Major UK stocks enjoyed a strong day bolstered by hefty dividend payout announcements and largely upbeat earnings updates.

At the close, the benchmark FTSE 100 had recorded a 0.85% jump to finish at 7,076.40, led by pest control company Rentokil Initial (RTO), with oil major Royal Dutch Shell (RDSB) and miner Anglo American (AAL) also firmly up.

The more domestically focused FTSE 250, which hit an intraday high on Wednesday before falling back, joined in the positive mood, adding 0.17%to close at 23,005.36.

Across the pond, US markets got off to a firm start with investors clearly buoyed by the US Federal Reserve showing no signs of rushing to remove its support for the economy.

The Dow Jones Industrial Average and S&P 500 both claimed gains of around 0.55%, while the tech-heavy Nasdaq Composite added 0.35% with earnings season continuing at full throttle.

Facebook fell nearly 4% after warning of a possible slowdown in advertising revenue due to changes in Apple’s latest iOS operating software that makes user behaviour harder to track. PayPal, another big pandemic winner that also reported late Wednesday, was down around 5.4% after reporting a sharp slowdown in net new users.

Amazon takes top billing of companies reporting Thursday, albeit after the close, and there is also the fascinating debut for trading platform Robinhood, which yesterday priced its shares at the lower end of the expected range.

Soothing some tech concerns will be the apparent olive branch being extended to Chinese tech firms by the nation’s regulators, with reports suggesting that China’s authorities will continue to allow Chinese firms to tap overseas capital and list in the US as long as they met stringent listing requirements.

Overnight 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 was a clear winner 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 more than 5% to £32.93.

Oil company Royal Dutch Shell was close behind, the share price up 4% at £14.38, 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 million 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, so it is quite a puzzle to work out why the stock has slumped 6% to £14.645.

BT has more pressing operating issues to work through. Shares in the communications giant slumped more than 6.5% at 171.6p 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 revenue of £5.07 billion, slightly below consensus of £5.15 billion.

Back among the risers, Rentokil Initial encouraged analysts to raise profit forecasts following first-half results which were ‘slightly ahead of expectations.’

That saw the share price rally nearly 5% to 550p, their highest in 2021 so far.

OTHER BIG STORIES

Lloyds Banking (LLOY) saw its share price reverse earlier modest gains to dip 1% to 46.20p 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 572.8p 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 3% to £21 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. The shares inched 0.3% to 265.4p.

Guinness and Johnny Walker whisky-maker Diageo (DGE) saw its shares recover earlier losses to firm 0.8% to £35.40 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 nudged 0.1% higher to £82.77p.

Accountancy software company Sage (SGE) saw recurring revenues rise 5% to £1.22 billion in the nine months ended 30 June. It drifted 1% lower to 692.6p.

Catering company Compass (CPG) reported third quarter organic revenue grew by 36.4% amid strong business wins in the quarter. Its shares rose 4% to £15.535.

Asset management company Schroders (SDR) inched 0.9% higher to £36.93 after the company saw profits jump 33% in the six months ended 30 June.

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Issue Date: 29 Jul 2021