FTSE 100 Close: Boring finish belies macro positivity as Dow Jones hits 40,000
- FTSE 100 boring close belies volatility
- Dow Jones hits another new high
- BT Group shares surge
- City sceptical Royal Mail can skip politics
- Chevron sxits North Sea
- easyJet CEO to exit
FTSE 100’s boring close belies macro positivity
The FTSE 100 index experienced a slight decline, closing down 7 points or 0.08% finishing at 8,438.
Nonetheless, despite the low-key close it was not a day without drama or volatility as several big name stock were on the move on Thursday.
In Europe, Germany's DAX fell by 0.8%, and France's CAC 40 dipped by 0.6%.
Despite these minor declines, the overall investor mood remained relatively upbeat driven by yet more record levels on Wall Street where sentiments are being boosted by apparently favorable inflation data, fueling hopes of potential interest rate cuts.
Notably, the Dow Jones reached a new high and a big psychological milestone, as it touched 40,000 for the first time. It was achieved with broad-based gains in some of the market’s cornerstone sectors.
BT Group glass half-full boosting shareholder dividends
Dividends helped BT Group to a positive trading day despite final results that disappointed slightly compared to market expectations.
BT on Thursday told investors it would be paying a final dividend of 5.69p, which takes the total for the year up to 8p per share.
It comes as BT highlighted an important milestone – passing the peak of capital investment needed to roll-out fibre broadband – and cheered its successful cost-cutting programme that’s axed some £3 billion of outgoings around a year ahead of schedule.
Actual trading metrics were less inspiring though with full year revenue marked at £20.8 billion rather than the £20.9 million forecast by City analysts. Underlying profit was up 2% at £8.10 billion, shy of a forecast pitched at £8.15 billion.
BT said it expected to grow earnings (EBTIDA) by between 0% and 1% in its current financial year..
Evidently, the improve dividend payout meant shareholders’ glasses were seen as half full, with BT shares rising 16% during Thursday’s session to finish near the 131.25p marker.
“Having passed peak capex on our full fibre broadband rollout and achieved our £3 billion cost and service transformation programme a year ahead of schedule, we've now reached the inflection point on our long-term strategy,” chief executive Allison Kirkby said.
"This delivery and greater capex efficiency gives us the confidence to provide new guidance for significantly increased short term cash flow and sets out a path to more than double our normalised free cash flow over the next five years.
Royal Mail takeover unlikely avoid politics – analysts
Royal Mail’s proposed takeover by Daniel Kretinsky's EP Group is unlikely to escape government scrutiny, especially if the Labour party wins the next election and is in power by the time the deal is due to close, that’s the view of one City analyst on Thursday.
The proposed £3.5 billion takeover, which would put the UK postal company’s in ‘foreign’ ownership for the first time, made headlines on Wednesday afternoon and has since sparked public debate.
Much of the attention has been on Royal Mail’s public service obligations, and, whether the sale of the company that was privatised in 2013, under David Cameron’s government, presents a risk to the public interest.
A press report in the Daily Mail, citing un-named sources, claimed government ministers were not planning to intervene in the matter.
Elsewhere, however, City analysts were looking at the prospect in quite opposite terms.
"We remain highly sceptical on the prospects of government clearance, especially if it falls to a potential future Labour government to decide," Liberum analyst Gerald Khoo said in a note.
Chris Beauchamp, chief market analyst at IG, questioned: “"I don’t know whether the bid has much chance in an election year really.
And, according to AJ Bell’s Danni Hewson, UK regulator OFCOM may also scrutinise the proposed deal.
In the UK, the National Security & Investment Act gives the government the power to intervene in takeovers and similar situations related to entities where there is a significant public interest, such as critical national infrastructure.
Easyjet CEO to exit on a high
Easyjet chief executive Johan Lundgren is to exit the budget airline, in early 2025, after a seven year term.
The news came as Easyjet reported a 22% jump in revenue for its winter season, with its half-year total amounting to £3.27 billion, driven by an 11% increase in passenger numbers.
Easyjet also boast continuing growth in its complementary holidays business which boosted its six-months revenue by 40% and banked a £31 million profit.
At group level, meanwhile, Easyjet reported a pre-tax loss of £350 million which compared favourably to analyst forecasts of a slightly larger loss of £357 million.
"We are now absolutely focused on another record summer which is expected to deliver strong FY24 earnings growth and are on track to achieve our medium term targets,” Lundgren said.
Kenton Jarvis, Easyjet’s chief financial officer, will step up to take the reins following Lundgren's exit.
US oiler Chevron sells up and exits UK North Sea
Chevron is selling its remaining 19.4% stake in BP-operated Cair oilfield which is in the West of Shetland region, and, produces around 120,000 barrels of oil per day.
It comes as oil producers have increasingly winced at the high tax rates currently levied by the British government – the rate, including supplementary (aka ‘windfall’) taxes, equates to 75%.
In recent months the UK oil lobby has become louder ahead of an upcoming UK election, in which both energy security and climate change will be hot-button topics.
Chevron, meanwhile, is selling up because of its proposed $53 billion acquisition of Hess which gives it access to onshore US shale and newer higher impact offshore projects in Guyana, South America.
The American major has previously said it would target up to $15 billion of asset sales to boost it coffers for the Hess deal. The North Sea sale could bank around $1 billion, according to reports.
