The FTSE 100 was a beneficiary of major oil results on Tuesday with BP echoing Shell in releasing surging profits for 2022 alongside increased returns to shareholders.
BP shares were 5% higher at the time of writing on Tuesday with Shell jumping on BP’s tailcoats and gaining 2%. The combination of both companies gains added a significant number of points to the index and helped the FTSE 100 higher by 0.5% to 7,879.
“BP may be enemy number one in the public’s eyes for its record profits, but its latest success has helped to drive up the FTSE 100, which in turn will benefit people up and down the country with exposure to UK stocks in their pension,” said Russ Mould, investment director at AJ Bell.
As the FTSE 100 bounces back from a soggy session yesterday, traders will be eyeing all time highs of 7,901 set on Friday last week.
UK Banks
UK banks were among the top risers as we approach quarterly updates from Lloyds, Barclays and Natwest. Lloyds is scheduled to release full year results 22nd February and Natwest’s and Barclays results are due 17th February and 15th February respectively.
UK banks have been benefitting from higher interest rates but investors will be watching closely for any provisions for bad debts caused by softer economic conditions.
Lloyds, Barclays and Natwest were trading between 1% to 1.5% higher at the time of writing.
With the banks and oil majors rising, there was notable risk-on tone to equity trade on Tuesday which also saw cyclical sectors such mining and the housebuilders gain.
“Over the past month or so, investors have become more optimistic that we’re near the top of the rate rise cycle, hence why you’ve seen higher-risk companies do well on the stock market,” Mould said.
“If this optimism turns out to be misplaced then we’ll likely see investors flock back to sectors where you can typically find value stocks such as banking, energy and tobacco. In a way, today’s movement on the FTSE 100 already reflects this investor thinking.”