The FTSE 100 dropped again on Thursday as companies accounting for a significant proportion of the index traded ex-dividend and wiped a sizeable number of points from the index.
BAE Systems, AstraZeneca, and BP, among others, all traded ex-dividend and gave the impression of a bad day for London’s leading index. In reality, the index would only be marginally down without the impact of stocks trading ex-dividend.
“The FTSE 100 started Thursday modestly in the red as some big names on the index traded without the rights to their upcoming dividends,” says AJ Bell investment director Russ Mould.
Although ex-dividends weighed heavily on the index, geopolitical and macro considerations did give a reason for investors to be cautious.
The Federal Reserve signalled it wouldn’t move to cut rates again until they had more evidence inflation was falling. The problem here is the new president’s tariffs campaign threatens a period of higher prices.
“Uncertainty abounds about the knock-on effects of Trump’s tariffs for multinationals listed in London. Although the more cautious stance from the Federal Reserve didn’t blow Wall Street off course, with the S&P 500 breaking out to a record level, there is set to be more wariness creeping in today,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
Despite the negative tone to trade, there were a number of positive corporate stories from FTSE 100 firms for investors to dive into on Thursday.
Lloyds shares surged to the highest level since before the pandemic after announcing underlying results – which are to be commended. When the impact of the £700m motor charge was stripped out of the earnings, Lloyds beat expectations across the board. The mortgage business is doing very well, and the company is managing costs.
Investors will be pleased with the level of cash Lloyds is returning to them, and an additional £1.7bn buyback will have gone down very well.
“The more positive response to Lloyds’ full-year numbers compared with its immediate peer group is less a reflection of the results themselves and more related to the fact it had lagged behind its rivals heading into this earnings season,” Russ Mould explained.
“A significant increase in provisions associated with motor finance mis-selling is unlikely to have caught investors on the hop. However, the fact the government’s attempt to intervene on lenders’ behalf was rejected by the Supreme Court is obviously unhelpful and the increased provision meant profit came in below forecasts.
“This issue remains a lingering uncertainty for the business ahead of the latest hearing in early April but the decision to sanction a sizeable share buyback and deliver a healthy increase in the dividend suggests management are not overly concerned.”
Centrica was jostling with Lloyds for the top spot on the FTSE 100 leaderboard – both were up around 7% at the time of writing – following the release of results that exceeded expectations.
There was a broad decline in Centrica’s earnings due to lower energy prices but this had largely been baked into the Centrica share price cake, and the positive earnings surprise sent shares back to levels not seen since the beginning of 2024.