FTSE 100 risers: BP paces gains, RBS and IAG fall on Brexit worries
By Alexander Bueso
Date: Tuesday 30 Jul 2019
(Sharecast News) - BP shares paced gains on the top flight index from the get-go on Tuesday after the oil major posted better than expected second quarter profits on the back of higher output, with strength in Upstream helping to offset weakness in Downstream.
Despite the outfit's high dividend yield of 6.22% and some analysts' concerns around its level of gearing, others sounded a more upbeat note, including those at Morgan Stanley, who reiterated their 'overweight' stance and 620.0p target price for the shares following BP's latest update.
Among other things, analysts at Morgan Stanley pointed to BP's sustained organic free cash flow generation, likely fall in gearing going forwards (from the third quarter of 2019 onwards), scheduled divestments most of which still lay ahead and "significant" remaining leeway for share buybacks in the second half of 2019.
Going the other way, Centrica and Fresnillo were both clobbered after slashing their dividend payouts.
Centrica recorded a statutory loss before tax of £446m for the six months ended 30 June, swinging from a profit of £704m during the same point last year, which the company blamed on the new energy price cap and increased pensions contributions as it slashed its interim dividend by 58% to 1.5p.
In parallel, precious metals miner Fresnillo posted what analysts at ShoreCap termed a pitiful net attributable interim profit of $70.9m which was down from $229.3m one year ago, while the interim divi was cut from 10.7 US cents to 2.6 cents.
Adding to the pain, management said the rate of improvement in production at its Fresnillo, Saucito and Herradura mines would not be what the company had anticipated, which had led the outfit to lower its full-year output guidance earlier during the same month.
Other notable movers to the downside on the top flight index included RBS and IAG, with the both felled by traders' jitters around the new course set by Westminster on Brexit.
In the case of the former, markets were also looking ahead to the Bank of England's policy meeting two days later, although Diageo which is often seen as a so-called dividend proxy advanced.
For Rolls Royce and BAE Systems meanwhile weakness in the pound was proving a fillip.
A rally in defensive issues such as British American Tobacco and Imperial Brands stalled at technical resistance.
FTSE 100 - Risers
BP (BP.) 543.20p 3.07%
Micro Focus International (MCRO) 1,756.80p 2.09%
JD Sports Fashion (JD.) 648.40p 1.69%
Taylor Wimpey (TW.) 176.55p 1.26%
Diageo (DGE) 3,450.00p 1.11%
Rio Tinto (RIO) 4,728.50p 1.00%
Rolls-Royce Holdings (RR.) 895.80p 0.99%
InterContinental Hotels Group (IHG) 5,744.00p 0.91%
NMC Health (NMC) 2,523.00p 0.84%
Smith & Nephew (SN.) 1,862.50p 0.78%
FTSE 100 - Fallers
Centrica (CNA) 74.18p -18.34%
Fresnillo (FRES) 660.60p -16.86%
International Consolidated Airlines Group SA (CDI) (IAG) 414.80p -5.43%
British American Tobacco (BATS) 2,978.00p -4.12%
Imperial Brands (IMB) 2,103.00p -3.99%
Just Eat (JE.) 750.00p -3.85%
Royal Bank of Scotland Group (RBS) 221.10p -3.66%
Reckitt Benckiser Group (RB.) 6,463.00p -3.10%
Pearson (PSON) 895.60p -2.88%
Melrose Industries (MRO) 189.71p -2.51%
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