The FTSE 100 reversed early losses on Tuesday as a strong session for Barclays and InterContinental Hotels helped support the index.
London’s leading index had started the session in the red, with miners dragging the index lower as copper prices fell. However, traders saw the dip in the mining sector as a buying opportunity, and miners trended higher off their worst levels as the session progressed.
An improvement in the miners compounded substantial gains for Barclays and InterContinental Hotels, and the FTSE 100 was trading 0.15% higher at the time of writing.
Barclays stole the headlines after the UK banks announced a £1bn share buyback and £2bn in cost-cutting measures. These two developments helped mask falling profit in the last quarter and declining net interest margins. The bank also said it would return £10bn to shareholders by 2026.
“There is a common theme among companies: increase dividends and cut costs to keep shareholders happy. Staff might not appreciate this strategy as it means they may have to do additional work for the same pay, but running a leaner machine is the playbook for corporates when there is an uncertain economic outlook,” said Russ Mould, investment director at AJ Bell.
“Barclays is the latest to follow this path as it announces yet another business reorganisation, a lower cost-to-income ratio target and a goal to return £10 billion to shareholders via share buybacks and dividends over the next three years.
“The news has gone down well with the market and has helped Barclays’ share price burst back to life after a long period in the doldrums.”
Lloyds and HSBC will report earnings later in the week.
InterContinental Hotels
InterContinental Hotels staged a quiet recovery from the pandemic and is now in full-blown growth mode, with revenue rising 17% in 2023 compared to the year prior. Growth was robust across North America and Europe while Greater China stormed ahead.
The group plans further expansion in China with 500 hotel openings to add to its 700 already in place. This would make Greater China a substantial part of IHG’s business in terms of room numbers.
“Safe to say the pandemic hangover is truly over for Intercontinental Hotels Group with over $1bn on its way back to shareholders via buybacks,” said Adam Vettese, analyst at eToro.
“Despite the cost of living crisis, it seems there has been no lull in demand for leisure spending with travel stocks in general having an outstanding 2023. Along with a portfolio of brands consumers can know and trust, this helped IHG shares rocket 68% last year.
“We expect to see macro conditions begin to ease up, which certainly will not stifle the appetite for leisure spending. In fact, with more disposable cash in consumers’ pockets as inflation continues to ease, it’s quite likely we will see the firm build on its 2023 success.”