The FTSE 100 gained on Tuesday as strong commodity companies offset the impact of mixed corporate results.
The FTSE 100 was up 0.3% at 7,510 in afternoon trade on Tuesday, having staged a recovery from early selling as strong performances by Shell and other commodity companies helped the index recover. The FTSE 100 traded as low as 7,365 on Tuesday.
Shell shares were 1.6% higher at 1,975p and BP gained 1%.
Oil prices have risen to almost $100 per barrel amidst scarcity fears as tensions between Russia and Ukraine rise.
The price of Brent Crude is currently trading at $97.47 per barrel and WTI Crude is trading at $93.71, marking the highest prices for the commodity since 2014.
Although high oil prices have helped the FTSE 100 gain in the face of geopolitical tensions, analysts highlight how consumers are set to bear the brunt of rising energy prices.
“Consumers are belting up and bracing themselves for a fresh squeeze in the cost of living as a jump in the oil price is set to see forecourt prices ticking up again,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown
“The price of oil is rising up again back towards levels last seen consistently more than seven years ago with a barrel of Brent crude surging past $89.5 dollars, heading towards $90 a barrel.”
“The escalating situation surrounding Ukraine, with the standoff continuing between Russia and NATO members had already pushed up the price, but supply constraints with a drop in US inventories registered, has seen it edge up by another 1.5% today.”
Hargreaves Lansdown
Hargreaves Lansdown was down nearly 15% in Tuesday afternoon trade and was the FTSE 100’s top faller. The broker revealed a slump in Net New Business to £2.32bn in H1 2021, down from £3.24bn in the same period a year prior as retail investors returned to the office meaning their retail trading business is taking the hit.
With a direct reduction in trading volumes, Hargreaves Lansdown’s profitability is being eaten at with a decrease in pre-tax profits falling from £188.4m to £151.2m in the 6 month period. The investment group said they would invest £175m to deliver future growth and enable operating efficiencies.
“In the first half of this financial year, we saw a gradual return to the office and calmer markets which led to more normalised share trading levels, albeit still higher than before the pandemic. Our assets under administration have reached record levels, and we now have a record 1.7 million customers,” said Chris Hill, Chief Executive Officer.
Hargreaves Lansdown is confident with their fiscal position and are committing to increasing their ordinary dividend by 3% from 11.9p to 12.26p per share.
Coca-Cola HBC was another faller after the drinks group posted full year earnings.
Coca-Cola HBC gave up 4% to trade at 2,218p after releasing earnings and a 16.9% revenue jump, and operating profits increasing 21%.
With emerging markets contributing to 27.1% of the revenues for Coca-Cola HBC and Russia being a large portion of that segment, the market chose to focus on the risk to future revenues. However, in an interview with Reuters, Coca-Cola HBC stated that contingency plans are in place to be prepared for upcoming commotions from Russia-Ukraine conflict. They are stockpiling ingredients in order to prevent any disruptions.
HSBC
Despite FTSE 100 gaining 0.3% on Tuesday, the HSBC share price missed out on the rally after a strong rebound in profits and the announcement of a share buy back programme. HSBC have reported a decrease of 2% in their revenues to $49.6bn. However, they managed to report an 87% increase in the profits before tax from $10.1bn to $18.9bn.
Their dividend has increased to $0.25 per share for 2021.
“We have good momentum coming into 2022 and are confident that we can continue to execute against our strategy. We also remain cognisant of the potential impact that further Covid-19-related uncertainty and continued inflation might have on us and our clients,” said Noell Quinn, Group Chief Executive.
Smith & Nephew was the FTSE 100 top riser trading at 1245p on Tuesday afternoon, adding 5.6% on the day.
Smith & Nephew reported revenue increased by 14.3% from $4.5m to $5.12m as some operations returned to pre-covid levels.