UK stocks returned to negative territory on Tuesday as the earnings season continues to unfold, with a major bank unveiling a fresh multibillion-dollar share buyback. The FTSE 100 index declined by 0.79% at closing. HSBC Holdings (HSBA) experienced a rise of 3.12% after announcing its plan to repurchase up to $3 billion of shares, following an increase in its attributable profit and revenue for the third quarter of 2024.
This buyback announcement closely follows the British lender's declaration of a broad restructuring that will transition into four divisions at the start of 2025. "Following strong performance in 2023, we think the bank's earnings momentum has come to an end," RBC Capital Markets stated. "HSBC's net interest income is negatively geared to falling rates, which are expected across HSBC's core geographies over 2024 and 2025.
This headwind will be partially offset by hedging and balance sheet growth, but this growth is unlikely to be remarkable." Conversely, BP (BP) reported a significant slump in its third-quarter profit and revenue, resulting in a 5.02% decline in its shares at closing. Despite this downturn and weaker oil prices, the British energy giant is moving forward with a $1.75 billion share buyback for the third quarter and plans to maintain the same amount for the subsequent three months. "The company has also noted that it intends to review elements of its guidance at the February 2025 CMD, which includes expectations for 2025 share buybacks," RBC commented.
"Given the weaker macroeconomic conditions, we anticipate a cut into next year; however, we expect BP to revise its 'surplus payout ratio' guidance, aligning more closely with sector standards on a Cash Flow From Operations (CFFO) payout, thereby allowing more room for de-leveraging." In economic developments, net borrowing of mortgage debt by individuals in the UK saw a decrease of 300 million pounds sterling, bringing it down to 2.5 billion pounds in September.
Meanwhile, net mortgage approvals increased to 65,600. Additionally, net consumer credit borrowing by individuals also fell to 1.2 billion pounds from the previous 1.4 billion pounds. Britain's M4 money supply experienced a 0.6% month-over-month increase in September, reversing the 0.1% decline observed in August..