London midday: Stocks slump but BP bucks trend after results
By Michele Maatouk
Date: Tuesday 03 May 2022
(Sharecast News) - London stocks had fallen further into the red by midday on Tuesday as traders returned to their desks after the Bank Holiday weekend, with results from oil giant BP in focus.
The FTSE 100 was down 0.8% at 7,482.27.
Russ Mould, investment director at AJ Bell, said: "Metal producers and pharmaceuticals acted as a drag on the index, with the former extending losses seen after the recent quarterly updates from mining sector - most of whom reported operational challenges.
"Markets are particularly worried about lockdown in China and how fast US interest rates might go up. We'll get clarity on the latter tomorrow when the Federal Reserve gives its latest policy decision, with markets expecting half a percentage point increase in the Fed Funds rate. Central banks typically raise rates by a quarter percentage point, but the Fed is under pressure to be more aggressive to combat rising inflation.
"While all eyes are on the Fed this week, it is important not to forget the Bank of England's next interest rate decision will be made on Thursday.
"The market expects a quarter percentage point increase to 1% for UK rates which will prompt a lot of chatter about recession, particularly as consumers are already under a lot of financial pressure from the rising cost of living. There couldn't be a worse time to push up borrowing costs, but the Bank of England needs to do something to tame inflation and that means raising rates."
In equity markets, Segro tumbled after a downgrade at Kepler Cheuvreux.
Elsewhere, Avast fell after the cybersecurity firm said it expected annual revenue to slow and margins to be squeezed amid a "challenging global backdrop".
Meanwhile, AO World was knocked lower by a downgrade to 'underweight' at JPMorgan, but Auction Technology was boosted by an upgrade to 'overweight' by the same outfit.
Asset managers M&G and St James's Place both rallied after upgrades to 'buy' at HSBC.
BP gained ground even as it said it swung to a massive first-quarter loss as a result of its decision to exit Russia after the country's invasion of Ukraine. Analysts said investors were encouraged by better-than-expected underlying profits.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: '"$20.4bn is an eye-watering quarterly loss for BP but it's far from unexpected. The market had already factored in a huge hit due to its Russia exit and now the company has unveiled the price to pay is a big and bold $25.5bn. That's the amount it has set aside in pre-tax charges and the cost of extricating itself from Rosneft.
"But surprising on the upside is the boost to underlying profits which came in at $6.2bn, sharply higher than the consensus expected of around $4.5bn. The company has been raking in cash as the supply squeeze on oil markets has intensified. The war and the high geopolitical tensions have brought about a surge in the oil price which is up 40% since the start of the year, spiking in the first weeks of the war at $139."
Market Movers
FTSE 100 (UKX) 7,482.27 -0.83%
FTSE 250 (MCX) 20,575.36 -0.64%
techMARK (TASX) 4,372.14 -0.03%
FTSE 100 - Risers
BAE Systems (BA.) 763.00p 3.11%
BT Group (BT.A) 182.25p 2.76%
International Consolidated Airlines Group SA (CDI) (IAG) 147.72p 2.61%
M&G (MNG) 219.60p 2.52%
Whitbread (WTB) 2,883.00p 2.34%
BP (BP.) 400.45p 2.27%
Sainsbury (J) (SBRY) 237.80p 1.93%
Taylor Wimpey (TW.) 128.35p 1.14%
Tesco (TSCO) 274.90p 1.07%
Legal & General Group (LGEN) 254.60p 0.99%
FTSE 100 - Fallers
SEGRO (SGRO) 1,234.00p -8.08%
Antofagasta (ANTO) 1,488.00p -4.06%
Croda International (CRDA) 7,508.00p -3.79%
Glencore (GLEN) 478.85p -3.71%
Ocado Group (OCDO) 891.40p -3.53%
Endeavour Mining (EDV) 1,891.00p -3.47%
Unilever (ULVR) 3,614.50p -2.81%
Royal Mail (RMG) 335.00p -2.79%
Howden Joinery Group (HWDN) 740.40p -2.76%
Ferguson (FERG) 9,870.00p -2.66%
FTSE 250 - Risers
Auction Technology Group (ATG) 941.00p 7.05%
Energean (ENOG) 1,234.00p 4.22%
Micro Focus International (MCRO) 392.50p 3.37%
Apax Global Alpha Limited (APAX) 193.00p 3.21%
Mitie Group (MTO) 55.80p 2.95%
Darktrace (DARK) 446.30p 2.76%
Marks & Spencer Group (MKS) 141.50p 2.72%
ICG Enterprise Trust (ICGT) 1,144.00p 2.69%
Trustpilot Group (TRST) 107.10p 2.68%
Wood Group (John) (WG.) 228.90p 2.46%
FTSE 250 - Fallers
Tritax Big Box Reit (BBOX) 227.40p -6.73%
JTC (JTC) 736.00p -5.76%
Weir Group (WEIR) 1,488.50p -4.52%
BMO Commercial Property Trust Limited (BCPT) 113.80p -3.72%
LondonMetric Property (LMP) 259.80p -3.64%
Sirius Real Estate Ltd. (SRE) 117.00p -3.62%
Discoverie Group (DSCV) 737.00p -3.53%
Rotork (ROR) 283.60p -3.14%
Impax Environmental Markets (IEM) 429.00p -3.05%
Unite Group (UTG) 1,101.00p -3.00%
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