UK stocks closed higher for the third consecutive session on Tuesday as corporate earnings continued to buoy confidence in the economic recovery.
In the US shares in Chinese Amazon equivalent Alibaba dropped 2% after missing quarterly revenue expectations.
At the close the FTSE 100 index of leading shares was up 0.3% to 7,106 points while the FTSE 250 mid-cap index gained 0.4% to 23,290 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. The shares gushed 5.6% higher to 306.1p.
FINANCIALS BEAT FORECASTS
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. The shares gained 1% to 441p.
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. The shares accelerated 5.5% to 315.9p.
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. The shares added 5.7% to 915p.
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. After a strong run the shares dropped 2.9% to £27.24.
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. The shares made a new high rising 2.3% to 431.6p.
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. The shares dipped 0.1% to 565.7p.
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