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Oil majors drag down FTSE 100 after Shell misses earnings

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By Reuters
Shell earnings hit FTSE 100; Lloyds, WPP shine
Shell earnings hit FTSE 100; Lloyds, WPP shine   -   Copyright  Thomson Reuters 2021

By Bansari Mayur Kamdar and Amal S

-London’s FTSE 100 fell on Thursday, led by oil major Royal Dutch Shell after it missed quarterly profit estimates, although forecast-beating earnings from Lloyds Banking Group and ad firm WPP checked overall declines.

The commodity-heavy FTSE 100 ended 0.1% lower, with Shell down 3.0% after its third-quarter adjusted earnings came in below analysts’ forecast, while rival BP dropped 1.6%.

The decline in Shell’s profit came as hedge fund Third Point built a large stake and called on the oil major to split into multiple companies to increase its performance and market value.

“In this modern age, investors either want to wear an ESG hat, knowing that their investments are doing the right thing when it comes to environmental, social and governance matters, or they don’t care what the company does so long as it makes money,” said Russ Mould, investment director at AJ Bell.

The energy sub-index has declined 1.7% so far this week, lagging the benchmark FTSE 100 as oil prices fell to a two-week low after official figures showed an unexpected jump in U.S. inventories of crude. [O/R]

High street lender Lloyds gained 1.3% after beating analyst estimates for third-quarter results as Britain’s economy rebounded from pandemic lockdowns.

WPP jumped 8.1% as the world’s biggest advertising company lifted its full-year underlying net sales guidance again.

The domestically focussed mid-cap index fell 0.1%.

There was an air of caution in broader European markets ahead of a European Central Bank policy decision, while many heavyweight companies including Volkswagen flagged a hit to earnings from supply-chain disruptions. [.EU]

British aerospace engineer and takeover target Meggitt Plc was flat after it warned of lower annual revenue and profit as it struggles with supply-chain problems and weak defence markets.