- FTSE 100 advances 29 points to 8150
- Shell loads up new buyback after earnings impress
- Standard Chartered leads risers after big beat
10.27am: BHP’s AAL-Team
A crack team of BHP (LSE:BHP, ASX:BHP) executives have flown to South Africa to try and woo “government officials, regulators and local shareholders” of Anglo American PLC (LSE:AAL) ahead of a potential higher bid.
This is a report from Bloomberg, where the people familiar with the matter, say this AAL-team has already begun these talks.
They are “explaining the detail” of the $39 billion takeover bid that Anglo rejected.
Shares in Anglo are unmoved this morning.
10.13am: FTSE in limbo after Fed gives with one hand, takes away with the other
European stocks are “in limbo” after the Fed meeting last night, says market analyst Kathleen Brooks at XTB.
“The key event this week was the Fed meeting. It was less hawkish than expected, with a rate hike explicitly ruled out.
“The market reaction was mixed, a sharp drop lower in Treasury yields, which has extended into Thursday, a weakening of the dollar, especially vs the yen and a higher gold price, although gold is slipping this morning.
“The focus will now shift to Apple results tonight and the Non-Farm Payrolls report for April that is scheduled for Friday.
“European stocks are mixed on Thursday, as the stock market still can’t pinpoint when interest rates in the US will be cut.
“The FTSE 100 is bucking the global trend, but European stocks may have been knocked by the slightly weaker final readings of Eurozone manufacturing PMI.”
The Fed view from Russ Mould at AJ Bell is that chair Jerome Powell “gave with one hand and took away with the other from a market perspective”.
While the Fed kept rates on hold as expected, Powell “largely dismissed any idea they might rise from the current levels despite inflation proving more stubborn than hoped. However, he did warn rates would stay higher for longer.
“He tried to reassure on the risks of stagflation – a slowing economy and rising prices at the same time – arguing he didn’t see the ‘stag’ or the ‘flation’. However, he, like other central bankers, said inflation would be transitory in 2021 so his track record on predictions isn’t exactly unblemished.”
9.31m: OECD sees healthier global economy
More details on the new OECD economic forecasts, which included a downgrade on the UK’s expected growth, but “signs that the global outlook has started to brighten”, though the thinktank says growth remains modest.
“The impact of tighter monetary conditions continues, especially in housing and credit markets, but global activity is proving relatively resilient, inflation is falling faster than initially projected and private sector confidence is improving,” the twice-yearly global economic healthcheck states.
Softer outcomes are now seen in many advanced economies, especially in Europe, offset by strong growth in the US and many emerging market economies, with India, Indonesia and China’s growth top of the charts.
The UK forecast was downgraded to 0.4% from 0.7% in the November report, with a rebound of 1% growth in 2025.
This is slower than the UK’s Office for Budget Responsibility latest forecast, which projects 0.8% growth this year and 1.9% in 2025.
While overall inflation is continuing to moderate, the OECD expects Britain’s growth rate to be dampened by persistent price rises in the services sector and shortages of skilled staff that push up wages in many sectors.
For the US, real GDP is projected to grow 2.6% in 2024 and 1.8% in 2025.
The OECD expects the Fed to begin monetary policy easing in the second half, though a delay to rate cuts is one of the “downside risks” to the growth forecast, as well as the imposition of additional trade restrictions (presumably following the presidential election).
9.09am: FTSE firmly on front foot
The Footsie is more firmly on the front foot now, rising 0.5% and heading towards the intraday highs from earlier this week.
This is despite the the UK’s economic outlook having worsened this year, according to the Organisation for Economic Cooperation and Development (OECD).
UK growth is forecast to grow only 0.4% this year, down from November’s forecast of 0.7%.
It’s a mixed scene looking across Europe, with Milan and Madrid also in green as continental markets reopen after the May Day public holidays, while Frankfurt is just below flat and Paris is in the red
Europe largest company, Novo Nordisk (NYSE:NVO), is down 2.4%.
8.40am: Some thoughts on StanChart
Standard Chartered PLC (LSE:STAN) first-quarter results this morning have lifted the shares to a six-month high, up 6% today and over 20% higher than when CEO Bill Winters called the bank’s share price “crap” earlier this year.
Was an unorthodox strategy from the StanChart CEO, but one that appears to have paid off pic.twitter.com/9CsNxuEo9p
— Michael Brown (@MrMBrown) May 2, 2024
The results provided a “fitting end” to London’s blue-chip banking season, according to market analyst Richard Hunter at Interactive Investor, ending what has been a mostly positive quarterly reporting season for the banks.
“Despite the headwinds of its exposure to China and the real estate sector in particular, where its presence remains a blessing and a curse, the group’s general exposure to Asia has offset any immediate concerns,” Hunter says.
“The numbers themselves have for the most part sailed past expectations, largely driven by strong business activity and higher interest rates in many of the markets in which it operates.”
While net interest income grew 5% to $2.4 billion non-interest income leapt 37% to $37% to $2.7 billion, with notable contributions from each of its main units.
With StanChart saying that around two-thirds of the $1 billion share buyback programme had now been completed, Hunter says: “all things being equal could lead to a further buyback announcement at the half-year results”.
8.26am: The major blue-chip movers
A major boost for the blue-chips is Standard Chartered PLC (LSE:STAN), up over 6% after first-quarter profit delivered a significant beat to consensus expectations, primarily driven by better-than-expected non-interest income growth.
“While this included the benefit of some notable items relating to the revaluation of the Egyptian pound and Ghana hyperinflation, it was still comfortably ahead of expectations,” said analysts at Shore Capital.
Shell PLC (LSE:SHEL, NYSE:SHEL) is up 0.6% after its earnings also came in higher than City estimates and it loaded up another $3.5 billion share buyback.
“Shell has beaten expectations by a reasonable margin, despite the impact of lower gas prices during the first quarter. Earnings are up, costs have fallen, and the oil and gas major has brought debt down too – all in all, it’s a solid set of numbers,” said Stuart Lamont, investment manager at RBC Brewin Dolphin.
Smurfit Kappa Group plc (LSE:SKG) is up almost 4% after its earnings rose and it reported continued improvements in box demand in Europe and the Americas.
Flutter Entertainment PLC (LSE:FLTR) is up over 1% after shareholders yesterday voted overwhelmingly in support of a move of its main listing from London to New York.
Elsewhere, Melrose Industries PLC (LSE:MRO, OTC:MLSPF) is down 1.7% after reporting a strong start, as anticipated, with expectations for the year unchanged.
8.16am: FTSE opens higher
The FTSE 100 has opened higher, as it has all week, but the question is if it can keep up the positivity.
In the opening trades, the index rose around 30 points to 8152 but is already retreating from that level.
It was similar for the FTSE 250 which jumped 100 points to 20,020 but has now fallen flat.
7.57am: Novo Nordisk (NYSE:NVO) ramping up production of weightloss drug
Another massive company announcing results today is Europe’s biggest, Novo Nordisk (NYSE:NVO), the maker of diabtes/weightloss drugs Wegovy/Ozempic, with the Danish giant saying it is ramping up production after patient numbers quadrupled in the US.
First-quarter sales of 65.35 billion Danish krone beat forecasts of DKK 63.75 billion, including almost DKK 35 billion from the drug, with earnings of DKK 31.85 billion also came in higher than DKK 29 billion expectations.
Full year sales are seen rising 19-27% at constant exchange rates, which might disappoint with the current market forecast just under 26%.
7.42am: Takeover talks for Revolution Bars
Revolution Bars Group PLC is in talks about being taken over by rival hospitality firm Nightcap PLC (AIM:NGHT).
A range of possible transactions, including an all-share offer, have been discussed, Revolution has said in a statement this morning.
This is not part of Revolution’s formal sales process, unveiled in early April, the struggling bar operator added, with Nightcap having until May 30 to table an offer.
7.36am: Shell unloads new share buyback as earnings beat forecasts
Shell PLC (LSE:SHEL, NYSE:SHEL) has unveiled a new $3.5 billion share buyback as it reported higher first-quarter profits and cash flow than expected.
Adjusted earnings from the oil supermajor came in at $7.7 billion for the first three months of 2024, which was down 10% year over year but up 6% from the final quarter of 2023 and better than the $6.25 billion average analyst forecast.
Compared with the fourth quarter of last year, income was boosted by lower operating costs, higher margins from crude and oil trading, and higher refining margins, partly offset by lower LNG trading margins and tax movements.
Adjusted earnings per share of $1.20 were likewise down 5% on a year ago, but beat the City consensus of $0.97.
The business generated $9.8 billion of free cash flow, up from $6.9 billion in Q4, while net debt was reduced to $40.5 billion from $43.5 billion.
Having completed the $3.5 billion share buyback announced at its last results, the company announced another of the same size that is expected to be completed by the time of half-year results.
For the second quarter, adjusted earnings are expected to be a net expense (a loss in other words) of about $400-600 million, and a around $1.7-2.3 billion for the full year 2024. This excludes the impact of currency exchange rate and fair value accounting effects.
7.16am: FTSE bounce-back expected after Fed stands pat
The FTSE 100 is expected to bounce back with a strong start on Thursday after last night’s US Federal Reserve meeting saw a mixed market reaction.
Spread-betters are calling London’s blue-chip index up 35 points, after it finished down 22.89 points at 8,121.24.
Overnight, following the Fed decision not to raise rates but to announce a tapering of other tightening measures was followed by US stock indices first spiking higher before then mostly falling into losses.
The S&P 500 and Nasdaq Composite closed the session down by 0.3%, while the Dow Jones finished up 0.2% and Treasury yields fell.
“Fed Chair Jerome Powell argued in his post-FOMC press conference that, despite the stickiness of inflation in recent months, additional interest rate hikes were still ‘unlikely’,” said Capital Economics’ Paul Ashworth.
“Moreover, while he admitted that the strong start to the year means it will ‘likely to take longer to gain the confidence’ that inflation was moving down to a sustained 2% pace, he was careful not to rule out rate cuts later this year either.”
This morning in London we have results from Shell, Melrose, Hiscox, Reach, Smurfit Kappa, Spectris and Standard Chartered.
A quick look shows Shell’s earnings of $1.20 per shares is above the $0.97 consensus forecast.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
