Shells sets USD4 billion buyback; ECB and BoE ahead

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(Alliance News) – Stocks in London are expected to open higher on Thursday, after the US Federal Reserve, as expected, reversed its pace of increases in interest rates to 25 basis points.

Next is the Bank of England and the European Central Bank. The BoE will reveal its interest rate decision at 1200 GMT on Thursday, followed by the ECB at 1300 GMT, with markets expecting a 50 basis point increase from both.

The Federal Open Market Committee lifted the target range for the federal funds rate to 4.50% to 4.75% from a previous range of 4.25% to 4.50%. The twelve members of the committee voted for the increase.

In a press conference after the decision, Fed President Jerome Powell said that the central bank will need “substantially more evidence” to be confident that inflation is on a sustained downward path in the United States, despite “encouraging” recent developments.

“For all Fed chairman Jay Powell’s insistence that more rate hikes were coming, and that the Fed was not looking at cutting rates this year, his failure to pushing back emphatically on direct questions about market expectations of rate cuts this year, as well as easing financial conditions has created an even greater divergence between market pricing on the rates, and the Fed’s expectations of how the economy is likely to evolve,” commented Michael Hewson, chief market analyst at CMC Markets UK.

He added: “The market thinks inflation’s job is done, even if the Fed has not yet come to that conclusion. Consequently, this goes a long way to explaining why US markets closed much higher and yields and the US dollar fell to a 9-month low, with the euro hitting USD1.1000 for the first time since April last year.”

In UK corporate news on Thursday, FTSE 100 heavyweight Shell announced a multibillion-dollar share buyback as it posted an increase in both revenue and profit in 2022.

Telecoms operator BT has reported a 9-month drop in revenue and profit, following the divestment of BT Sports revenue for a new joint venture.

Here’s what you need to know about the open London market:




FTSE 100: gained 0.4% to 7,795.0


Hang Seng: flat at 22,081.91

Nikkei 225: closed up 0.2% at 27,402.05

S&P/ASX 200: closed up 0.1% at 7,511.60


DJIA: closed up 6.92 points at 34,092.96

S&P 500: closed up 42.61 points, or 1.1%, at 4,119.21

Nasdaq Composite: closed up 231.77 points, or 2.0%, at 11,816.32


EUR: up to USD1.1005 (USD1.0919)

GBP: up to USD1.2383 (USD1.2315)

USD: down to JPY128.69 (JPY129.28)

Gold: up to USD1,951.72 per ounce (USD1,928.82)

(Brent): down to USD83.17 per barrel (USD84.42)

(changes since the previous London equities close)




Thursday’s main economic events are yet to come:

14:15 CET ECB interest rate announcement

08:00 CET Germany foreign trade

12:00 GMT UK interest rate decision

12:00 GMT UK BOE monetary policy report

12:00 GMT UK BOE meeting minutes

08:30 EST US unemployment insurance weekly claims report

16:30 EST US federal discount window loans

16:30 EST US Foreign Central Bank Holdings


Rail passengers have been warned to expect continued disruption to their journeys following Wednesday’s strike action and ahead of Friday’s walkout. Commuters have been warned by operators to expect “significantly reduced train services” throughout the three days and advised to check before taking a journey. Train driver members of Aslef and the Rail, Maritime and Transport union took industrial action on Wednesday and will take to the picket lines again on Friday in a long-running dispute over pay. , jobs and conditions. Network Rail said: “Due to industrial action, there will be significantly reduced train services from Wednesday 1 to Friday 3 February.




Goldman Sachs downgrades Standard Chartered to ‘neutral’ (buy) – price target 885 (845) pence


JPMorgan cuts Vodafone price target to 95 (97) pence – ‘neutral’


Jefferies cuts NCC Group price target to 245 (260) pence – ‘buy’




Oil major Shell announced a share buyback of USD4 billion, as it reported that revenue in the fourth quarter of 2022 rose to USD101.30 billion from USD85.28 billion a year earlier. Pre-tax profit rose to USD16.44 billion in the quarter from USD16.27 billion. Full-year revenue rose to USD386.20 billion, from EUR272.66 billion year-on-year, while pre-tax profit more than doubled to USD64.81 billion from USD29.83 billion. The company declared a dividend of USD0.29 for its fourth quarter, up from USD0.24 a year earlier; this brings the full year dividend to USD1.04 from USD0.89. Shell said the share purchase will be completed by the time of the announcement of the first quarter results.


Telecoms firm BT reported revenue of GBP15.59 billion in the nine months to December 31, down 1% from GBP15.68 billion a year ago. Pre-tax profit fell 15% to GBP1.31 billion from GBP1.54 billion. BT explained that revenue was helped by price increases and improved trading seen in its Openreach and Consumer divisions. However, this was offset by disposals and the removal of BT Sports income due to its new joint venture. Adjusting for this, revenue was up by GBP65 million, he said. Looking ahead, BT confirmed its financial outlook; normalized free cash flow will be heavily weighted for the fourth quarter.




NCC Group said revenue in the six months to November 30 rose to GBP176.6 million from GBP150.1 million a year ago. Pre-tax profit jumped to GBP10.3 million from GBP8.4 million. The cyber security firm declared an interim dividend of 1.50 pence, unchanged year-on-year. However, NCC said that since the beginning of the second half of its financial year it has experienced a lengthening of the sales cycle, which is leading to delays in purchasing decisions, commencement of work and therefore revenue recognition, particularly in North America and the United Kingdom. Based on this, the company now expects only single-digit revenue growth on a constant currency basis for the full financial year 2023.


Budget airline Wizz Air said it carried 4.1 million passengers in January 2023, an increase of 73% year-on-year, with a load factor of 86%. January capacity increased by 60% to 4.8 million seats from GBP3.0 million seats. On a 12-month basis, capacity rose by 76% to 54.5 million seats from GBP31.0 million seats at 31 January 2022. Passengers more than doubled to 47.4 million from 23.5 million.




Ryanair said customer numbers rose 69% to 11.8 million in January from 7.0 million a year earlier, as load factor improved to 91% from 79%.


The land manufacturer James Halstead said that the income in the six months to December 31 is expected to be about 8% to 9% ahead of the comparative period in the previous year. During the six month period, the UK manufactured goods trade was hurt by the unavailability of international shipping to several overseas territories mainly Australia, North America and South, note. However, in December, James Halstead said he saw signs of reduced international freight costs and raw material costs, but energy costs remain at historically high levels. Based on this profit before tax for the first half of the year will be short of the comparative period, but the company said that expectations for the full year will not change.


By Sophie Rose, Alliance News reporter

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