FTSE 100 climbs on upbeat earnings as BP hikes dividend

BP led the charge on the FTSE 100 this morning as it increased its dividend, adding to the positive momentum around earnings from UK equities.

The FTSE 100 made headway this morning on the back of optimistic earnings updates, including an uplift in the BP (BP) dividend, but gains were limited as the Delta virus variant continues to spread.

The main market moved 0.35%, or 24 points, higher to 7,106 despite sterling doing its best to hold the internationally-focused index back with a 0.25% jump to trade at $1.3917 against the dollar.

A series of upbeat earnings updates was led by BP, which pushed to the top of the blue chips with a gain of 2.3%, or 6p, to trade at 296p. The oil major cheered investors by splashing the cash on shareholder returns, lifting the dividend 4% a year through to 2025 and announcing a $1.4bn (£1bn) share buy-back after profits for the quarter came in at $3.1bn.

Hargreaves Lansdown analyst Susannah Streeter said: ‘BP isn’t quite throwing caution to the wind, but the company’s steady as she goes approach has been infused with optimism as higher oil prices make immediate prospects look brighter.’

AJ Bell investment director Russ Mould said some investors may have been ‘disappointed at the paltry rise in the dividend’.

‘BP nudged up the shareholder pay-out by 4%, which pales in comparison to Royal Dutch Shell’s (RDSA) 40% increase declared last month,’ he said.

Natwest (NWG) continued to make gains on the back of its update that saw it swing back into profit, moving 1.8%, or 3p, to 208p. It was joined by Standard Chartered (STAN), which became the latest bank to provide a positive report.

Although it saw revenues tick down in the first half to $7.6bn, a $1.6bn swing in provisions for bad loans meant profit before tax soared 41% to $2.7bn.

The advance in sterling helped the FTSE 250 rise 0.3%, or 76 points, to 23,285. Indivior (INDV) advanced to the top of the mid-caps, up 3.8%, or 6p, at 171p as the niche pharmaceutical group, which develops opioid addiction treatment drugs continued to benefit from a swing back into profit last week.

Specialist insurer Hiscox (HSX) added 3.5%, or 31p, to trade at 896p after reporting a pre-tax profit of $133.4m and resumed its interim dividend after an improvement in rates post-pandemic.

It pulled peer Direct Line (DLG) higher, with the firm’s shares gaining 3.5%, or 10p, to change hands at 310p.

Shrinking Vietnam fund

Vietnam Holding (VNH ) leaped 7%, or 17p, to 261p after the £102m Guernsey investment company launched a tender offer to buy up to 30% of its shares at 2% below net asset value (NAV). They stand on a 24% discount to NAV so the offer looks attractive.  

The mid-cap stock focused portfolio managed by Dynam Capital has performed strongly with a one-year NAV sterling return of 88.8%, beating the VN Index gain of 59.1%, but is struggling to grow. An earlier tender offer for 15% of the shares was heavily over-subscribed last November. 

In other investment trust news, Ground Rents Income (GRIO ) advanced 2.4% to 72p after selling Manchester’s Beetham Tower for a nominal sum to a private investor. The sale releases the trust from all litigation in a dispute over cladding repairs following the collapse of contractor Carillion three years ago and frees up £2.9m of costs that had been set aside.

Fidelity European (FEV ) firmed 1.3p or 0.4% to 318.3p after posting a 12.9% first half investment return, beating the 10.9% gain of its FTSE World Europe ex-UK index benchmark. Increased gearing helped as did Sam Morse’s stock picks of semiconductor giant ASML and luxury good retailers LVMH and Hermes. 

 

 

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