Shell shares rose on Thursday morning as the oil and gas giant’s earnings for the Q3 came in almost bang in line with estimates.

Shares in the group were 2% higher at the time of writing – a sharp contrast to BP’s performance after they released earnings this week.

After peers BP, Chevron, and Exxon missed analyst estimates, Shell shareholders will be delighted to learn higher oil prices are feeding through into Shell’s profitability and LNG maintenance didn’t impact earnings too heavily.

Investors will also welcome increased share buybacks as the group returns some of its $7.5bn free cash flow to shareholders.

“Shell has not bucked expectations, unpacking underlying earnings of $6.2 billion for the third quarter. This position of strength has prompted it to announce share buybacks of $3.5 billion over the next three months, up from $2.7 billion in the previous three months,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Revenues have been boosted, not just from the creep higher in oil prices, but also by higher margins in its refining business. Shell is also a leading supplier of Liquified Natural Gas and, although scheduled maintenance kept the taps tighter, with production across the integrated gas division down 9%, earnings from its gas trading business ticked up. Tighter supply has enabled the company to make higher margins diverting gas away from other regions to Europe where it’s still in high demand.”

The new Shell CEO’s strategy to refocus on hydrocarbons and take a more tentative approach to investing in clean energy has supported shares this year, with Shell gaining 14% since the beginning of the year.

Like all major fossil fuel companies, Shell must contend with volatility in underlying energy markets as traders weigh geopolitical threats with global demand.

Sainsbury’s shares were firmly higher on Thursday after the supermarket released very robust trading in their most recent half year period.

Sainsbury’s has actively set out to compete with discounters Lidl and Aldi on price, and the strategy is paying off. Extensive use of Nectar pricing brings many products in line with the discounters and helped drive a 10.1% volume increase in the half year.

Their efforts have increased market share as group retail sales for the period rose 8.4%.

Simon Roberts, Chief Executive of J Sainsbury plc, said: “Food is firmly back at the heart of Sainsbury’s. We’ve never been more competitive on price and our focus on value, innovation and service is giving more customers more reasons to shop with us.”

Sainsbury’s shares were 4.7% higher at the time of writing.

Considering the focus on low prices and higher volumes, shareholders will have been pleased to see retail operating margins decrease only 4 bps to 2.91%.

Strong performance during the period now means Sainsbury’s see underlying profit before tax in the range of £670m-£700m, the higher end of the previously guided £640m-£700m range.

“This is another solid trading update from Sainsbury’s with further volume growth in the second quarter and an improved market share performance. This means the group now expects profit for the year to come in at the top end of its previous guidance range,” said Wealth Club’s Charlie Huggins.

“Sainsbury’s has worked hard to lower prices in the face of intense competition. The launch of Nectar prices, where Nectar card holders save money on everyday items seems to have been well received and has helped the group to hold its own against Tesco and the German discounters. 

“Food inflation is starting to fall and this should help ease pressure on consumers, whose finances have been squeezed from all angles by rising prices, no more so than for the weekly shop. That said, lower inflation also means volume growth will become a more important contributor to like-for-like sales in future periods. It is encouraging that Sainsbury’s volumes grew in the second quarter but it will need to maintain this momentum.”

The FTSE 100 edged higher on Wednesday as markets prepared for the next instalment from the Federal Reserve and its interest rate decision after the European cash market closes.

The main interest rate decision is likely to be a non-event with the Federal Reserve expected to keep rates on hold. Markets will be most concerned with the accompanying projections and insight into thinking on where rates will go in the coming months.

A bumper 4.9% increase in US GDP in the last quarter shows the world’s largest economy is able to withstand higher rates and suggests the Federal Reserve could act again to increase rates if inflation persists at current levels.

Interest rate cuts will not even be in the conversation.

After the US 10-year treasury yield hit 5% last week, bond markets will be watched closely for any sign of rising yields that could dampen demand for equities.

“The FTSE 100 moved higher on Wednesday ahead of the crunch meeting of the US Federal Reserve,” said AJ Bell investment director Russ Mould.

“The broad expectation is the Fed will sit on its hands for now, so all the focus is likely to be drawn to any hints dropped about the future direction of monetary policy.

“Given the volatile economic and geopolitical backdrop, Jerome Powell will have to weigh any words in the accompanying statement carefully if he wants to avoid giving investors the jitters.”

FTSE 100 movers

Next was the FTSE 100’s top riser after the retailer again dispelled any fears about the UK consumer with an increase to full year profit guidance.

“It’s been a turbulent year for retailers thanks to consumers battling high interest rates and, more recently, unusual weather patterns which meant the wrong kind of clothes were on the shelves. For example, t-shirts and summer dresses were less appealing during the cooler than average August, and then retailers’ winter range gathered dust during a warmer than average September,” Russ Mould said.

“Nonetheless, Next has managed to navigate through the challenges and once again has upgraded earnings guidance. Rival retailers will certainly want to know how it has managed to stay above water.

“The latest success can be attributed to online sales, suggesting Next continues to stock what people want and at price point that shoppers deem to be good value for money.”

Marks & Spencer’s rose in sympathy but sports retailer JD Sports didn’t join in the rally declining 1.2%.

GSK was the FTSE 100’s biggest loser, down 3%, as the removal of COVID-related sales masked otherwise strong sales activties.

“Speciality medicines couldn’t quite shrug off the effects of falling COVID sales but still saw strong growth from the rest of the portfolio. Here, the longer-term outlook looks promising driven by product launches/expansions and a strong R&D programme, the success of which will be key to unlocking further value,” said Derren Nathan, head of equity research at Hargreaves Lansdown.

“The current share price valuation looks attractive, likely held back in some part by the ongoing Zantac litigation. GSK is moving swiftly to settle these cases but there are still a number of key hearings outstanding. However, investors should take heart from the strong operational progress.”

Investors will have one eye on tomorrow’s Bank of England rate decision and Shell’s earnings.

After BP’s disappointing results on Tuesday.

Ørsted shares had plunged 19.63% at the time of writing on Wednesday as it became known that the Danish renewable energy company was to halt two offshore wind farm developments in the U.S.

Ørsted released a statement saying that the move is to cost the company approximately 39.4 billion DKK (£4.6 billion).

The developer announced the discontinuation of its 2,248-megawatt Ocean Wind 1 and 2 projects in New Jersey.

This decision is part of the company’s ongoing restructuring of its U.S. offshore wind portfolio.

“Significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates have led us to this decision,” said Ørsted Chief Executive Mads Nipper on the matter.

Ørsted stocks have been rapidly falling for two months since August and are now down by approximately 60%.

The shares were trading at 273.1 DKK in the morning trade on Wednesday.

“The development of new wind energy projects is becoming increasingly challenging. Securing investment is particularly difficult in the current rate environment. Input costs are on the rise for wages and materials like steel and copper, and our experts highlight that offshore vessel hire costs are particularly elevated. It coincides that the maximum set price per MWh is simply set too low to offset these soaring costs,”said Louis Knight, analyst at Third Bridge.

“The future of many projects remains uncertain due to the increasing construction costs, combined with the fact that power prices for projects are fixed, ignoring inflation, through the UK’s contracts-for-difference price model”, he added.

ASOS investors have baulked at the news the online retail company will continue to sacrifice revenue in an attempt to bolster EBITDA through 2024.

The retailer said adjusted revenue fell 11% in the 2023 full year as the company focused on efficiencies and carving out higher EBITDA by cutting costs and improving stock management.

Adjusted EBITDA fell 59% to £124.5m in the year to 3rd September 2023.

“The past year has been another annus horribilis, but then again it was always going to be. You cannot perform major surgery on a broken business without taking considerable pain. ASOS still remains in intensive care, meaning the year ahead is also likely to be very painful,” said Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club.

ASOS shares were 9% lower at the time of writing on Wednesday.

“Profitability rather than growth remains the order of the day at ASOS. There were no major surprises in full-year results, revenue had fallen at double-digit rates as the number of active customers shrank 9% to 23.3m. With shoppers clearly struggling with the cost-of-living crisis and looking elsewhere for their latest fix of fashion, ASOS expects these double-digit revenue declines to continue into the new financial year, before turning positive again in the final quarter,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

Chiekrie continued to explain the financial situation ASOS was far from ideal as debt rose cash outflows increased.

“With net debt and cash outflows rising, an £80m equity raise was needed last year to help shore up the balance sheet. This isn’t usually a good sign for existing shareholders as it waters down their stake in the company. On the flip side, the cash injection has given ASOS some wiggle room to execute its ongoing transformation, and there are some very early signs that it’s bearing fruit,” said Chiekrie.

“Despite overall profit coming in lower last year, profit per order was up over 30% as the group streamlined its offering and narrowed its focus on higher-quality, more profitable customers. And good progress has been made in trimming the mountain of excess inventory in ASOS’ warehouses, down around 30% year-on-year. The discounts used to help clear this stock have hurt margins though, and the group turned loss-making.”