Barclays (BARC) led the FTSE 100 risers, jumping 4.7% to 229.4p after results for the second quarter proved less bad than investors had feared.
Barclays reported an 8% drop in profits in the second quarter as the bank’s attempts to clamp down on high-risk trading impacted on its investment banking division.
Investment revenues fell 18% to £4.2 billion over the first half of the year, not as big a drop as some analysts had forecast. It set aside a further £900 million to compensate customers mis-sold payment protection insurance.
‘The “beat” was at various levels with better-than-expected performance on revenue, costs and impairments,’ said Gary Greenwood, analyst at Shore Capital.
‘The shares have been terrible performers of late so the profit beat and good progress on capital should come as a welcome relief to the market.’
Barclays’ good performance in the morning’s trading follows the sharp jump in Royal Bank of Scotland (RBS) shares at the end of last week as the bank reported surprise profits.
The strong showing of Barclays has also helped to lift stocks across the financials sector, which is up 0.5%. RBS jumped 2% to 361.2p while Lloyds Banking Group (LLOY) rose 0.7% to 76.1p.
Financial stocks helped to support the FTSE 100, which traded eight points, or 0.1% lower, at 6,799 points. Stricter European Union and US sanctions against Russia have had only a limited impact on the index as they were largely priced in. The measures, announced yesterday, target state-owned banks, impose an arms embargo and restrict sales of sensitive technology and the export of equipment for the country’s oil industry. Russia’s Micex 10 index has rallied following the announcement, rising 2%.
ITV (ITV) meanwhile gained some ground after the broadcaster posted an 11% rise in first-half earnings, helped by the impact of the football World Cup. Shares edged 0.3% higher to 205.5p on the news.
Shares in the broadcaster received a boost earlier in the month when Virgin Media owner Liberty snapped up a 6.4% stake, prompting speculation a takeover bid could be launched.
Antofagasta (ANTO) was the biggest faller on the FTSE 100, despite the miner reporting a 5% rise in its copper output in the second quarter. The share falls follow a pattern throughout the year of underperformance versus the sector. Analysts at Jefferies, who rate the stock a ‘buy’ said the morning’s falls were a further prompt to invest.
‘Our analysis indicates that Anto shares offer investors an attractive trade-off between risk and reward and we recommend that investors buy Antofagasta, especially on today’s weakness.’
British American Tobacco (BATS) was another faller, shedding 30.5p, or 0.9%, to £35.36 as it reported lower revenues and profits for the first half of the year, hurt by the strong pound.
‘Small cap’ stock 4imprint (FOUR) was a big riser, after the promotional gifts group announced ‘stunning’ first half results, prompting a 8.7% jump in the share price to 700.5p. ‘4imprint’s first half 2014 results were considerably stronger than we expected, despite US dollar currency weakness,’ said analysts at Espirito Santo. A 4.1% rise in sales at pet shop group Pets At Home (PETSP) meanwhile sent its shares 6.8% higher at 181.6p, making it the biggest riser on the FTSE 350.
Fellow ‘mid cap’ stock Jupiter Fund Management (JUP) fell 3.8% to 399.4p as its results for the first half of the year disappointed investors. Profits before tax were £75.1 million over the period, below the £80.7 million analysts at Barclays had been projecting. ‘The cause of this miss appears to be weaker than expected net revenues with management fee margins declining to 0.87%,’ they said.