FTSE 100 shares round-up: L&G, Rolls-Royce, BP, Relx

A librarian using Elsevier’s ScienceDirect platform at the University of Leeds. Source: Relx.

A standstill in Middle East peace talks today fuelled inflation worries as the FTSE 100 index geared up for next week’s heavyweight earnings season by falling to a two-week low.

The decline of 76.80 points to 10,399.66 came as Brent crude topped $102 a barrel and April’s snapshot of private sector business activity showed cost pressures building across Europe.

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The headline S&P Global Flash PMI reading for the UK improved to 52, but this was offset by an acceleration of cost inflation to the highest level since November 2022.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the improved rate of expansion partly reflected a rush to secure purchases ahead of feared price rises and supply shortages linked to the war.

He added: “Prices have spiked higher at a rate not previously seen by the survey outside of the pandemic, suggesting inflation could rise more than many forecasters have been anticipating.”

The gloomy figures set the tone for the selling of Barclays (LSE:BARC), BP (LSE:BP.) and AstraZeneca (LSE:AZN) ahead of updates next week, while reassuring figures by RELX (LSE:REL) failed to help shares build on their recent recovery.

Ex-dividend stocks also weighed on the performance of the FTSE 100 index as Legal & General Group (LSE:LGEN) slumped 16.45p to 252.15p after its shares began trading without the right to its next distribution of 15.67p a share, which is due for payment on 4 June.

Other ex-dividend stocks included silver miner Fresnillo (LSE:FRES), BAE Systems (LSE:BA.) and Rolls-Royce Holdings (LSE:RR.), which is scheduled to pay 5p a share on 3 June subject to AGM approval on 30 April.

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The engine giant’s shares are back where they were at the end of March, having slid from last week’s 1,312p to 1,123p this afternoon.

Today’s weakness came despite unchanged guidance by sector peer Safran SA (EURONEXT:SAF), which delivered a first-quarter sales beat amid strength across manufacturing and aftermarket operations.

BP shares have risen by a fifth since the start of the war, boosted by the impact of the higher oil prices on its balance sheet deleveraging. However, the focus of shareholders was elsewhere today as the group held its annual general meeting in Sunbury-on-Thames.

Chair Albert Manifold began the meeting by announcing that votes on two special resolutions had failed to reach a simple majority. He did not specify which ones.

BP had sought to make changes to its Articles of Association for the first time since 2018. This would have given the board flexibility to hold fully electronic general meetings in addition to physical or hybrid meetings.

It also sought to retire two resolutions passed a number of years ago that required certain additional climate-related disclosures. AGM voting results are due for release later today.

Other risers in the FTSE 100 index included Reckitt Benckiser Group (LSE:RKT), which rallied 66p to 4,758p after UBS reiterated its price target of 7,400p and said the consumer healthcare group offered “compelling prospects” underneath the “chaos” of yesterday’s quarterly update.

There were mixed fortunes for London Stock Exchange Group (LSE:LSEG) and Relx shares, having rallied sharply after their annual results in February showed little evidence of the AI disruption behind new year weakness.

The firms - major holdings for Finsbury Growth & Income Ord (LSE:FGT) and Lindsell Train Ord (LSE:LTI) Investment Trust - gave investors further reassurance today with first-quarter trading updates.

Data and analytics services business Relx, which is best known for its Elsevier journals operation Science, Technical and Medical (STM) and its LexisNexis legal arm, reported strong new sales across the board.

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It made no change to guidance, which points to another year of  strong underlying growth in revenue and adjusted operating profit.

Analysts at Bank of America said this was unsurprising given that Relx’s traditional resilience and immaterial Middle East exposure meant a high bar for any change to guidance.

Shares eased 54p to 2,686p, which compares with 2,013p on 11 February and the recent peak of 2.779p. They were trading at more than 4,000p last May.

BofA lifted its price target by 50p to 3,850p as it highlighted a potential catalyst on 13 May, when Relx is due to deliver an investor seminar on its Risk and Business Analytics division.

The operation does business with more than 90% of the Fortune 100 and helped to process 88% of new US auto insurance policies issued to consumers as of 2024. Its Digital Identity Network analyses over 345 million transactions daily.

Bank of America points out that Risk is a £30 billion company, growing at consistently high single-digit rates and generating 40% plus underlying margins.

The bank added: “For three years the Legal division has dominated discussions, but Risk contributes more than double the profit of Legal, more than half the enterprise value of the group and is arguably the best business Relx owns.”

If Risk is valued in line with the most highly rated US information services peers, it said this would imply that the market continues to value the Legal and STM divisions - where AI concerns are most acute - at 12 times earnings and below Thomson Reuters Corp (TSE:TRI) on 13x.

BofA said: “At this level, we believe markets are still pricing a high probability of AI disruption in Legal and STM divisions, which we think looks overstated.”

London Stock Exchange Group shares maintained their recent strong run after the financial data and analytics firm reported record first-quarter revenues.

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It also forecast full-year top-line growth in the upper half of its 6.5%-7.5% guidance range as customers increasingly recognise the value of LSEG solutions in an AI world.

In its Data & Feeds business, the company has made its data available to licensed customers through a wide range of models and cloud environments including Anthropic, Microsoft, Open AI, Databricks and Snowflake.

Ninety customers have so far connected with LSEG’s recently launched Model Context Protocol server, which delivers context, accuracy, control and measurability for data consumption. A further 64 customers are in the process of onboarding.

UBS, which has a price target of 11,500p, said LSEG beat revenues expectations in all four of its trading segments but with particular strength in markets after recording 15.5% growth.