Early Morning Call: FTSE 100 earnings reports see Rolls-Royce and BAE Systems post upbeat results
Rolls-Royce's full-year underlying operating profit rose 57% to £652 million, while BAE Systems posted underlying earnings up 9.5%, and lifted its annual dividend by 7.6%, citing confidence in long-term growth.
Equity market overview
US equity markets ended the session little changed after the release of the Federal Reserve (Fed) minutes. They confirmed that a solid majority of Fed officials agreed to slow the pace of increases in the Federal funds rate to a quarter point.
They also acknowledged the risks of high inflation remained a "key factor" shaping monetary policy and warranted continued hikes in borrowing costs until it was under control.
Last week two influential non-voting members, James Bullard and Loretta Mester, both confirmed that they would have liked to have seen another 50-basis point (bp) move, Bullard telling the markets that he still believes the Fed should go another half point at its next meeting.
The dollar extended its gains after the Fed minutes. Today, currency traders await the second GDP estimate for the fourth quarter (Q4). Economists anticipate a 2.9% rise quarter-on-quarter (QoQ).
Earnings
Rolls-Royce's full-year (FY) underlying operating profit rose 57% to £652 million, helped by a better performance in Civil Aerospace and Power Systems.
Anglo American posted an adjusted EBITDA of $14.5 billion, and its adjusted earnings per share (EPS) was $4.97, better than the $4.85 expected by the market.
BAE Systems posted underlying earnings up 9.5%, and lifted its annual dividend by 7.6%, citing confidence in long-term growth.
French insurer AXA posted a lower-than-expected full-year earnings. Net income fell by 8% year-on-year (YoY) to €6.7bn in 2022. This missed the €7.22bn consensus of 15 analyst estimates compiled by Refinitiv. Gross revenues over the year were up 2% to €102.3 billion.
AXA raised its 2023 guidance, announced a share buy-back programme of up to €1.1bn this year and a dividend of 1.70 per share.
German reinsurer Munich Re posted a 74% rise in net profit in the fourth quarter, to €1.52bn. Profits for 2022 rose to €3.42bn, higher than the €3.29bn analysts had expected.
On Wednesday, Munich announced it would raise its dividend and buy back up to €1bn worth of shares.
NVIDIA shares jumped in extended trading, as the chip maker reported better-than-expected earnings and guidance. The group posted an adjusted profit of 88 cents per share for its fourth quarter, beating analyst estimates of 81 cents. Revenue reached $6.05 billion, compared with analysts' estimate of $6.01 billion.
NVIDIA forecast first quarter revenue of $6.50bn, plus or minus 2%, higher than the $6.33bn anticipated by analysts.
Artificial Intelligence has been the catalyst of this set of earnings. NVIDIA's CEO said the use of its chips to power AI services like chatbots had "gone through the roof in the last 60 days."
Like other Covid vaccine makers, Moderna's sales are likely to have been much lower than a year ago, with the impact of the pandemic receding. Today, Moderna is expected to report earnings of $4.70 per share on revenue of just over $5.05bn.
In the same quarter a year ago, Moderna posted EPS of $11.29, and revenue reached $7.21bn.
Commodities
US crude oil inventories increased substantially last week, according to the API. Crude oil stocks rose by nearly 10 million barrels last week.
Gasoline stockpiles rose by 900,000 barrels and distillate stocks rose 1.4 million barrels.
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