FTSE 100 close: British Gas owner propels to top of London index after record profit
London’s FTSE 100 bumped higher today after a manic morning of company earnings gave a lift to market sentiment.
The capital’s premier index added 0.21 per cent to reach 7,692.77 points, while the domestically-focused mid-cap FTSE 250, which is more aligned with the health of the UK economy, climbed 0.45 per cent to 19,273.37 points.
A number of Britain’s largest companies today reported decent earnings, firming up investors’ risk appetite.
Barclays said profits jumped 24 per cent in the second quarter of this year, in line with analysts’ expectations, partially aided by higher interest rates.
The earnings rise prompted the lender to launch a fresh share buyback programme of £750m. However, the bank warned its retail arm is coming under pressure from a growing threat of consumers defaulting on loans.
Barclays set aside nearly £900m in the previous quarter to deal with an expected jump in loans souring. Customers, particularly those in the UK, are being gripped by rising living costs and tighter credit conditions.
That warning has cast doubt over whether Barclays’s future profits can fulfill its current guidance, pushing its shares down nearly six per cent and to close to the foot of the FTSE 100.
British Gas owner Centrica fired to the top of the premier index, leaping 7.54 per cent after it upped its dividend, justified by profits sky rocketing.
The firm has come under intense pressure from politicians and the public for profiteering at the expense of families, criticism that is likely to renew after today’s bumper results.
Ofgem’s price cap is now back down to around £2,000, although that is much higher than before the Covid-19 crisis.
Mike Ashley’s Frasers Group posted a near doubling in pre-tax profits in an earnings update this morning, lifting its FTSE 100-listed shares a shade under three per cent.
Analysts at Shore Capital said: “Frasers Group’s exceptional success can be attributed to the establishment of stronger relationships with brands, which has driven its overall performance.”
Traders are also digesting the US Federal Reserve’s latest 25 basis point interest rate hike. Last night, Chair Jerome Powell suggested it could be the central bank’s final rate rise.
European Central Bank president Christine Lagarde followed suit, overseeing a 25 basis point rate hike later today, which will send borrowing costs to 3.75 per cent.
“If the Fed is close to the end of its rate hiking cycle which appears to be looking increasingly likely, despite Powell’s determination to keep markets guessing, the pressure on the ECB to be more aggressive in its own battle against inflation, is also looking as if it might recede,” Michael Hewson, chief market analysts at CMC Markets UK, said.
Pound sterling retraced gains against the US dollar, weakening 0.57 per cent.
Oil prices jumped more than one per cent.