- FTSE 100 closes 98 points lower
- Wall Street slides as FOMC meeting begins
- BP weak on cautious outlook, but HSBC up as profit triples
4.40pm: FTSE 100 falls sharply
Stocks reversed across the board this afternoon, leaving the FTSE 100 to finish well under water at 7,703 points for a 1.2% loss.
“Last week saw risk appetite revive on better earnings from tech giants, but a host of worries about interest rates, further bank crises, the US debt ceiling and of course pre-Fed nerves have conspired to prompt a reversal in equity markets. European and US indices are down sharply, as investors’ nerves get the better of them,” IG’s Chris Beauchamp noted.
“But these same concerns seem ready-made for gold to move higher, a perfect safe haven from the turmoil of the US debt ceiling. After the choppy trading of the last month a clearer path higher now beckons for the commodity.”
4.00pm: Oil slide weighs
The FTSE 100 entered the last half hour of trading in London sharply lower, tumbling in the afternoon as US stock indexes dropped amid worries ahead of the Federal Reserve’s latest interest rate decision on Wednesday, and as fears regarding the US debt ceiling were ignited by comments from Treasury Secretary Janet Yellen.
Michael Hewson, chief market analyst at CMC Markets UK noted that the FTSE 100 was mostly weighed down by a weaker energy sector after BP’s results statement, as well as lower oil and gas prices.
Crude prices have remained under pressure this week, sliding to 5-week lows, having seen two successive weeks of declines, with concerns over a rebound in Chinese demand continuing after a weak manufacturing survey for April at the weekend.
Hewson commented: “BP shares are amongst the worst performers after the oil and gas giant warned that lower oil and gas production, and a squeeze on its margins, could see a slowdown in Q2.
“Nonetheless it still managed to deliver a better-than-expected quarter for revenues and profits, with Q1 revenues coming in at $56.2bn comfortably beating forecasts. Underlying replacement cost profits edged up to $4.96bn, a modest increase from Q4’s $4.8bn, but below last year’s $6.24bn.”
He added: “The sector also isn’t being helped by falling oil and gas prices, with the price of UK and EU natural gas sliding to its lowest levels since July 2021. This will be a welcome boost to businesses if sustained, as well as consumers, although prices are still over double the level they were at the end of 2020.”
“Inevitably BP’s profits have prompted criticism from politicians branding them as the ‘windfalls of war’ except for the fact that they aren’t given that natural gas prices are now well below the levels they were when Putin invaded Ukraine and have been for most of this quarter.
“If anything, it’s not the ‘windfalls of war’ but windfall windbaggery and shows that our politicians across the divide are completely out of ideas when it comes to dealing with the challenges facing the UK economy,” Hewson concluded.
BP shares shed 8.7% at 488.05p and peer Shell fell 4.4% at 2,345p ahead of its own Q1 numbers which are due on Thursday.
3.35pm: Rightmove higher
Rightmove PLC shares found support on Tuesday afternoon after analysts at HSBC upgraded their rating for the estate agency group to ‘buy’ from ‘hold’ and raised the share price target to 645p from 530p.
The analysts highlighted early demand indicators that show the return of buyers’ interest and argued that positive sentiment from agents is not priced into current multiples for the stock.
The HSBC analysts noted: “According to Zoopla, demand levels are 16% higher compared to 2019 and Rightmove data shows sales agreed in March were similar to 2019 levels. Although it’s too early to tell if the demand is sustainable and whether the demand from first time buyers will trigger a chain reaction, creating a ripple effect, the activity levels are in a better shape than at the end of 2022.”
They added: “Historically, Rightmove has shown a disciplined approach with a rejigging of the product structure every 18-24 months, with its last major update of Optimiser 20 (from Optimiser 15) in Q4 2019. Now that all of the estate agents have upgraded to Optimiser 20, we believe the potential for a new product in late 2023 or early 2024 is entirely plausible and could support ARPA growth next year.
“However, closure of low-stock agents will be a risk to watch out for as we progress though the year.”
In late afternoon trading, Rightmove shares were 0.9% higher at 579.20p.
3.15pm: Healthy offer
Trade unions representing the majority of National Health Service staff involved in a dispute over wages with the UK government have voted to accept a pay deal.
The offer, covering nurses, paramedics, midwives and other workers in England, includes a one-off payment equivalent to 2% of salaries in the 2022/23 financial year and a 5% pay rise for 2023/24, according to Reuters.
It has been accepted by Unison, the largest union involved in the dispute, as well as three other unions, but others including Unite and the Royal College of Nursing have rejected the offer and plan to continue strike action.
Health minister Steve Barclay said the offer was the final one and the vote by the NHS Staff Council, which includes representatives from NHS employers and trade unions, to accept it showed a majority believed it was “fair and reasonable”, Reuters reported.
2.50pm: Down day
The FTSE 100 index languished near session lows as US stocks opened Tuesday lower with traders proceeding cautiously as the Federal Reserve’s May rate-setting meeting kicks off.
Dragging on sentiment as well was US Treasury Secretary Janet Yellen’s warning that the country could run out of cash as soon as June 1.
“It’s hard to overstate the negative impact that a default could have on the economy. Yellen’s comments have focused the market’s attention,” commented FOREX.com market analyst Fiona Cincotta.
Around 20 minutes after the opening New York opening bell, the Dow Jones Industrials Average was down 168 points, or 0.5% at 33,883, while the S&P 500 had shed 0.5%, and the Nasdaq Composite was down 0.3%.
But on the rise, Uber shares added over 6% at US$34.85 after reporting a first-quarter earnings beat driven by a surge in bookings.
2.30pm: A flock of buybacks
Following announcements from HSBC and BP today, FTSE 100 firms have now announced plans to return £26.9 billion via buyback schemes so far this year, following 2022’s record FTSE 100 buybacks of £55.8 billion, on top of an aggregate dividend pay-out of £83.6 billion forecast for 2023.
AJ Bell investment director Russ Moul commented: “The debate over the rights and wrongs of the bumper profits made by HSBC and BP will run and run but from the narrow perspective of investment their announcement of fresh multi-billion dollar share buyback schemes – topped up by a fresh programme at Ashtead – means that the FTSE 100 cash return bonanza continues.”
He added: “Sentiment still seems lukewarm at best toward UK equities, despite the buybacks and rash of takeover deals, but the money keeps flowing. After this trio of announcements, FTSE 100 firms have announced plans to return £26.9 billion to their shareholders via buybacks this year.
“That figure supplements a forecast aggregate dividend pay-out of £83.6 billion for 2023 and comes on top of 2022’s all-time high for FTSE 100 buybacks of £55.8 billion.
“Whether the final total for 2023’s buybacks will match or exceed that of last year remains open to question, and much may depend on the trajectory of the global economy in the second half, but we are certainly off to a fast start.”
2.15pm: Living on the debt ceiling
Treasury Secretary, Janet Yellen has said the US government is likely to run out of cash to meet all of its obligations, possibly as soon as next month.
In a letter sent to Congress, Yellen reportedly said that could “potentially be as soon as 1 June”. In January, she had warned that the so-called ‘X date’ might arrive around 5 June.
However, Yellen also said that tax revenues and spending were “inherently variable” so that “it is impossible to predict with certainty the exact date when Treasury will be unable to pay the government’s bills.”
President Joe Biden has responded by calling a meeting with the Democratic and Republican heads of the US House of Representatives and Senate for 9 May to discuss the debt situation.
1.30pm: A look at some of the top riser and fallers on the junior market
Longboat Energy PLC (AIM:LBE) soared 121% to 21.03p after the Norwegian North Sea explorer struck a deal with Japan Petroleum Exploration Co (Japex) to form a joint venture.
Made Tech Group PLC (AIM:MTEC), the technology services group focused on the public sector, saw its share price drop 26% to 20p; due to its forecast of lower-than-expected revenue for the financial year ending May 31, 2023.
Tribal Group PLC (AIM:TRB) saw its shares fall 9% to 35.40p before rebounding up to 40.5p after the education software firm revealed it has received a claim for damages from Nanyang Technological University (NTU) relating to a contract that NTU last month announced it had terminated.
East Imperial PLC (LSE:EISB) plummeted 30% on the AIM market following the premium drinks distributor’s latest full-year results. Though revenues ticked 14% higher, cash flows have come under considerable stress and the group is in “advanced discussions with potential debt funders to provide additional working capital to support ongoing expansion”.
1.00pm: US markets seen lower, FOMC decision looms
US stock indexes are expected to edge lower at the open on Tuesday as investors position themselves for the Federal Reserve’s May policy meeting to kick off, with an interest rate decision due on Wednesday.
The US central bank’s two-day policy meeting is expected to conclude with the central bank announcing another 25 basis-point rate hike after recent mixed economic data, with investors, more importantly, looking for clues on whether the Fed will keep rates steady after this meeting, or if it will further tighten monetary policy to fight inflation.
TickMill Group’s Market Analyst James Harte commented: “With recession risks growing and given recent developments in the banking sector, the Fed is expected to strike a more reserved tone on rates going forward. If seen, this should help keep stocks supported near-term.”
In pre-market trading on Tuesday, futures for the Dow Jones Industrial Average (DJIA) were around 0.2% lower, while those for the S&P 500 were also down 0.2%, while Nasdaq-100 futures were off 0.02%.
The moves follow modest declines on Monday, when the DJIA and Nasdaq Composite both lost about 0.1%, while the S&P 500 finished just slightly below its opening level.
Investors remain focused on the banking sector following news that JPMorgan Chase won the weekend auction for troubled First Republic Bank (NYSE:FRC).
The corporate earnings season is also rolling on, with Ford, Starbucks, Advanced Micro Devices and Caesars Entertainment set to report after the opening bell.
On the economic front, investors will look out for data on job openings, factory orders and light vehicle sales.
Ahead of the US open, the FTSE 100 remains stuck in a tight trading range, down 5 points.
12.45pm: Confidence in small businesses improves – FSB
Confidence among small businesses has recovered strongly in the first quarter of 2023, according to new figures from the Federation of Small Businesses.
The FSB’s small business index headline confidence measure came in at minus 2.8 points, which the organisation described as “lightly negative”.
It called it a “significant upturn” from the deeply negative finding of minus 45.8 points recorded in the last quarter of last year but it was still some way below the 15.3 points registered in the same quarter a year ago.
The new reading means that more small businesses still feel pessimistic than feel optimistic, but “the scale of the improvement in sentiment is significant”, the FSB said.
It is also the third-largest quarter-on-quarter increase in the history of the index.
All the big industry sectors that it tracked recorded improvements in their confidence ratings, including wholesale and retail, accommodation and food, manufacturing and information and communication.
The professional, scientific and technical sector was the only significant one that ended up in positive territory, with a confidence reading of 14.9 points.
Martin McTague, national chairman of the FSB, said: “Our latest small business index data shows that small firms may be about to turn the corner and rebound after the pandemic and the energy crisis, with confidence recovering alongside improved optimism for Q2. “
“However, there are still plenty of dark clouds on the horizon that could dampen small business recovery. The prospect of further interest rate rises is causing significant disquiet at the same time that costs remain at serious highs.”
12.20pm: Unions blast BP profits
Trade unions blasted BP’s profits and accused the Government of being “asleep at the wheel.”
Unite general secretary, Sharon Graham said: “BP’s grotesque profiteering is continuing at pace. Last year Shell and BP’s combined profits stood at £55bn and all the indications point to Shell taking billions in the first quarter of this year.”
“Profiteering by big oil and other major sectors is a blight on the economy. Profiteering is driving prices higher, leaving workers poorer while businesses struggle to keep the lights on.”
“Sunak’s government is asleep at the wheel. It needs to wake up and learn from the Norwegian government, which takes billions more out of North Sea oil profits than the UK does,” she added.
11.55am: Berkeley to take Gove to court
Berkeley Group Holdings PLC (LSE:BKG) is taking Michael Gove to court over his decision to block one of its developments because he did not like the look of the homes.
The Times reported the FTSE 100-listed housebuilder has written to the housing secretary informing him that it intends to challenge his “irrational decision” to overrule planning inspectors and refuse permission for the 165-home development in Kent.
It wants him to “agree to the immediate quashing of [his] decision”.
Gove said Berkeley’s plans for the homes were of a “generic suburban nature” and did not “reflect the expectations” of the local design code.
The homes were due to be built in Crane Valley, an area of outstanding natural beauty 16 miles from Tunbridge Wells.
In April 2021, the then-secretary of state called in the application. An independent inspector completed a report into it and this was submitted to ministers.
The inspector recommended that the application be approved and permission granted, subject to conditions.
However, Gove then decided to refuse permission. A letter dated April 6 which details his thinking says that “the harm to the landscape and scenic beauty… attracts great weight”.
The decision is believed to be the first time Gove has used his powers as housing secretary to block a development on aesthetic grounds since he pledged last year to crack down on “ugly identikit” houses “plonked down without regard to the shape and character of existing communities”.
The letter from Berkeley’s lawyers, seen by The Times, outlines six reasons that it thinks the decision was wrong. It claims that the refusal was partly based on “erroneous and out-of-date conclusions”, particularly with regards to the shortfall of housing in the local area, which Gove had said was “slight”.
Berkeley also questioned how Gove could reject planning because of “bad design without any reasoning or indeed without referring to any evidence”.
11.20am: Carnival lifted by Norwegian Cruise numbers
The broader FTSE 250 is performing better than its blue chip peer, rising 76 points to 19,486.
Sitting close to the top of the risers are shares in Carnival which rose 4.7% after its sector peer Norwegian Cruise closed up 8.9% in New York following strong first-quarter results.
The company said adjusted EBITDA of US$234mln and adjusted LPS of US$(0.30), were above guidance of $US195 million and US$(0.45) respectively.
It said the firm met or exceeded guidance for all key metrics in the first quarter.
Shares in Carnival were trading 4.2% higher at 681.90p each.
11.18am: Capita loses Deliveroo deal – report
Capita PLC (LSE:CPI) shares came under further pressure after a report in The Times said Deliveroo had been forced to scrap an £18mln deal after the outsourcing specialist failed to deliver on the contract.
In another headache for the firm – which was recently plunged into chaos after a cyber attack – the report said it had failed to deliver on its promise to recruit a team of 150 multilingual staff for the takeaway company.
The Times said Capita had an agreement with Deliveroo at the start of 2022 to build up a new support centre in Poland for its restaurant partners.
The report cited sources with knowledge of the project describing a poor relationship between Capita in the UK and in Poland, led to chaos when it came to recruitment, along with a lack of leadership or accountability for delivering the project, which led to delays.
They said the team lacked the knowledge and experience to put such a centre in place.
The Times quoted a source close to Capita who said recruitment was actually hampered by the tight labour market.
11.01am: Demand for business loans slumps in Eurozone
Demand for loans from eurozone businesses has fallen at the fastest rate since the 2008 financial crisis, according to European Central Bank data that wil add to calls for the European central banks to slow down the pace of interest rate increases when it meets this week.
The ECB said banks indicated “a further substantial net tightening in credit standards for loans to firms and for house purchases” in the first quarter as rising borrowing costs and fading confidence weighed on economic activity.
Firms’ net demand for loans fell strongly driven primarily by higher interest rates with the net percentage of negative 38% compared to negative 12% in the previous quarter.
“From a historical perspective, the pace of net tightening in credit standards remained at the highest level since the euro area sovereign debt crisis in 2011,” the bank said.
Risks related to the economic outlook and firm-specific situation remained the main driver of the tightening of credit standards, while banks’ lower risk tolerance also contributed, it added.
A further, but moderate, tightening is predicted by banks in the second quarter.
Banks also reported a further substantial net tightening of credit standards for housing loans in the first quarter of 2023, while the net tightening became less pronounced for consumer credit.
10.25am: Eurozone inflation in surprise increase
Eurozone inflation rose for the first time in six months in April muddying the waters ahead of the European Central Bank meeting on Thursday which will set borrowing costs.
Euro area #inflation at 7.0% in April 2023, up from 6.9% in March. Components: food, alcohol & tobacco +13.6%, other goods +6.2%, services +5.2%, energy +2.5% – flash estimate https://t.co/q9VyID6II6 pic.twitter.com/c40dmObWUL
— EU_Eurostat (@EU_Eurostat) May 2, 2023
Consumer prices in the single currency bloc rose 7% in the year to April, compared with an increase of 6.9% in March, according to Eurostat, and ahead of forecasts which had predicted a flat reading.
But core inflation, which strips out energy and food prices to give a better indicator of underlying price pressures, fell slightly to 5.6% in April.
Carsten Brzeski Global Head of Macro at ING said the figures show inflation in the eurozone remains “sticky” and “underlines the need for further rate hikes, albeit at a slower pace and smaller magnitude than before.”
“The unexpected increase is the result of a bounce back in energy price inflation, after the strong negative base effect in March, and slightly higher service price inflation,” he added.
He said the “only open question is whether the ECB will go for 25bp or 50bp.”
But he feels with last week’s weaker-than-expected GDP growth report and today’s weak loan growth and loan demand data, “the case for slowing down the pace and size of rate hikes has become stronger.”
“We stick to our call of a 25bp rate hike on Thursday,” he concluded.
9.43am: UK manufacturing remains in the doldrums
The downturn in the UK manufacturing sector continued at the start of the second quarter, according to figures from S&P Global.
The seasonally adjusted S&P Global/CIPS UK manufacturing PMI ticked down to a three-month low of 47.8 in April, from 47.9 in March but above the earlier flash estimate of 46.6.
April saw output and new orders contract, with companies reporting that client destocking and efforts to cut costs had contributed to the downshift in demand, the report showed.
All five of the PMI components signalled a deterioration in operating conditions. Output, new orders, employment and stocks of purchases all contracted and vendor lead times improved (a sign of weaker demand for inputs hurting suppliers).
Rob Dobson, Director at S&P Global Market Intelligence, said: “The UK manufacturing sector remained in the doldrums at the start of the second quarter.”
“Output and new orders contracted, as manufacturers felt the impacts of client uncertainty, destocking and tightening cost controls. There was no escape from the subdued mood of the market, with both domestic and export customers remaining reticent to commit to new contracts.”
9.27am: Food prices continue to rise but growth decelerating
UK shop price inflation saw a mild deceleration in April, according to data from the British Retail Consortium on Tuesday, but remained near record-highs.
Shop price inflation slowed slightly to 8.8% in April on an annual basis, from 8.9% in March. The BRC said this was above the 3-month average rate of 8.7%, however.
Against the month prior, shop price inflation decelerated to 0.2% in April from 0.8% in March.
“Overall shop price inflation eased slightly in April due to heavy Spring discounting in clothing, footwear, and furniture,” said BRC chief executive Helen Dickinson.
“However, food prices remained elevated given ongoing cost pressures throughout supply chain. The knock-on effect from increased production and packaging costs meant that ready meals became more expensive and coffee prices were also up due to the high cost of coffee beans, as well as key producer nations exporting less.”
Food inflation accelerated to 15.7% on an annual basis in April, from 15.0% in March. The BRC said this was above the 3-month average rate of 15.1%, and was the highest inflation rate in the food category on record.
But there was some good news. Harvir Dhillon an economist at the BRC said: “Food prices do look like they’re decelerating – seeing the slowest monthly growth since May 2022.”
Today at @the_brc we published the latest Shop Price Inflation report, covering the month of April
Shop prices expected to have peaked ???? pic.twitter.com/mEvlA3kb01
— Harvir Dhillon (@HarvirDhillon) May 2, 2023
Dickinson added: “We should start to see food prices come down in the coming months as the cut to wholesale prices and other cost pressures filter through.”
Victoria Scholar, Head of Investment, interactive investor said: “While inflation remains elevated, there are incipient signs that price pressures are starting to cool.”
“The hope is that food prices will come down in the months ahead, although it is more likely that price growth will just slow instead in the near-term as consumers continue to feel the squeeze from rising weekly food bills,” she added.
Meanwhile, after a bright start the FTSE 100 has slipped into negative territory, down 4 points.
8.48am: HSBC beat expectations across the board
HSBC’s first quarter results have been well received with shares advancing 4.6%.
Jefferies noted the numbers were characterised by strong capital generation and a US$2.0bn buyback.
The broker said pre-tax profit, adjusted for gains on the SVB UK acquisition and the reversal of the impairment related to the French business, was 35% ahead of its estimates and 26% ahead of the consensus.
All lines were better, Jefferies pointed out, with revenue 10% ahead of its estimates on 2% better net interest income, 21% better non-interest income while costs were 5% lower.
Richard Hunter, Head of Markets at interactive investor felt the “relief from these results is palpable.”
He noted the “huge spike” in pre-tax profits saw the benefit of two tailwinds as outlined by Jefferies above.
But he added: “Even without the SVB UK and French adjustments, the figure is comfortably ahead of estimates.”
Matt Britzman, equity analyst at Hargreaves Lansdown thought “investors should be reasonably happy with the restored quarterly dividend and US$2bn buyback that looks likely to be completed over the next quarter.”
“Whether this is enough to quell the voices of those adamant that splitting HSBC up is the best course of action for investors remains to be seen, but certainly, one gripe had been the lack of returns given the strong capital position,” he stated.
8.15am: FTSE pushes higher, housebuilders climb on house price rise
The FTSE 100 made steady progress on Tuesday after the long weekend although oil major BP PLC (LSE:BP.) slipped despite better than expected first-quarter profits as a US$1.75bn share buyback disappointed the market.
At 8.15am London’s leading index was at 7,893.25, up 22.68 points, or 0.29%, while the FTSE 250 jumped to 19,507.34, up 82.20 poinys, or 0.42%.
Shares in BP were 3.7% lower after it announced a US$1.75bn buyback and said it expects to be able to deliver share buybacks of around US$4.0bn per year, at the lower end of its US$14-18 billion capital expenditure range.
The oil major said underlying replacement cost profit for the quarter totalled US$4.96bn, up from US$4.81bn in the fourth quarter but lower than US$6.25bn reported in the first quarter of 2022. City analysts had expected a profit of around US$4.3bn.
Heading the other way were shares in HSBC Holdings PLC (LSE:HSBA) after its strong numbers.
First quarter profit trebled at the bank which reinstated the first quarter dividend and pledged a US$2bn share buyback.
Housebuilders received a boost from data from the Nationwide which showed a monthly increase in house prices for the first month in seven months.
Persimmon PLC (LSE:PSN) soared 4.9%, Barratt Developments PLC (LSE:BDEV) advanced 2.1% and Taylor Wimpey rose 1.7%.
8.01am: Green shoots in the housing market?
There was better news on the UK housing market today as house price growth picked up in April according to the figures from building society, Nationwide.
Average house prices rose by 0.5% last month, data from the lender showed, following seven consecutive falls going back to last September.
The average price increased to £260,441, up from £257,122 in March.
This has lifted the annual rate of house price growth to -2.7%, from -3.1% in March, as calm returned to the markets after the chaos of last autumn’s min-budget.
Robert Gardner, Nationwide’s chief economist, said: “While annual house price growth remained negative in April at -2.7%, there were tentative signs of a recovery with prices rising by 0.5% during the month (after taking account of seasonal effects). April’s monthly increase follows seven consecutive declines and leaves prices 4% below their August 2022 peak.”
Nicky Stevenson, Managing Director at national estate agent group Fine & Country said: “April’s small rise in house prices is a hugely positive sign, coming after Nationwide reported several months of falling prices even as other indices suggested the opposite was happening.“
“The property market is proving much more resilient than people anticipated, even though household finances remain tight and inflation is still stubbornly high.”
The EY ITEM Club suggested that “combined with recent increases in the Halifax price measure and evidence of a pick-up in transactions from very low levels, the latest Nationwide numbers offer another sign that weakness in the housing market may have troughed.”
“This would be consistent with signs of a turnaround in the economy, still-solid job creation and improving consumer confidence.”
But it cautioned: “the risk of a sustained correction in values hasn’t gone away.”
“Average house prices still look very stretched on most affordability measures,” it added.
7.53am: BP profit tops forecast, buyback plans outlined
BP PLC (LSE:BP.) outlined plans for further share buybacks as it reported a rise in profit on the previous quarter on the back of strong oil and gas trading.
The oil major said underlying replacement cost profit for the quarter totalled US$4.96bn, up from US$4.81bn in the fourth quarter but lower than US$6.25bn reported in the first quarter of 2022.
BP said compared to the fourth quarter the result reflects an exceptional gas marketing and trading result, a lower level of refinery turnaround activity and a very strong oil trading result, partly offset by lower liquids and gas realizations and lower refining margins.
Announcing a US$1.75bn buy back, the FTSE 100-listed firm said it expects to be able to deliver share buybacks of around US$4.0bn per year, at the lower end of its US$14-18 billion capital expenditure range, and to have capacity for an annual increase in the dividend per ordinary share of around 4%.
Operating cash flow in the quarter was US$7.6bn including a working capital build of US$1.4bn while capital expenditure was US$3.6 billion.
BP continues to expect capital expenditure, including inorganic capital expenditure, of US$16-18 billion in 2023.
The firm declared a quarterly dividend of 6.61 cents unchanged from the previous quarter but up from 5.46 cents the year before.
“This has been a quarter of strong performance and strategic delivery as we continue to focus on safe and reliable operations,” said Bernard Looney, BP chief executive.
7.33am: HSBC profit trebles
HSBC Holdings PLC (LSE:HSBA) pledged to return more cash to shareholders as it unveiled first quarter pretax profit trebled.
The Asia-focused bank said pretax profit soared by US$8.7bn to US$12.9bn from US$4.1bn a year prior including a provisional gain of US$1.5bn on the acquisition of Silicon Valley Bank UK Ltd in March.
The FTSE 100-listed lender said it planned a share buy-back of up to US$2bn which is expected to knock around 25bps on the CET1 capital ratio.
Noel Quinn, Group Chief Executive, said: “With the good momentum we have in our business, we expect to have substantial future distribution capacity for dividends and share buy-backs.”
Revenue increased by 64% to US$20.2bn driven by higher net interest income in all global businesses due to interest rate rises while net interest margin of 1.69% was 50bp higher compared to the first quarter of 2022 and broadly flat when compared to the previous quarter.
Bad debt charges fell to US$0.4bn from US$0.6bn and operating expenses of US$7.6bn were 7% lower than last year.
Lending to customers rose by US$40bn in the quarter while HSBC reinstated the dividend for the period with a US$0.10 per share payment after passing last year.
The bank said its common equity tier 1 capital ratio of 14.7% was up 0.5 percentage points compared to the previous quarter and it remains confident of achieving its return on average tangible equity target of at least 12% for 2023 onwards.
Net interest income expectations are unchanged from full-year guidance, HSBC said.
7.00am: FTSE 100 expected to open higher
The FTSE 100 is expected to make steady progress when it opens on Tuesday as investors digest the takeover of First Republic Bank (NYSE:FRC), results from HSBC and a surprise increase in interest rates in Australia.
Spread betting companies are calling London’s lead index up by around 15 points.
Shares in HSBC rose around 3% in Hong Kong after the Asia-focused bank reported net interest income rose 38% year-on-year to US$8.96bn from US$6.48bn above City expectations of US$8.85bn billion.
Overall net operating income reached US$19.74bn, compared to US$11.67bn a year before.
Elsewhere, Australia’s central bank lifted the key interest rate by 25 basis points to 3.85%, surprising many economists who predicted there would be no change.
ING Economics said: “Despite falling inflation, RBA Governor, Philip Lowe, justified the latest hike by saying that it would take time to bring inflation down and hinted that more hikes might be necessary.”
In the US on Monday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.1%, the S&P 500 marginally lower, and the Nasdaq Composite down 0.1%.
Back in London, and the early focus will be first quarter results from BP.
