Economic news

Shell Props Up FTSE 100 after Bumper Earnings

  • FTSE 100 up 0.3%, FTSE 250 off 0.1%
  • Shell jumps on profit beat, dividend hike
  • Anglo American down as copper output falls

Oct 27 (Reuters) - UK's export-oriented FTSE rose on Thursday as oil major Shell announced a bumper profit and plans to boost shareholder returns, helping offset broader concerns around high inflation and a possible recession.

The blue-chip FTSE 100 rose 0.3% to hold at a three-week high, while the mid-cap FTSE 250 slipped 0.1%.

Shell jumped 5.5% after the refiner reported a slightly better-than-expected quarterly profit of $9.45 billion and said it would sharply boost its dividend by year-end. The UK's energy sector climbed 4.7%.

"There is a slight bias where earnings estimates had been set quite low on prospects of a recession and supply constraints," market analyst Daniela Hathorn said, referring to UK companies in general. "So, any beat of those expectations is taken as a sign of good times".

The UK's financial markets have recovered over the past few days after taking a beating earlier this month on worries about unfunded tax cuts that Liz Truss's government proposed

Britain's new Prime Minister Rishi Sunak on Wednesday delayed until Nov. 17 the announcement of a keenly awaited plan for repairing the country's public finances. Investors are now betting that the Bank of England will raise its benchmark rate by a full percentage point on Nov. 3.

"With the change of government, there is a little bit more security that we won't see any crazy fiscal spending like we did see under Truss," said Hathorn.

Miners were among the biggest decliners, dragged by a 2.9% slide in Anglo American after a drop in quarterly copper production offset a ramp-up in coal operations and a strong performance at its De Beers diamond unit. The sector was down 3.2%.

Unilever jumped 1% in early trading after it raised its full-year sales forecast but shed nearly all those gains on a dire assessment of consumer sentiment in Europe and China, two of its key markets.

Telecom service provider Airtel Africa tumbled 15.1% after the company missed analysts' profit estimates as a result of higher costs.

Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips, Savio D'Souza and Devika Syamnath

Source: Reuters

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