UK markets made a bright start to a busy Thursday as encouraging earnings and huge dividend payouts from some of UK's biggest companies offset lingering worries about rising inflation and Covid-19 cases.

At 9am, the benchmark FTSE 100 was around 25 points to the good, or 0.36% at 7,041.76, led by oil major Royal Dutch Shell (RDSB), miner Anglo American (AAL) and pest control company Rentokil Initial (RTO).

The more domestically focused FTSE 250, which hit an intraday high on Wednesday before falling back, was 0.25% higher at 23,064.61.

Overnight, US markets finished the day mixed, with the Nasdaq outperforming after the latest Fed decision moved the bond tapering argument onto Jackson Hole next month, while markets in Asia rebounded strongly on reports that China’s authorities said that Chinese firms would be allowed to list in the US as long as they met listing requirements.

The Dow Jones finished Wednesday down 127 points or 0.36% at 34,930 while the S&P 500 dipped just 0.01% to end the session at 4,400.

The tech-heavy Nasdaq Composite rose 102 points or 0.7% to finish at 14,762, with the small-cap focused Russell 2000 index adding 1.5% to 2,224.

In Asia, Japan’s Nikkei climbed 0.64% to 27,757, while Hong Kong’s Hang Seng jumped 3% to 26,264 and the Shanghai Composite moved up 1.4% to 3,408.

MAJOR MARKET MOVERS

Global mining group Anglo American jumped to the top of the FTSE leaderboard on Thursday after it increased its shareholder payout to $4.1 billion, including a $1 billion buyback, after bumper profits for the first six months of 2021.

That news saw Anglo’s stock surge nearly 5% to £32.755.

Oil company Royal Dutch Shell was close behind, the share price up 3.7% at £14.36, on word that second-quarter profit jumped to $5.5 billion, the highest in over two years. That prompted the company to raise its dividend and launch a $2 billion share buyback programme.

The day’s big losers were healthcare firm Smith & Nephew (SN.) and BT (BT.A). The former stated that it remains on track to meet full-year guidance assuming surgery volumes not constrained by the pandemic in the second half of the year.

Smith & Nephew reported strong growth in both revenue and operating profit for the first half to 30 June, and it appears that profit taking may be a factor in the stock’s weak showing, the shares falling 6% to £14.66.

BT has more pressing operating issues to work through. Shares in the communications giant slumped more than 5% at 173.9p after the group reported a decline in first-quarter profit as weaker performance in its enterprise and global business segments weighed on revenue.

BT posted a 5.5% decline in revenue of £5.07 billion, slightly below consensus of £5.15 billion.

OTHER BIG STORIES

Lloyds Banking (LLOY) saw its share price run 1.1% higher to 47.3p as it beat expectations with a first-half profit of £3.9 billion. That compared to a loss of £602 million this time a year ago.

Further bad loan releases seem to be convincing investors that Lloyds can continue to ride the wave of generally improving conditions.

Defence firm BAE Systems (BA.) rose more than 2% to 572.4p after upping its dividend by 5% and bolstering returns with a planned $500 million share buyback.

The group expects underlying earnings to grow by between 3% and 5% this year on last.

Business publisher Relx (REL) rallied 2.5% to £20.84 after telling the market that it anticipates revenue and profit growth to be slightly above historical trends. The company also upped its interim dividend by 5% to 14.3p.

On the slide was National Express (NEX) following falling half year revenue, which eased 3.8% versus 2020 equivalent numbers.

Guinness and Johnny Walker whisky-maker Diageo (DGE) saw its shares nudge marginally lower to £35.10 despite reporting a rise in annual profit. The company pointed to higher sales boosted by growth in its off-trade business that offset pandemic-led weakness in on-trade, but talk of possible further disruption ahead gave investors pause for thought.

For the year ended 30 June 2021, pre-tax profit rose to £3.7 billion from £2 billion as sales increased 8.3% to £12.7 billion.

BEST OF THE REST

Pharmaceutical giant AstraZeneca (AZN) reported a rise in first-half profit as strong sales in the new medicines and cancer divisions bolstered results. Its share price is down a little over 1% this morning at £81.57p per share.

Accountancy software company Sage (SGE) saw recurring revenues rise 5% to £1.22 billion in the nine months ended 30 June. It opened flat at 696p per share.

Catering company Compass (CPG) reported third quarter organic revenue grew by 36.4% amid strong business wins in the quarter. Its shares rose 3% to £15.43.

Asset management company Schroders (SDR) inched 12p higher to £36.72 after the company saw profits jump 33% in the six months ended 30 June.

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Issue Date: 29 Jul 2021