FTSE 100 boosted by Powell’s comments on US economy

The FTSE 100 was up 23.22 points at 7,371.45 while the broader FTSE 250 rose 136.56 points to 19,782.72

FTSE 100 kicked off Thursday in positive fashion boosted by reassuring comments by the Federal Reserve Chairman, Jerome Powell, about the state of the US economy, and as investors digested a hefty batch of results.

At 8.30am the FTSE 100 was up 23.22 points at 7,371.45 while the broader FTSE 250 rose 136.56 points to 19,782.72.

Powell said: He did not believe the US is in a recession, noting that ‘there are too many areas of the economy that are performing too well.’

He also indicated rate rises might slow in the coming months.

Barclays PLC slipped after warning that full year operating costs would be much higher than expected after taking a £1.9bln pound hit in the first half, including a £1.3bln cost related to what the bank calls the ‘over-issuance of securities’ in the US.

The news marred the figures and sent the shares 1.83% lower to 154.78p.

On the upside the banking giant reiterated its guidance that full year return on tangible equity would be above 10% better than the market consensus of 8.3%.

Shore Capital analyst Gary Greenwood said this leaves scope to increase his full year EPS forecast closer to 30p from his current 27p.

BT shares fell back sharply as a trading update for the three months to June disappointed.

The telecoms and media group held full year guidance with no changes to the outlook for the full year.

Revenue of £5.1bn was up 1% due to improved pricing and trading in Consumer and Openreach, while profit before tax was down 10% to £482m.

The group said market conditions remain challenging in the Enterprise division.

Shares fell 3.72% on the news to 169.55p.

Oil heavyweight, Shell PLC, rose in early trading after reporting quarter two income of $18,040mln, up from $7,116mln in quarter one boosted by a tripling of refining profits and strong gas trading.

The company also announced a share buyback programme of $6bln billion for the current quarter, but did not raise its dividend of 25c. It said shareholder returns would remain ‘in excess of 30% of cash flow from operating activities’.

Michael Hewson, Chief Market Analyst at CMC Markets, commented: Today’s Q2 numbers have gone one better, posting another record quarter, even though the bar had been raised earlier this month when Shell announced it was revising up the value of its oil and gas assets on the back of higher refining margins, as it generated higher returns from higher prices.

Shares advanced 0.5% on the news to 2,127.00p.

The market warmed to full year results from Diageo after upbeat comments going forward.

Shares in the beverage company rose 1% to 3,802.50p as Chief Executive Ivan Menezes said he remained confident that the business was ‘well-positioned to deliver our medium-term guidance for fiscal 23 to fiscal 25 of organic net sales growth consistently in the range of 5% to 7% and organic operating profit growth sustainably in the range of 6% to 9%.’