FTSE steady ahead of Fed as Barclays, SJP profits soar

FTSE 100 holds its ground as investors wait for US Federal Reserve policy meeting, Barclays reports half-year profits of £5bn and one China trust rallies after steep falls this week.

Barclays (BARC) kicked off UK banks’ reporting season in style but it wasn’t enough to move the FTSE 100, which was flat this morning ahead of the US Federal Reserve’s latest interest rate call.

The main market managed to edge up just 3 points, or 0.06%, to 6,999 by 9am despite Barclays jumping to the top of the blue chips, adding 4.7%, or 8p, to trade at 177p after the bank’s half year profits soared to £5bn.

Profits were boosted as the bank released £742m of cash it had set aside to cover bad loans at the start of the Covid-19 pandemic, allowing it to pay a 2p per share dividend, higher than the expected 1.8p.

Richard Hunter, head of markets at Interactive Investor, said the results reflected ‘both an improving economic outlook and a benign credit environment’.

‘For the most part, the numbers indicate a bank in rude health,’ he said.

‘In terms of the banking season overall, it remains to be seen whether Barclays’ performance is as good as it gets, and the shares have reacted warmly to the results.

Barclays was joined at the top of the index by St James’s Place (SJP), which climbed 4.6%, or 70p, to £15.78 after reporting an increase in funds under management to £143.8bn, up from £129.3bn at the end of 2020.

Miner Fresnillo (FRES) added 3.8%, or 29p, to change hands at 783p after it said it was on track to meet full-year targets as silver production levels had improved in the second quarter.

The blue chips were cautious this morning despite strong earnings reports overnight from tech stocks in the US, as Apple, Google parent Alphabet, and Microsoft all updated.

Investors were focused instead on the Fed’s meeting today for signs that rising inflation will force a swifter than expected interest rate rise.

Matt Ryan, analyst at Ebury, said: ‘The US monetary committee is likely to highlight the downside risks to growth posed by the latest wave of virus infection triggered by the aggressive spread of the delta variant.’

This in turn will delay the need to tighten policy. Ryan is not expecting ‘a formal announcement on quantitative easing tapering until the September meeting, when fresh macroeconomic and interest rate projections will be released’.

The FTSE 250 fared better than its large-cap counterpart, adding 0.66%, or 150 points, to 23,027, supported by travel-related stocks as the government looks set to welcome double-jabbed tourists from the US and EU.

  • Wizz Air (WIZZ) rose 4.9%, or 229p, to £48.88.
  • Easyjet (EZJ) rose 4%, or 34p, to 883p.
  • SSP (SSP) rose 4%, or 10p, to 262p.
  • FirstGroup (FGP) rose 3.5%, or 3p, to 87p.

China Growth attempts rally

Baillie Gifford China Growth (BGCG ) rallied 3.7% or 15p to 423p after sliding 13% in the previous three days as Chinese tech stocks plunged in the face of a broadening regulatory crackdown in the country. 

Lowland (LWI ), the UK equity income trust run by James Henderson and Laura Foll at Janus Henderson, rose 3.75% or 50p to £13.85 from a 5% discount. 

Princess Private Equity (PEY ) advanced 3.5% or 37.5p to £11.20 on a 16% discount as the Partners Group managed trust announced a 4.8% investment gain in June, caused mainly by its unquoted investments in French property management group Foncia and SPi Global, a data analytics company. This lifts its total first half underlying return to 16.7%.

Rival Oakley Capital Investments (OCI ) firmed 3p or 0.9% to 354p on a 15% discount after reporting a first half return of 11% from its investments in private technology, consumer and education providers. 

GCP Infrastructure (GCP ) rose 1% to 106p as it reduced its quarterly dividend to 1.75p for this year from 1.9p – a move flagged last summer.

Tufton Oceanic Assets (SHIP ) added 0.8% to $1.20 on a 2% premium as the shipping fund bought one containership and sold another and updated investors on efforts to improve the fuel efficiency of its fleet. 

Digital 9 Infrastructure (DGI9 ) slipped 0.51% to 113p as the company made a £50m investment into a subsea and terrestrial fibre system following its recent fundraising.

 

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