By Steve Goldstein
Well-received third-quarter results from heavyweights HSBC Holdings and BP helped nudge U.K. blue chips higher on Tuesday to outperform European rivals.
HSBC /zigman2/quotes/203901799/delayed UK:HSBA -1.21% /zigman2/quotes/208272822/composite HSBC -1.58% shares rose 7% in late morning trade, as the U.K.-based banking giant reported a smaller decline in third-quarter profit than anticipated, and said it was weighing making a “conservative” dividend payment.
“These are difficult times to be a bank — low interest rates are squeezing incomes on one side and bad loans push up the cost line on the other. However, there are signs conditions are stabilizing and that’s given the HSBC board the confidence to float the idea of a ‘conservative’ dividend at the end of the year,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
BP /zigman2/quotes/202286639/delayed UK:BP -2.20% /zigman2/quotes/207305210/composite BP -4.75% shares added 1% as the oil major, on an adjusted basis, returned to profitability in the third quarter. “All-in there is probably not much new of note in BP 3Q20; hardly surprising given the company deep-dive that we had six weeks ago. A challenging quarter from a macro perspective, but financial damage has really been averted by the second-quarter dividend reset,” said Alastair Syme, an analyst at Citi.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.97% was trading up by 0.2%, as other indexes around Europe traded lower. Insurers and fund managers, including M&G /zigman2/quotes/214468176/delayed UK:MNG -1.55% and Legal & General /zigman2/quotes/201125471/delayed UK:LGEN -2.50% , traded lower following the selloff in global equity markets on Monday.
The mining sector was mostly lower. Liberum Capital downgraded Rio Tinto /zigman2/quotes/208934945/delayed UK:RIO -3.03% /zigman2/quotes/202627887/composite RIO -5.15% to sell from hold, and downgraded Antofagasta /zigman2/quotes/200173667/delayed UK:ANTO -3.66% and KAZ Minerals /zigman2/quotes/208098927/delayed UK:KAZ +0.72% to hold from buy, while the brokerage upgraded Anglo American /zigman2/quotes/201381512/delayed UK:AAL -5.31% to buy from hold. The analysts said while they are more bullish on the short-term outlook due to better-than-expected Chinese credit growth, the market has overstated price support in iron ore and underestimated it in platinum group metals. They also cautioned of reading too much into the recent recovery in diamond prices.