUR1.6416.
Looking ahead, Unilever said it will aim for underlying sales growth ahead of its markets, delivering growth in the range of 3% to 5%, as well as profit growth ahead of sales growth.
eToro analyst Adam Vettese explained: "Once again, Unilever's results are patchy, although the fact it managed to grow sales will be welcomed by shareholders. Aside from anything else, it shows demand for many of its products, such as its Domestos cleaning range and Dove soaps, has held up during the pandemic.
"It's healthy cash flow situation demonstrates its resilience, but investors will probably be disappointed overall with this latest update, particularly that it has been unable to grow operating profit."
The pound was quoted at USD1.3594 early Thursday, down from USD1.3651 at the London equities close Wednesday, ahead of the Bank of England's interest rate decision.
The BoE's latest monetary policy decision is at noon in London on Thursday, alongside the release of the Monetary Policy Committee meeting minutes and the quarterly Monetary Policy Report. A press conference will follow at 1300 GMT.
Analysts largely expect the central bank to stand pat on policy this week despite the surge in coronavirus cases since its December meeting and resulting third national lockdown in England. Focus will be on any discussion about the potential for negative interest rates.
The Bank Rate, the UK's key interest rate, currently lies at a record low 0.10%, cut to that level back in March last year as the pandemic first hit.
Gold was quoted at USD1,820.55 an ounce, lower against USD1,835.90.
The euro stood at USD1.2010, down from USD1.2022. Against the yen, the dollar was trading at JPY105.17, higher from JPY105.05.
The Japanese Nikkei 225 index ended 1.0% lower on Thursday. In China, the Shanghai Composite closed down 0.4%, while the Hang Seng index in Hong Kong is down 0.8%. The S&P/ASX 200 in Sydney closed down 0.9%.
In the economic calendar on Thursday there is a UK Markit construction PMI reading at 0930 GMT, followed by eurozone retail sales at 1000 GMT and US initial jobless claims at 1330 GMT.
By Arvind Bhunjun; [email protected]
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