The FTSE 100 gained a 0.5% boost to 7,343.5 after a slate of positive results from the UK and US markets helped the FTSE 100 outperform European indices and US futures.
“The FTSE 100 made some modest progress on Tuesday morning as earnings reports on both sides of the Atlantic turn from a trickle to a flood,” said AJ Bell investment director Russ Mould.
“Some really big hitters report in the US later today, including Coca-Cola, McDonalds as well as Microsoft and Alphabet.”
“These could really define an earnings season which, up until now, has been pretty resilient given the backdrop.”
However, US markets slid in advance of the looming US Federal Reserve interest rates decision tomorrow, which is currently predicted to see a rate hike of up to 75% to tackle soaring 9.4% US inflation.
The Dow Jones dipped 0.3% to 31,851 in pre-open trading, with the S&P 500 falling 0.3% to 3,954.5 and the NASDAQ decreasing 0.5% to 12,292.5.
“Another defining moment this week comes with tomorrow’s decision on US interest rates. How hard will the US Federal Reserve push – will it serve up another 75 basis point rise as is widely expected? Or will it dial back a touch?” said Mould.
Unilever
Meanwhile, the FTSE 100 saw Unilever shares climb 2.7% to 4,022.2p as the firm enjoyed a €29.6 billion turnover in HY1 2022.
However inflation made its worrying mark by eating into the company’s operating margins over the financial period.
Unilever operating profits gained 1.7% to €4.5 billion, but its operating margin fell 200 basis points to 15.2% year-on-year.
The consumer goods firm announced an underlying profit rise of 4.1% to €5 billion and an underlying profit margin fall of 180 basis points to 17% as a result of cost input inflation.
“It’s no surprise to see inflation and global uncertainty called out as headwinds, but importantly for Unilever work done raising prices is keeping sales and profits moving in the right direction,” said Hargreaves Lansdown equity analyst Matt Britzman.
“Juggling higher prices and weaker consumers is a tough act to nail, so far Unilever looks to be doing a decent job.”
Mould added: “Consumers trading down to cheaper alternatives is an obvious risk for Unilever but, rather than trying to compete on price, the company is better off protecting itself from inflationary pressures by testing its pricing power.”
“In fairness the volume declines weren’t too alarming, suggesting its brands retain their hold over shoppers for now. Longer term, protecting the integrity of these brands by not compromising on quality to reduce costs is important.”
Compass Group
Compass Group joined the top risers with a 2.3% increase to 1,887.5p after its Q3 2022 results displayed a return to thriving business post-Covid.
The foodservice company reported a 49.7% growth in revenue, with all regions operating above 2019 levels over the period.
Compass Group also noted a 40 basis point rise in its underlying operating margin from 5.8% in HY1 2022 to 6.2% in the term.
Its net new business expanded 9.1% and customer retention rate remained high at 96.1%.
“Some may be disappointed that Compass have not been able to fully absorb current margin pressures, given their renowned strengths in micro-managing costs within the group,” said Hargreaves Lansdown Select fund manager Steve Clayton.
“But the bigger picture is that the group has now put the pandemic firmly behind it, has restored margins above 6% and doubled its run-rate of new business growth, whilst keeping client retention above 96%.”
Oil rises on supply fears
The price of oil rose on supply fears, as Russian energy company Gazprom confirmed gas supplies through the Nord Stream 1 pipeline to Germany would fall to 20% of capacity.
The threat is set to throw European countries into hot water, as states struggle to stock up on supplies in advance of the winter season.
European Commission President Ursula von der Leyen previously asked European regions to reduce gas usage by 15% from August until March in a move to ration supplies after von der Leyen accused Putin of attempting to “blackmail” Europe into paying for gas in Roubles.
A draft law was passed today by EU energy ministers, which included voluntary steps to cut gas consumption and launch mandatory measures if insufficient supplies were saved across the trading bloc.
Benchmark Brent Crude hit $106 per barrel. Shares in the FTSE 100 oil giants gained, with BP increasing 1.7% to 393.5p and Shell climbing 1.6% to 2,103.2p.
