FTSE 100 Live: Shell and Centrica profits surge, US rates rise

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hell and British Gas owner Centrica today reported substantial profit increases after benefiting from the surge in commodity prices.

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Second quarter earnings at Shell hit a record $11.47 billion (£9.4 billion), double last year’s level and prompting the oil giant to buy back another $6 billion ($4.9 billion) of shares in addition to the $8.5 billion completed in the first half.

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Adjusted operating profits at Centrica jumped to £857 million due to its production and nuclear generation activities, offset by weaker trading in its British Gas residential arm.

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Path for rate rises boosts markets

Wall Street shares surged and the US dollar weakened after Federal Reserve chairman Jerome Powell last night boosted hopes of a slowdown in the pace of interest rate rises.

His comments came after policymakers increased the target range for the Fed Funds rate by the expected 75 basis points, a move taking US borrowing costs to their highest level since 2019 at between 2.25% and 2.5%.

Another big increase is expected at the September meeting, but Powell signaled it may soon be appropriate to slow the pace of rate rises after spending and production in the economy softened in recent weeks.

Michael Hewson, chief market analyst at CMC Markets, said: “Powell went on to acknowledge that the Fed still sees inflation as way too high, and that the committee was highly attentive to inflation risks, but by saying that at current levels the Fed Funds rate is in the range of what they think is neutral, he appeared to catch the markets off guard.”

US stock markets, which were already higher prior to the meeting, rallied sharply to leave the S&P 500 2.6% higher by the close and the Dow Jones Industrial Average up by 1.4%.

Technology stocks were the biggest beneficiaries as the prospect of a shallower policy path weakened bond yields and helped the Nasdaq to jump 4% in its best performance since April 2020.

Disappointing results from Facebook owner Meta Platforms after the closing bell means the momentum is likely to fade in trading today, with US futures pointing to a flat start.

On a busy day for corporate results, CMC is calling the FTSE 100 index to open 20 points higher at 7,368. The pound, meanwhile, has strengthened to $1.218 following the dovish signals on US monetary policy.

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Credit: www.standard.co.uk /

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