FTSE 100 helped higher by strong earnings, Centrica soars – Nokturnal

UK stocks took rates hikes by the Federal Reserve and European Central Bank in their stride on Thursday as the FTSE 100 gained helped higher by upbeat earnings.

Thursday was a busy day for FTSE 100 earnings updates as companies including Shell, Barclays, Centrica, St James’s Place and BT issued updates.

Although there were disappointing results from Barclays, St James’s Place and to some extent Shell, Centrica, Informa, Fraser’s Group and Informa results helped drive the index higher.

The FTSE 100 was 0.25% higher at the time of writing.

St James’s Place was the FTSE 100 biggest loser after the wealth manager said new business was falling and funds under management also declined. St James’s Place shares were down 15% at the time of writing.

Centrica shares were 7% to the good at the other end of the leaderboard after releasing bumper profits for the first half of 2023. Centrica’s Adjusted operating profit rose by £2.1bn from £1.3bn in 2022 due to higher energy prices and increased trading activity.

“British Gas owner Centrica won’t be winning a popularity contest with the public anytime soon, but shareholders may not be too bothered,” said AJ Bell investment director Russ Mould.

“The massive increase in first-half profit reflects the impact on its retail energy-facing business of a lifting of the price cap but the contribution made by its energy marketing and trading division, helped by the big volatility in commodity prices, should not be ignored.

“The strengths of Centrica’s integrated model have really come to the fore in recent times and after several lean years, the company is able to reward investors handsomely – lifting its dividend substantially and extending a share buyback.”

Barclays

Having recovered from the worst levels of the session, Barclays were down 3.5% on the back of disappointing investment banking activity in the last quarter. A downgrade to their net interest margin didn’t help matters and Barclay’s key measure of profitability now looks to have peaked.

“The market does not like the latest round of results from UK banks. Investors gave the thumbs down to Lloyds’ results yesterday and now they are doing the same to Barclays, with its shares down more than 6% in early trading,” Russ Mould said.

“Even though Barclays slightly beat analyst consensus profit forecasts and announced a bigger than expected share buyback of £750 million (consensus: £575 million), there were two points in the results that didn’t go down well.

“First, it has downgraded guidance for UK net interest margins to less than 320 basis points compared to previous guidance of more than 320 basis points. Second, it suffered from a drop in dealmaking for its investment banking arm.”

Shell shares were 1.5% lower after reporting falling adjusted earnings amid lower oil prices and gas volumes.