The FTSE 100 was clinging on to gains at the time of writing on Tuesday as a turbulent month of October drew to a close.

London’s leading index had started the session firmly in positive territory before US futures fell, taking European stocks with them.

Investors were digesting a raft of economic data on Tuesday, including weaker US manufacturing data and slower retail sales in Germany.

The ongoing human tragedy in the Middle East also continued to weigh on sentiment.

“We’re at the end of a difficult month for equity markets, shaken by conflict in the Middle East and a mixed set of corporate results. The FTSE 100 and Dax indices are on track to end the month down 4%. In the US, the S&P is looking at a 3% decline on the month. Investors will be hoping for an end-of-year rally to help repair portfolios,” said Russ Mould, investment director at AJ Bell.

Earnings season in the US and UK has been mixed to date, with many companies missing already conservative analyst estimates.

Mould highlighted a number of big losers in October, adding; “NatWest has had a shocker of a time with its share price down more than 23% in October. Rat-catcher Rentokil has shown that its business is not as defensive as one might have thought, with its shares down 30% on the month.”

BP was the latest casualty on Tuesday as shares slipped 4% after missing analyst earnings estimates. The oil major was suffering from lower gas trading activities, and falling oil prices piled further pressure on their refining business.

“The third quarter has been something of a mixed bag for oil & gas supermajor BP. But overall the strong cash flows is still enabling it to invest in new projects, make inroads into the debt position and make generous payouts to shareholders,” said Derren Nathan, head of equity research at Hargreaves Lansdown.

“Whilst the oil pricing outlook remains strong there are some headwinds blowing into the fourth quarter. The high oil price is favourable to the upstream operations but the profits it makes in its petrol station forecourts remain sensitive to the cost of supply. And in refining margins are expected to trend significantly lower. Production is expected to be flat, but with four major projects due to have been completed by the end of the year its building a solid foundation for the future and it has upped its longer-term profit guidance.

“Despite a strong run in the shares, the valuation remains well below the long-term average. The market has been disappointed by today’s results and concerns remain around the Group’s renewable ambitions, but fundamentally BP is well placed to continue building shareholder value.”

Shell will report on Thursday.

BP shares sank in early trade on Tuesday after the oil major announced slowing profit that missed analyst estimates.

Earlier in October, we published a premium article explaining BP offers little value above 550p. We argued that the move higher in BP due to Saudi Arabian and Russian supply lacked conviction, and the BP share price was vulnerable to a pullback.

We also voiced concerns about the energy pricing mix and how this could impact BP’s earnings.

Today’s results revealed a punishing reduction in Q3 2023 profit that missed estimates. Underlying replacement cost profit was $3.3bn in Q3 2023 as revenue slipped to $54bn from $57bn a year ago.

BP shares were down 4.1% at the time of writing on Tuesday.

The main culprit in BP’s falling revenue and profit was weaker gas prices and trading activities. Lower oil prices also weighed on profit as oil refining margins fell.

BP is not alone in the oil sector in missing estimates; Chevron and Exxon recently released earnings weaker than analyst forecasts.

However, market sentiment is clearly turning against BP – a $1.5 billion share buyback did little to offset the shareholder disappointment around lower-than-expected earnings.

BP maintained its dividend at 7.27 cents per share.

With oil prices failing to maintain strength despite heightened geopolitical risks, the outlook for BP is increasingly uncertain, which is reflected in BP’s share price action today.

The FTSE 100 was higher on Monday as investors geared up for a busy week of central bank action and further earnings from the world’s biggest companies.

The FTSE 100 was 0.78% higher at 7,348 at the time of writing.

“European equity indices pressed ahead at the start of the new trading week as investors slowly regain their appetite for riskier investments following last week’s tough spell for stocks,” said Russ Mould, investment director at AJ Bell.

“The FTSE 100 advanced 0.9% to 7,356 as investors flocked to the technology, consumer, industrials, utilities and basic materials sectors. Airtel Africa took the top slot on the blue-chip risers, up nearly 7% thanks to reporting strong customer growth.”

Later in the week, the Bank of England is widely expected to keep rates on hold on Thursday as UK economic data worsens, despite inflation remaining significantly above their 2% target.

Also on Thursday, the FTSE 100’s largest company by market cap, Shell, is scheduled to report earnings during a volatile period for energy prices. BP will issue its third quarter results tomorrow.

The two oil majors account for a substantial proportion of the FTSE 100 and have the power to move London’s leading index.

US interest rates & Apple

In the US, the Federal Reserve will release its interest rate decision on Wednesday. Economists expect the Fed to keep rates on hold.

Apple, the world’s largest company by market cap, will report earnings on Thursday, marking the end of earnings season for major technology companies.

Technology companies have reported mixed earnings in recent weeks, culminating in the NASDAQ entering correction territory last week.

HSBC

The release of HSBC’s Q3 results rounded off the latest batch of earnings updates from FTSE 100 banks on Monday. Unlike their FTSE 100 peers, HSBC announced a fresh wave of share buybacks, which were the highlight of the £117m market cap bank’s release.

HSBC shares were down 0.6% at the time of writing – the decline may have been materially larger if it wasn’t for the $3bn buyback.

“A larger than expected share buyback seems to be doing a lot of the heavy lifting for HSBC today – making up for some less than positive details in its third quarter results,” Russ Mould said.

“What may sober up any investors drunk on a $3 billion handout is the higher-than-expected cost growth now expected for 2023. Management had made keeping a tight rein on any outgoings a key part of their strategy, so to fall down on this point does some damage to their credibility.

“Given part of the bloated costs relates to higher performance-related pay, HSBC could be exposed to some political or even regulatory blowback.

“For now, HSBC, whose horizons go far beyond the UK, is seen in a much better light by the market than its rivals and it is notable to see it sticking with its return on equity targets for 2023 and 2024.”

Cadence Minerals has announced a major development for their investment in the Amapa iron project, which lays down a path to restarting production at the project once owned by Anglo American.

Cadence Minerals has signed a memorandum of understanding (MOU) with a Chinese engineering firm to conduct a feasibility study and potentially finance and construct the Amapa Iron Ore Project in Brazil.

The MOU is with Sinoma Tianjin Cement Industry Design & Research Institute Co., a subsidiary of Sinoma International Engineering Co. It comes after ongoing talks between Cadence’s joint venture Pedra Branca Alliance, Amapa operator DEV Mineração and Sinoma to advance the $500 million project.

Cadence Minerals shares were 63% higher at the time of writing on Monday.

Under the non-binding agreement, Sinoma will submit a proposal to complete a definitive feasibility study for rebooting the idled Amapa mine and processing facilities. If approved, the firm would then provide a fixed-price engineering, procurement and construction contract and arrange financing from Chinese institutions.

Progress on the MOU could pave the way for the construction of the former Anglo American project to resume. Cadence has invested $12.1 million to date, increasing its stake in Amapa to 32.6%.

Additional details include:

• Cadence’s Amapa investment vehicle is Pedra Branca Alliance, a joint venture with Indo Sino Pty Ltd
• Amapa operator DEV Mineração owns the project and is Cadence’s Brazilian partner
• Sinoma would act as general contractor if appointed after feasibility study
• Sinoma is discussing potential financing with SinoSure export credit agency and China Development Bank
• Parties will develop a roadmap to advance feasibility study, financing and EPC contract

The MOU marks a significant step forward in efforts to revive the Amapa iron ore mine, which has potential to produce millions of tonnes per year. Cadence and its partners will be working closely with Sinoma as the project enters this critical development phase.