The FTSE 100 underperformed European peers in the early hours of trade on Tuesday but made a steady recovery after starting the session deep in the red.
Although investors are gearing up for a busy week of central bank action, a string of corporate updates yielding mixed results on Tuesday was the driving influence on shares on Tuesday
BP reported increased underlying replacement profit, Diageo sales and volumes sank, and Standard Chartered smashed analyst earnings estimates.
“With earnings season in full swing, there are several FTSE 100 names making big moves this morning on the back of their figures,” said Steve Clayton, head of equity funds, Hargreaves Lansdown.
“The headlines are that Diageo, Croda International and Sage Group are all heading south this morning after reporting results that left traders worrying about weak momentum in these stocks’ underlying revenues. On the leaderboard though, BP is up after hiking its quarterly dividend by 10%, whilst Standard Chartered released forecast-beating results and announced a further buy-back of stock.
The result was a 0.2% decline for the FTSE 100 at the time of writing.
Diageo
Diageo was the FTSE 100’s biggest detractor in terms of points on Tuesday, with the drinks giant slumping over 6% after confirming a net sales decline in the first half.
“A catastrophic session from Diageo served to drag down the FTSE 100 index,” said Russ Mould, investment director at AJ Bell.
Operating profits were higher during the period, but this did little to address concerns about the top line. Overall organic volumes were down 4% during the period.
“Diageo has gone from bad to worse,” Russ Mould said.
“It has reported an operating profit decline in four out of its five operating regions, two of them in substantial double-digit territory. The company can dress up the numbers all it wants, but it’s clear that something major has to change.
“Debra Crew will be fighting to keep her job as chief executive. If the board doesn’t do something, one can expect activist investors to circle Diageo and push for new leadership.”
Standard Chartered
There was a lot to like about Standard Chartered’s half-year report. Operating income was up 11% in the first half, and underlying profit before tax rose 21%. Shareholders are being rewarded with a bumper $1.5bn share buyback, which helped shares rise over 6% on Tuesday.
“We generated double-digit income growth, with positive momentum continuing into the second quarter, and with continued discipline in managing our expenses,” said Bill Winter, CEO of Standard Chartered.
“This led to a 20% growth in underlying profit before tax. Reflecting confidence in our performance and robust capital position, we are upgrading our guidance for income growth, which we now expect to be above 7% in 2024, and we are announcing our largest ever share buyback of $1.5bn.”