FTSE 100 Index Climbs with Commodity Stocks Leading the Way

The FTSE 100, an index that tracks the performance of 100 major companies listed on the London Stock Exchange, saw a notable increase on August 27. The index climbed by 52.73 points, reaching a value of 8380.51. This 0.6% rise was largely driven by stronger performances in commodity stocks.

Oil Giants BP and Shell See Gains

One of the main contributors to the FTSE 100’s surge was the rise in oil prices. Over the weekend, events in the Middle East caused the price of Brent Crude oil to increase to $81.49 per barrel. This rise positively impacted oil companies BP and Shell. BP’s shares went up by 5.65p, reaching 434.95p, while Shell saw an increase of 28.3p, bringing their share price to 2748.3p. These gains reflect the market’s reaction to the higher oil prices, which often benefit oil producers and related industries.

Mining Companies Also on the Rise

The mining sector was another bright spot in the FTSE 100. Anglo American, a major global mining company, saw its shares rise by 2%, or 47.7p, to 2297.7p. Rio Tinto, another leading mining firm, experienced an 87p increase, bringing its shares to 4848.5p. These gains were driven by better-than-expected results from BHP, one of the world’s largest mining companies. BHP’s annual underlying profit reached $13.7 billion (£10.4 billion), a 2% rise compared to the previous year. The company also reported a 3% increase in revenue, driven by higher sales volumes in iron ore and copper.

Bunzl’s Big Move: Share Buyback and Profit Guidance

Bunzl, a company that supplies essential goods and services to businesses, made headlines with a significant announcement. The company revealed that it would launch a £250 million share buyback, a move that typically signals confidence in the company’s financial health. Alongside this, Bunzl also raised its profit guidance, expecting a strong increase in full-year adjusted operating profit. The company’s shares jumped by 12%, rising 362p to a record high of 3576p.

In addition to the share buyback, Bunzl reported a 3.3% increase in half-year adjusted profits, which reached £408.7 million. The company also announced an interim dividend increase of 10.4p to 20.1p per share, marking 31 consecutive years of annual dividend growth. A strong balance sheet, bolstered by £2.9 billion of free cash flow since 2019, supports these positive developments.

Mixed Results for BHP

While BHP posted a bigger-than-expected profit, not all the news was positive for the mining giant. The company’s attributable profit fell by 39% to $7.9 billion (£6 billion), partly due to a significant charge related to the Samarco dam failure in Brazil. Despite this, BHP announced a final dividend of 74 US cents per share, which brings the total dividends for the year to 146 US cents per share. This is the fourth-largest dividend in the company’s history and means that BHP will have returned over $42 billion (£31.8 billion) to shareholders since July 2021.

BHP’s Chief Executive, Mike Henry, commented on the results, stating that while the long-term fundamentals for the company remain strong, they expect some volatility in global commodity markets in the near term, particularly with China’s uneven recovery.

Harbour Energy and the FTSE 250

Moving away from the FTSE 100, the FTSE 250 index also saw gains, rising by 16.46 points to 21,205.94. One of the standout performers in this index was Harbour Energy, whose shares increased by 5%, or 14.1p, to 295p. The boost came after Harbour Energy announced that its acquisition of the Wintershall Dea asset portfolio would be completed in September, rather than early in the fourth quarter as initially expected.

Challenges for Associated British Foods

Not all companies had a positive day, however. Associated British Foods, the parent company of Primark, saw its shares fall by 3%, or 74p, to 2440p. The drop followed a Sell rating issued by Deutsche Bank, which expressed concerns that the margin recovery phase at Primark had run its course.

Conclusion: A Strong Day for FTSE 100

Overall, it was a positive day for the FTSE 100, with gains driven by strong performances in the oil and mining sectors. Bunzl’s announcement of a share buyback and increased profit guidance added to the positive sentiment. Despite some challenges, particularly for Associated British Foods and BHP, the overall market outlook remains strong, buoyed by higher commodity prices and strategic moves by major companies.