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FTSE 100 Live: BP profits surge to £7bn in Q2, Brent crude holds $100

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·7-min read
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 (Evening Standard)
(Evening Standard)

BP today racked up profits of $8.5 billion (£6.95 billion), up more than a third on the previous quarter after a continued surge in oil prices.

The energy giant is to use surplus cash to buy back another $3.5 billion (£2.9 billion) of its shares, while it has hiked its dividend for the quarter by 10%.

The results come with the Brent crude price back at $100 a barrel, having fallen yesterday after manufacturing data from China and elsewhere heightened fears over weaker demand.

FTSE 100 Live Tuesday

  • BP profit nears £7 billion, hikes dividend 10%

  • Nationwide house price steady in July

  • FTSE 250 slides on busy results day

FTSE 100 steady after BP earnings boost offsets gloom for housebuilders

15:54 , Michael Hunter

London’s FTSE 100 was muted overall in afternoon trade, as a rally for oil stocks after strong earnings news from BP offset falls for housebuilders on signs that the UK’s runaway home market could be beginning to cool.

Overall, the top-tier stock index slipped by 7 points to 7,408.24 in afternoon trade. BP made the best single gain, up 3.5% to 406p after it reported almost £7 billion in quarterly profit, although soaring energy bills and the cost-of-living crisis stoked concern that the oil giant could face political scrutiny. Fellow oil giant Shell rose 1% to 2157p.

With the UK interest rates set to rise this week, data from the UK house market from Nationwide sent a shiver through housebuilders. The building society found that while house prices rose 11% year-on-year in July, there was a dip in the number of mortgages approved.

House builders moved to the bottom of the market, taking up residence in the list of the biggest fallers for the day. Berkeley Group dropped 5% to 4085p, the biggest single decline; with Taylor Wimpey just behind, down 4.8% at 122p. Barratt Developments also lost 4.8% to 481p.

The Bank of England is expected to lift interest rates on Thursday, with City forecasters expecting a rise of 0.50%, double the usual step, taking the base rate to 1.75%, picking up the pace of tightening monetary policy and the degree to which it will feed through to the mortgage market. The BoE has been increasing rates since December 2021.

Wall Street falls in opening trade after mixed set of US earnings reports

15:13 , Michael Hunter

Wall Street stocks got off to a sluggish start after a mixed run for corporate earnings against a backdrop of increasing political tension between the US and China.

The S&P 500 fell 28 points to 4091.11 in early trade, after a well-received update from Uber helped shares in the ride hailing app rise by over 14%, while Caterpillar fell by 4% after it missed anlaysts forecasts, in part due to the suspension of its Russian business.

Wider sentiment on global markets was cautious with Nancy Pelosi, the speaker of the House of Representatives, expected to visit Taiwan, a move expected to anger China which views the island as part of its sovereign territory. There was talk among analysts of potential sanctions from Beijing in response to the visit.

Brent Crude held just above $100 a barrel, ticking up 0.3% on the session, and the dollar index, which tracks the currency against a basket of alternatives, was up 0.5%.

Uber reveals UK revenue of $983 million after business model change

14:28 , Michael Hunter

The importance of Uber’s battle for a place in London’s competitive taxi and private hire market was highlighted as the US company reported the first positive quarterly cashflow in its history on Tuesday.

As part of its latest update for investors, the ride-hailing app said a “change in the business model for our UK Mobility business” contributed to a “$983 million revenue benefit” which came after a court ruling that the company was the official transportation provider to its users, rather than a middle man taking a cut from fares. The change means the company can book the entirety of fares charged in the UK there as its revenue.

Uber’s Mobility business was formerly known as Uber Rides, and includes its core ride-hailing service. London is by far the company’s biggest market in the UK and one of its biggest globally outside the US.

The ride-hailing and delivery app made more trips globally than before the pandemic in its second quater, helping it report free cashflow of $382 million for the second quarter, ahead of City and Wall Street forecasts of around $263 million as recovering demand tracked the return of tourist and commuter traffic around the world.

Within its second-quarter results, Uber revealed an increase of almost a third in the number of drivers and delivery staff on its global books, to a record high of five million.

BP shares up 4% but FTSE 100 lower

08:51 , Graeme Evans

BP shares have surged 4% or 17.45p to 409.8p after its second quarter results included a 10% dividend hike and another big share buyback worth $3.5 billion (£2.9 billion).

However, the oil giant’s progress has failed to prevent the FTSE 100 index falling 20.83 points to 7392.59.

Richard Hunter, head of markets at Interactive Investor, notes that BP shares are up by over a third in the last year compared with 4.7% for the wider FTSE 100. The momentum comes with Brent at $100 per barrel, against what BP describes as its “cash balance point” of $40.

Hunter added: “The company remains a core holding in many portfolios, with oil and mining stocks having underpinned some of the resilience which the FTSE 100 has shown so far this year in comparison to many of its global peers.”

BP’s share price progress was offset today by a fall of 3% for Mexico-based gold producer Fresnillo after half-year results and for stocks focused on the DIY and building sector following a weak reaction to figures from FTSE 250-listed Travis Perkins.

B&Q owner Kingfisher and Howden Joinery shares were down by 3%, while Travis tumbled 9% despite reporting operating profits in line with last year at £163 million.

The FTSE 250 fell 156.32 points to 19,922.91, with other big results-day fallers including Man Group and polymers business Synthomer after declines of 6% and 7% respectively.

House prices continue to rise, up 11% over year

08:12 , Graeme Evans

Building society Nationwide today said house prices edged up by 0.1% in July, with the 12th successive monthly increase leaving annual growth at 11%. The average figure stood at £271,209.

Chief economist Robert Gardner said the market has retained a surprising degree of momentum given the mounting pressures on household budgets.

He said: “While there are tentative signs of a slowdown in activity, with a dip in the number of mortgage approvals for house purchases in June, this has yet to feed through to price growth.”

Gardner added that strong labour market conditions and the limited stock of homes on the market has helped keep upward pressure on house prices.

Brent crude near $100 a barrel as demand fears grow

07:57 , Graeme Evans

Brent crude futures remains near $100 a barrel after oil prices fell sharply yesterday on the back of weak manufacturing data in China and other major economies.

Fears over weakening demand also created pressure on other commodity markets, with the copper price down for a second consecutive session today.

The retreat also reflected worries that US House Speaker Nancy Pelosi’s visit to Taiwan will lead to an escalation of tensions between China and the United States.

Asia markets were lower this morning and the FTSE 100 index is poised to open about 30 points lower at 7383, according to CMC Markets.

The stock market declines so far this week come after a much stronger July performance, when investors cheered robust earnings figures and a signal from the Federal Reserve that it is close to slowing the pace of recent interest rate hikes.

This perception over a Fed pivot is likely to face a key test later today when St. Louis Fed President James Bullard is due to speak at an event at New York University.

CMC’s chief market analyst Michael Hewson said: “He’s been notably hawkish in his recent pronouncements on the pace of rate hikes so it will be interesting to see if he agrees with Fed chair Jerome Powell’s pronouncement that the Fed is within the ranges of what is considered the neutral rate.”

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