Upbeat earnings from a slew of heavyweight companies lifted the UK’s FTSE 100 on Thursday, while investors awaited the Bank of England’s policy decision after the Federal Reserve shot down prospects for US interest rate cuts in March.
Shell climbed 2.6% to a more than three-week high after the energy major increased its dividend by 4% and extended its share repurchases after reporting a better-than-expected fourth-quarter adjusted profit.
“The improvements … across the board (at Shell) would appear to justify the pivot we saw last summer from CEO Wael Sawan where he pledged to focus on returns and ‘invest in the models that work’ and ‘those with the highest returns’,” Michael Hewson, chief market analyst at CMC Markets, said.
Peer BP, which is set to report next week, rose 1.3%.
BT’s shares gained 0.5% after Britain’s biggest broadband and mobile operator said it was on track to grow revenue and profit this year after reporting better-than-expected third-quarter revenue.
Vodafone drags FTSE 100 lower ahead of Fed outcome
The blue-chip FTSE 100 climbed 0.3%, while the midcap FTSE 250 dropped 0.2%. Both the FTSE indexes closed out January with their worst monthly performance since October 2023, as investors reined in bets of aggressive interest rate cuts this year.
Wall Street closed sharply lower on Wednesday after the Fed held interest rates steady, while dashing hopes for a cut as soon as March.
Britain’s central bank looked set to keep interest rates at their highest levels in nearly 16 years later on Thursday, with investors looking for hints of potential rate cuts later this year.
According to pricing in the interest rate futures market, it is a close call whether the Bank of England will start cutting rates in May or June.
“The Fed’s move has very likely set the stage for a similar ‘rates on hold, don’t get excited’ message from the Bank of England,” said Steve Clayton, head of equity funds, Hargreaves Lansdown.
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