LONDON MARKET PRE-OPEN: NatWest, Barclays and StanChart plan returns

(Alliance News) - Stock prices in London are seen opening higher on Friday on speculation that the Federal Reserve will slow its pace of interest rate hikes after the US economy contracted for two straight quarters.

In early company news, state-backed lender NatWest Group declared a special dividend, while peers Barclays and Standard Chartered set out plans for further share buybacks. Anglo-Swedish drugmaker AstraZeneca named a new chair alongside its half-year results.

IG futures indicate the FTSE 100 index is to open 26.25 points higher at 7,371.50. The index ended down just 2.98 points at 7,345.25 on Thursday.

On Thursday, official data showed the US economy shrank 0.9% in the second quarter following a 1.6% contraction in the first quarter as it was buffeted by the four-decade spike in inflation and rising borrowing costs. Two consecutive quarters of economic decline is considered a technical recession, though the US jobs market remains robust.

NatWest said it delivered a strong performance in the first half of 2022 against a beneficial backdrop of rising UK interest rates.

For the six months to June 30, total income was GBP6.22 billion, up from GBP5.14 billion last year. Operating pretax profit was GBP2.62 billion, up from GBP2.32 billion.

Turning to returns, NatWest proposed an interim dividend of 3.5 pence per share, up 17% from last year and a special dividend with share consolidation of GBP1.75 billion, or 16.8 pence per share. Taken together these will deliver 20.3p of dividends per share, it said. It also noted it has completed the GBP750 million share buyback programme launched in February.

Standard Chartered said it delivered a strong set of results for the first half of the year, as the emerging markets focused lender launched a substantial share buyback.

For the six months to June 30, operating income rose 8% to USD8.22 billion from USD7.63 billion last year, and pretax profit was USD2.77 billion, up 8% from USD2.56 billion.

Turning to returns, StanChart proposed an interim dividend of USD119 million, equivalent to 4.0 US cents per share

StanChart also announced a USD500 million share buyback to start "imminently" and plans to return more than USD5 billion to shareholders over the next three years. During the recent half, it completed a USD750 million buyback.

Chief Executive Officer Bill Winters said: "China is deploying strong policy stimulus that should help kick-start the economy so boosting domestic and regional activity. We are well equipped to navigate this complex macroeconomic picture with the solid risk-management foundations that the Group has built over time and the resilience of our diversified business model.

"Against this backdrop, we remain confident in the delivery of the financial and strategic targets laid out back in February, to deliver at least a 10% RoTE by 2024, if not earlier."

Barclays provided further details on the GBP500 million share buyback that it announced with its interim results on Thursday. It said the new programme will begin either when the GBP1.00 billion buyback started in May completes, or on October 3, whichever is earlier, and complete it by January 28 next year. Barclays has appointed Citigroup to run the new buyback.

AstraZeneca said it delivered a strong first-half boosted by demand for its cancer treatments.

For the six months to June 30, revenue jumped to USD22.16 billion from USD15.54 billion last year with growth coming from all disease areas, including Covid-19 medicines, and from the addition of Alexion Pharmaceuticals.

AstraZeneca declared a USD0.93 interim dividend, which it said reflects its intent to increase its payout to USD2.90 for 2022.

Looking ahead, the Cambridge-based firm raised its full-year revenue guidance, saying it expects it to rise by a percentage in the low twenties rather than the high teens forecast previously.

Separately, the drugmaker appointed Michel Demare as chair-designate replacing current Chair Leif Johansson who will be retiring at the conclusion of the annual general meeting in April 2023.

"AstraZeneca had a strong financial first half of 2022, and great pipeline delivery. We announced practice-changing data for several medicines including Enhertu in breast cancer, Farxiga in heart failure and Ultomiris in neuromyelitis optica spectrum disorder," said Chief Executive Officer Pascal Soriot.

"Given the ongoing performance of our underlying business and the contribution of our COVID-19 medicines, we are updating our revenue guidance for 2022. This has enabled us to increase our R&D investment in the exciting number of pipeline opportunities that can benefit patients and drive long term sustainable growth for our company. We look forward to announcing the results of several important late-stage trials this year and next," Soriot said.

New York ended higher on Thursday, with the Dow Jones Industrial Average up 1.0%, S&P 500 up 1.2% and Nasdaq Composite up 1.1%.

Apple after the US market close said it successfully navigated a "challenging operating environment" during its third-quarter, posting record revenue on bumper iPhone sales.

The stock rose 3.0% in after-hours trade.

Amazon.com also after the close reported consensus-topping second-quarter revenue growth, though the e-commerce company swung to a loss and forecast its third-quarter bottom line figure to weaken year-on-year.

Amazon said net sales in the second quarter of 2022 climbed 7.2% to USD121.23 billion from USD113.08 billion a year earlier, beat CNN cited consensus of USD119.0 billion.

However, it swung to a pretax loss of USD2.65 billion from a USD8.63 billion profit a year earlier.

Amazon shares surged 14% in after-hours trade.

"Markets have started to price out the prospect of more aggressive action by central banks when it comes to raising rates, pushing yields lower and giving a boost to equity markets. In that context we can expect to see a higher European open. Well received numbers from Amazon and Apple after the bell last night have also helped boost sentiment," explained CMC Markets analyst Michael Hewson.

The prospect of US rates not rising as fast as previously expected hit the dollar, which has soared in recent months against most rivals.

The pound was quoted at USD1.2233 early Friday, up from USD1.2129 at the London equities close Thursday.

The euro was priced at USD1.0248, up from USD1.0133. Against the yen, the dollar was trading at JPY132.05 in London, down from JPY134.45.

Brent oil was quoted at USD107.00 a barrel Friday morning, down from USD107.47 late Thursday. Gold stood at USD1,765.32 an ounce, higher against USD1,755.39.

In Asia on Friday, the Nikkei 225 index in Tokyo closed down 0.1%. In China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was down 2.3%. The S&P/ASX 200 ended up 0.8%.

Friday's economic calendar has EU GDP and CPI data at 1000 BST.

Friday's US corporate calendar has second-quarter results from oil majors Chevron and Exxon and annual figures from Procter & Gamble.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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