London open: FTSE gains as Shell update pleases; Samsung results in focus

(Sharecast News) - London stocks ticked higher in early trade on Tuesday, helped along by a well-received update from Shell, as investors mulled results from Samsung and the latest data on UK house prices.

At 0830 BST, the FTSE 100 was up 0.4% at 10,690.34, while Brent crude was 1.2% firmer at $72.87 a barrel and West Texas Intermediate was 1.1% higher at $69.33 following reports of an attack on a vessel in the Strait of Hormuz.

Market participants were mulling the latest results from Samsung, which despite being better than expected caused the shares to slide.

Richard Hunter, head of markets at Interactive Investor, said: "In South Korea overnight, the Kospi index shed 8% despite the rebound which had been seen on Wall Street. Of particular note was Samsung Electronics, whose shares fell by more than 8% even after reporting a 19-fold increase in operating income to $58.7 billion in the latest quarter.

"The wider issue is whether this is a new chapter for investor reaction, related not to any weakness in demand or immediate profitability, but rather whether the level of earnings can be maintained in order to repay the trillions of dollars which have been funnelled into AI investment by the hyper scalers. The Samsung share price weakness could also in part be the result of investors locking in some profits after a run which has seen the stock rise by 129% in the year so far.

"A further test of investor mettle is also on the cards, as another Kospi constituent, SK Hynix aiming to raise $28 billion in a share issue which would see the stock join the Nasdaq in what would be one of the largest ever share offerings in the US, although some way behind the $75 billion which SpaceX raised last month.

"The shares have gained 228% in the year to date despite some relatively sharp declines over the last few weeks, and this offering is the latest acid test. Ahead of the offering and as a read across from the Samsung reaction, the shares suffered a near 9% decline. The combined news has also led to both S&P500 and Nasdaq futures pointing lower ahead of opening trades later today."

On home shores, industry data showed that house prices edged up in June as mortgage rates started to ease.

According to the latest Lloyds house price index - formerly the Halifax HPI - British house prices increased 0.2% in June, following a 0.2% softening in May. It was the first increase for four months and slightly ahead of consensus expectations for a 0.1% uplift. The average property price now stands at �299,330. Year-on-year, house prices rose by 0.6%, up from May's 0.5%.

Lloyds noted that while affordability remained stretched for many buyers, mortgage rates have eased off recent highs, helping those looking to move home.

Amanda Bryden, head of mortgages at the lender, added: "While latest industry data shows the number of new mortgage approvals dropped in May, this wasn't unexpected given the spike in rates seen earlier this year, and we'd expect to see activity recover, assuming borrowing costs continue to fall.

"We expect the housing market to continue moving at a measured pace. Lower borrowing costs should provide some support for demand, though affordability constraints remain an important factor.

"The outlook for house prices will depend largely on inflation continuing to ease and household confidence gradually improving."

In equity markets, Shell gained as the oil giant said that trading & optimisation earnings in its integrated gas division are expected to be "significantly" higher in the second quarter and lifted its production guidance for the segment.

The company expects Q2 production of 610,000 to 650,000 barrels of oil equivalent per day in its integrated gas arm, down from 909,000 boed in the first quarter due to the impact of the Middle East conflict on Qatari volumes. However, this was above its previous forecast for production of 580,000 to 640,000 boed in Q2.

It also expects an improvement in its working capital position due to the impact of "unprecedented volatility" in commodity prices. Shell now forecasts a cash inflow of $1bn to $6bn in the second quarter, following an $11.2bn outflow in the first quarter.

Victrex surged as it maintained its full-year guidance and reported an 18% jump in third-quarter group revenues.

Geotechnical contractor Keller Group advanced as it said fullyear revenues and underlying operating profits will be materially ahead of current market consensus.

Software-related stocks were on the rise, with Relx, LSEG and Experian all up.

On the downside, heavily-weighted miners slid, with Antofagasta, Anglo American, Rio Tinto and Glencore among the worst performers on the FTSE 100.

Polar Capital Technology Trust - which has Samsung among its top 10 holdings - was under the cosh.