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Market report: Oil giants hold blue-chip index steady

Louis Ashworth
Shell - Patrick T. Fallon/Bloomberg
Shell - Patrick T. Fallon/Bloomberg

The FTSE 100 found itself in a tug-of-war as share price shifts for some of London’s biggest companies left the blue-chip bourse in a state of equilibrium.

Upward moves for heavyweight oil giants BP and Shell provided some thrust to the index, but a drag from Diageo and AstraZeneca kept gains in check on a busy day for corporate reporting.

BP jumped 18.2p to 299.3p after beating analysts’ expectations with its first-half results – despite slashing its dividend and slipping to a £21.6bn loss. Its rise reflected well on major peer Shell, which rose 40.6p to £11.41.

At the opposite end of the scale, spirits maker Diageo dropped 160p to £27.21 after the pandemic cut its profits in half, dragging it to its worst annual performance since 2009.

Covid-19 presented “significant challenges” for the FTSE 100 group, with UK sales knocked by the cancellation of events during the spring and early summer.

Pharma group AstraZeneca – currently the FTSE 100’s second-largest constituent after Unilever – also slipped, dropping 217p to £85.50 after pricing a three-tranche bond offering worth $3bn (£2.3bn). Engineer Melrose was the biggest mover on the FTSE 100, jumping 8.3p to 96.5p after securing a deal with lenders over a debt waiver.

Hot on its heels was BT, which jumped 8.1p to 106.1p after Berenberg raised its outlook for the group’s shares.

In a note to clients, analyst Carl Murdock-Smith wrote that sentiment about the telecoms group was “on its knees”, but added “its significant under-performance and scope for improved sentiment over the next year” made it a “buy”.

The FTSE 250 outperformed its blue-chip peers, led by airline easyJet – which rose 44.4p to 551.6p after outlining plans to increase its flight schedule in response to high levels of demand.

Royal Mail also jumped, up 12.7p to 181.1p, as the “Czech Sphinx”, billionaire Daniel Kretinsky, further raised his stake in the group.

The investor’s position in the postal service, which now stands at 13.1pc, has raised speculation that he may turn activist. Schroders is Royal Mail’s only larger shareholder, with a 13.9pc stake.

Insurer Direct Line climbed 16.4p to 324p after bumping its dividend slightly higher despite a fall in profits during the first half of the year.

The FTSE 250 group will pay 7.4p per share to investors, versus last year’s 7.2p.

Babcock was the biggest mid-cap faller, dropping 27.2p to 261.8p. The defence engineer scrapped its final dividend after profits sank due to Covid-19. Ruth Cairnie, the company’s chairman, said it “will resume dividend payments at the earliest opportunity”.