By Barbara Kollmeyer
After lagging its rivals over the last several months, Barclays shares were flying higher on Wednesday, with investors applauded its results and shareholder payout promises.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -2.86% rose 0.4% to 7,531, slightly underperforming the European benchmark Stoxx 600 index /zigman2/quotes/210599654/delayed XX:SXXP -2.11% , but still up 0.9% for the week so far, versus a 2.2% drop for the Stoxx.
Investors were viewing the Russia-Ukraine with slightly less panic, on the view global leaders had still not hit Moscow as hard as expected with sanctions . Crude prices /zigman2/quotes/209723049/delayed CL00 -8.30% slipped in response, which sent shares of heavyweights BP /zigman2/quotes/202286639/delayed UK:BP -7.01% /zigman2/quotes/207305210/composite BP -4.92% and Shell /zigman2/quotes/201538663/delayed NL:SHELL -8.64% /zigman2/quotes/206428183/delayed UK:SHEL -8.49% around 0.8% lower each.
Earnings were a dominant theme in London, with Barclays /zigman2/quotes/206581728/composite BCS -4.87% /zigman2/quotes/208409333/delayed UK:BARC -5.17% reported a forecast-beating rise in fourth-quarter profit , and said it intends to launch a share buyback program of up to 1 billion pounds ($1.36 billion).
One of the day’s biggest gainers, shares rose more than 4%, taking the heavily weighted banking sector along for the ride. Barclays has lagged behind rivals NatWest /zigman2/quotes/203233010/composite NWG -3.49% /zigman2/quotes/209265718/delayed UK:NWG -4.10% and HSBC /zigman2/quotes/208272822/composite HSBC -3.99% , both of which have recently reported, over the past six months, up 9% against gains of 13% and 39%, respectively.
“Unlike NatWest and HSBC where news of upgrades and share buybacks were canceled out by other negative factors, Barclays seems to have won the market over with its better-than-expected performance and promised shareholder returns, which were larger than the market anticipated,” said AJ Bell investment director Russ Mould, in a note to clients.
“There may also be an element of catch up at play given Barclays has been lapped like a 10,000-metre runner who’s run out of puff in recent months by its peers,” said Mould.
While Barclays “meaningful” investment banking operations — a big contributor to 2021 gains — set it apart from those rivals, he cautioned that recent market volatility could stall some of that momentum.
Elsewhere, Rio Tinto /zigman2/quotes/208934945/delayed UK:RIO -4.01% /zigman2/quotes/202627887/composite RIO -4.61% also reported on Wednesday, but shares were down 1.3%. The mining giant reported record 2021 adjusted earnings of $37.7 billion, meeting consensus forecasts and driven by higher commodity prices. Rivals Glencore /zigman2/quotes/201400686/delayed UK:GLEN -7.99% and BHP /zigman2/quotes/208108397/composite BHP -2.72% /zigman2/quotes/206213719/delayed UK:BHP -3.12% have also reported record earnings in recent results.
Rio Tinto also said it would nearly double its payout to investors, but analysts focused on its expectations for higher iron ore and copper costs.
“The guidance for 2022 reflects cost inflation seen throughout the industry, but the 9% increase in critical iron ore division is arguably at the higher end of market expectations,” said a team of Cciti analysts led by Ephrem Ravi.