Britain's blue-chip index edged up on Thursday as strong showings from Barclays, Intu and RSA outweighed losses through companies going ex-dividend. Barclays was the third listed British lender to report earnings this week, surprising investors and analysts with an increase in its core capital ratio, a measure of financial security.
"The capital ratio increase is rather important for Barclays, because this is a bank that had lagged peers in terms of its capital and hadn't performed well in last year's stress tests, so any improvement in capital is well-received," said Jefferies banking analyst Joseph Dickerson.
Lloyds, which reported yesterday, was also up 1.9 percent. HSBC was down 1.8 percent. Insurer RSA was a top gainer, up 4.3 percent after it posted a 2016 profit beat and increased its target for return on equity. CEO Stephen Hester said customers had benefited 'significantly' from RSA's not having been sold to Zurich Insurance, which withdrew a take-over attempt in September 2015.
"We like what Stephen Hester is doing at RSA and view the recent announcement of the disposal of the UK legacy book as a great deal but, in our view, this good news is now all in the share price," says Panmure Gordon analyst Barrie Cornes. The broker has a 'hold' rating on the stock.
Intu Properties, which owns and manages shopping centres, was top FTSE gainer, up 6.7 percent and headed for its best day in six years after its earnings beat expectations and it increased its dividend. Intu was one of the most shorted stocks before its earnings report this week, according to figures from HIS Markit, with 11.9 percent of its shares outstanding on loan.
Defence company BAE Systems gained 2.4 percent after it reported a better-than-expected rise in sales. BAE, which had its best day in over four years on Nov 10, the day after President Donald Trump's election, said it stands to gain from increased defence spending in many of its markets.
Miner Glencore gained 2.8 percent after it posted an 18 percent rise in core profit on a rebound in global commodity prices. Centrica was losing 3.6 percent despite returning to profit growth and flagging the possibility of a dividend rise after two years of shareholder payout cuts.
"Today's dividend announcement of no growth in 2016 was a surprise," Jefferies analysts said, adding Centrica's pension deficit ballooning to 1.1 billion in 2016 could be the reason for this. "Centrica is clearly prioritising secure credit metrics in the near term; consensus had expected 3 percent dividend growth in both 2016 and 2017." EasyJet and Rio Tinto were top fallers due to going ex-dividend, down 4.8 and 3.7 percent. Companies going ex-dividend took an estimated 12.3 points off the index.
Travel and leisure company Carnival gained 2 percent despite going ex-dividend. A hike in target price from Credit Suisse from 4860p to 5380p could have been supporting the stock.
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