The FTSE 100 rose on Thursday as robust profits at Shell helped support the index with both BP and Shell gaining on the day.
BP and Shell are among the largest FTSE 100 constituents and gains of 3.2% and 5.3% respectively added a significant number of points to the index.
There were also hopes central banks would soon start to slow the pace of interest hikes following disappointing earnings from US tech stocks.
Meta, Microsoft and Alphabet have all fallen heavily this week after earnings releases suggested consumers were starting to feel the pressure of inflation.
“US tech may be letting the side down when it comes to third quarter earnings but bumper profit from index heavyweight Shell helped lift the FTSE 100 on Thursday morning,” says AJ Bell head of investment analysis, Laith Khalaf.
“Once again, the wider market seems to be pinning some hopes on central banks looking at evidence of a deteriorating economy and reacting accordingly by slowing the pace of rate rises.”
The Federal Reserve, Bank of England and ECB will provide hints on the trajectory of interest rates in the coming weeks.
Shell
Shell had previously provided guidance on refining margins due to a falling oil prices which were a central element in Shell’s profit falling to $7bn in the third quarter, down from $18bn in the prior quarter.
Despite the sharp drop in profit from the prior quarter, Shell’s earnings were highly attractive to investors and shares rose over 5% as a result. Shell’s profit will support further distributions to shareholders after $6.8bn was paid in the last quarter.
Lloyds
Lloyds shares were largely flat on Thursday after the UK bank reported a 22% increase in underlying profit before impairment to £2.4bn. However, as with all UK banks updating the market this week, Lloyds were forced to set aside provisions for potential bad debts. Lloyds made provisions of just under £700m which say underlying profit for the quarter fall 17% to £1.7bn.
“Our income growth, balance sheet momentum and resilient customer franchise have enabled the Group to deliver a robust financial performance and strong capital generation, alongside updated guidance for 2022,” said Charlie Nunn, Lloyds Group Chief Executive.
Lloyds net interest margin is set to exceed 2.9% as a result of higher interest rates.