UK stocks built on Monday’s gains as corporate earnings continued to please investors, with index heavyweight BP (BP.) surging after hinting at a substantial return of capital to shareholders.

Asian markets were shaken overnight by worries of further Chinese government intervention in the private sector, this time involving the gaming industry. Shares in TenCent slumped as much as 10% at one point during the trading session.

By 8.45am the FTSE 100 index of leading shares was up 26 points or 0.4% to 7,108 points  while the FTSE 250 mid-cap index was up 57 points or 0.25% at 23,266 points.

BP BUYBACK PLEASES

Oil giant BP reported an increase in second-quarter earnings to $2.8 billion against $2.63 billion in the first quarter on the back of higher energy prices, prompting it to raise its dividend by 4% to 5.46c per share and to announce a $1.4 billion share buyback.

If oil prices stay at $60 per barrel, the firm expects to be able to buy back around $1 billion per quarter – equal to 5% of capital on an annual basis – and to increase its dividend by 4% per year through 2025. Shares topped the FTSE 100 gainers with a rise of 2.7% to 297p.

FINANCIALS BEAT FORECASTS

Asia-focused lender Standard Chartered (STAN) posted better than expected first half earnings and announced a $250 million (£180 million) share buyback.

Pre-tax profits were $2.55 billion against estimates of $2.23 billion, helped in part by the release of $67 million of bad loan provisions. Shares were the second biggest risers in the FTSE, climbing 1.8% to 445p.

Home and motor insurer Direct Line (DLG) posted a 1.5% fall in gross written premiums for the first half of 2021 to £1.55 billion, although it saw a rebound in the second quarter in commercial, home and rescue policies.

Operating profits beat estimates with a rise of almost 40% to £370 million thanks to a large write-back of prior-year provisions, good weather – meaning fewer household claims – the absence of Covid-related travel claims and a reversal of prior-year investment losses. Shares accelerated 2.4% to 307p.

Lloyds insurer Hiscox (HSX) reported a ‘return to profitable growth’ in the first half of 2021 with gross written premiums rising 8.5% to $2.43 billion and earnings per share of $0.35 against a loss of $0.50 last year.

The firm is deploying more of its own capital into what it called a ‘hard market’ with the result that London Market pre-tax profit jumped from $16.3 million to $87.3 million. Shares added 0.8% to 873p.

POSITIVE FOOD & DRINK UPDATES

Food-to-go retailer Greggs (GRG) posted a strong recovery in first half trading with sales matching their pre-pandemic level of £546 million and underlying profits rising more than 30% on their level of two years ago to £55.5 million.

As well as being able to reopen its existing stores the firm has pushed ahead with new store openings, adding a net 37 shops in the first half with double that number set to open in the second half. Shares firmed 0.5% to £28.17.

Takeaway food retailer Domino’s Pizza (DOM) also delivered a strong first half with system sales up 19.6% to £752 million driven by like-for-like growth of 19.3% helped in part by the Euro football championship.

Total orders returned to a positive trend up 3.5% with collection orders back to 75% of pre-pandemic levels. Shares rose 3.8% to 438p.

Soft drinks maker AG Barr (BAG) registered an 18% increase in revenues for the first half as on-the-go consumption recovered, with the energy sub-category outperforming the total soft drinks market.

Meanwhile, the reopening of the hospitality sector led to a recovery in cocktail sales due to re-stocking by bars, while at-home consumption of cocktails also increased. Shares fizzed 1.6% higher to 575p.

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Issue Date: 03 Aug 2021