Home > UK share prices watch: Shell’s results disappoint

UK share prices watch: Shell’s results disappoint

August 1, 2019 By Tsveta Zikolova

Royal Dutch Shell (LON:RDSA) has been one of today’s UK share prices to watch as its quarterly results disappointed investors this Thursday. Blue-chip financials meanwhile are rallying with Standard Chartered (LON:STAN), Barclays (LON:BARC) and London Stock Exchange (LON:LSE) all in demand on the back of their respective updates.

Shell falls in earnings-heavy Thursday

Anglo-Dutch energy major Shell has taken a hit today as it reported that its second-quarter profit had fallen amid lower oil, gas and LNG prices, as well as weaker margins in its chemicals and refining businesses. The company also suffered from a negative impact of $63 million related to the implementation of the IFRS 16 accounting standard.

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“Factors such as lower oil, gas and LNG [liquefied natural gas] prices and lower margins in chemicals meant Q2 [second quarter] earnings were just under US$3bn for the second quarter, roughly half of what they earned in the first quarter of this year and the comparable quarter last year and materially below expectations,” reported Helal Miah, an investment research analyst at The Share Centre, as quoted by Proactive Investors.

The BBC meanwhile quoted Morgan Stanley analyst Martijn Rats as commenting that the Anglo-Dutch group’s “set of earnings is weaker than most were looking for and were below expectations in all the main divisions”. The results come after FTSE 100 peer BP (LON:BP) surprised the market positively with forecast-beating earnings earlier in the week. Shell’s share price has given up about 4.7 percent in early afternoon trade, pressuring the benchmark FTSE 100 index which stands about 0.02 percent higher.

Packaging company Mondi (LON:MNDI) has joined Shell in the doldrums as it pointed to “increasingly challenging trading conditions” in the first half of the year. Mondi’s shares are changing hands about 4.8 percent lower this Thursday.

On a more upbeat note, London Stock Exchange is rallying after announcing today that it had inked the deal to acquire Refinitiv, which provides data, analytics and financial markets solutions. The company further updated investors on its half-year performance, posting a rise in revenue and adjusted operating profit. LSE’s share price is up by about seven percent.

Barclays has also been expectedly among this Thursday’s UK share prices to watch as it posted its interims. While the company reported a fall in profit, it cheered investors with stronger Common equity tier 1 (CET1) ratio, and a rise in its payout to shareholders. Sky News quoted Nicholas Hyett, equity analyst at Hargreaves Lansdown, as calling the results “a really mixed, and pretty messy set of numbers”.

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“The lack of PPI [payment protection insurance] compensation and US mortgage fines mean that on the face of it this half has been a big step forward on last year, however, the underlying numbers are less rosy,” the analyst elaborated, adding, however, that if there was “one thing these numbers do drive home it’s the advantage Barclays enjoys from a relatively diversified business model”. Barclays’ shares are up by more than two percent.

Over at FTSE 100 peer StanChart, investors are focusing on the group’s forecast-beating profit, as well as on comments by chair José Viñals who said that the Asia-focused lender stood  “to benefit over time as China continues to open and places more emphasis on trade corridors radiating through Asia and connecting it with our markets in Africa and the Middle East”.

Bloomberg News quoted analysts at JPMorgan Cazenove as commenting that the FTSE 100 group’s results had showed growth momentum and positive operating leverage. StanChart’s shares are up by about three percent.

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UK share prices to watch tomorrow

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Tomorrow’s earnings excitement is set to continue with part government-owned lender Royal Bank of Scotland Group (LON:RBS), whose results will come as the company continues its search for a new chief executive.

Former telecoms monopoly BT Group (LON:BT.A) will also be among tomorrow’s UK share prices to watch, with its Q1 update due out in the morning. Aaran Fronda at IG reckons that investors will be “eager to see if the company announces a reduction in the dividend” especially as the business embarks “on an ambitious turnaround plan to stop its share price sliding further”.

And last but not least, International Consolidated Airlines Group (LON:IAG) will unveil an interim update after receiving a notification last month that the Information Commissioner’s Office is planning to issue its British Airways unit with a hefty fine over the theft of customer data from British the British flag carrier’s website last year.

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