By Patrick Munnelly, Market Strategist, Tickmill
The large-cap FTSE 100 index dipped 0.19% by the close on Tuesday. Oil futures fell as investors became cautious ahead of an OPEC+ meeting where further supply cuts could be on the table, This saw a 0.6% loss for heavyweight energy stocks. A strengthening sterling also added pressure to the exporter-heavy benchmark index while data revealing that Britain borrowed less than expected ahead of its crucial budget update may lead to tax cuts being announced by finance minister Jeremy Hunt to boost the UK’s sluggish economy.
Coca Cola HBC share buyback program
Coca-Cola HBC [LON:CCH] has announced a share buyback program that could see up to €400m being returned to shareholders, causing the company to soar to the top of the index. The buyback program is expected to last for approximately two years and the company believes that its current share price does not reflect its future growth opportunities. Zoran Bogdanovic, the chief executive, stated that due to the company’s cash-generative business and strong balance sheet, the current market weakness presents an opportunity to enhance shareholder value through the buyback program. Shareholders cheered the announcement sending the firm to the top of the blue chip index with gains of 4.2% on the day.
Unchanged outlook for International Consolidated Airlines
On the negative side of the ledger, International Consolidated Airlines [LON:IAG], the parent company of British Airways, announced that it expects to achieve an operating margin of 12% to 15% in the medium term. Despite strong financial results in the third quarter and the opening of its capital markets day, the company’s outlook for the 2023 financial year remains unchanged, disappointing shareholders, with the business sitting at the foot of the FTSE 100 leaderboard, shedding 5% on the session.
While European airlines have reported solid earnings in the third quarter due to high summer demand, factors such as rising jet fuel prices and political instability have impacted their outlooks and share prices. IAG predicts a return on invested capital of 13% to 16% in the medium term.