Daily market update: Standard Chartered, Reckitt Benckiser, Rio Tinto

The FTSE 100 is sneaking above the all-time closing high from 28 February in early trading on Wednesday, helped by its lack of exposure to technology and AI stocks, and a slew of strong corporate results, with index heavyweights Standard Chartered, Reckitt Benckiser and Rio Tinto all delivering either better-than-expected profits, or bumper cash returns to shareholders, or both.

Standard Chartered hiked its dividend by two thirds and unveiled a new $1 billion share buyback, while Reckitt increased its payment by 5% and added a fresh £500 million buyback to the mix, with Rio Tinto chipping in a 43% increase in its first-half shareholder distribution.

This bonanza for investors underpins one of the London market’s attractions, namely cash returns.

Analysts expect the FTSE 100’s members to pay out £88.8 billion in dividends in 2026, while today’s announcements from Standard Chartered and Reckitt Benckiser take the total value of planned share buybacks by the index’s members to £40 billion.

Add in around £10 billion in dividends and £7.9 billion from buybacks from other members of the FTSE All-Share and AIM All-Share indices, and the £70 billion in live or completed takeover deals, and investors with exposure to UK equities are poised to pocket £217 billion this year, if all goes to plan.

That figure equates to just over 7% of the London’s £3 trillion stock market capitalisation, which as a total cash yield goes looks more than respectable relative to the 2.6% prevailing inflation rate, the 3.75% Bank of England base rate and the 4.98% benchmark ten-year Gilt yield.

All the same, investors in overseas stocks will note with a smile that Apple’s stock market capitalisation stands at $5 trillion for the first time. At a cross-rate of $1.33, that easily outstrips the London market’s total valuation, although both seem to be benefitting from their lack of exposure to the pell-mell spending on Artificial Intelligence large language models, data centres and memory chips, where doubts regarding the long-term returns on the huge expenditure and how the investments are to be funded continue to swirl.

This all sets the stage for Wednesday night’s results from Microsoft and then the latest quarterly updates from Apple itself and Amazon after the US stock market closes on Thursday evening.

Standard Chartered

The American megabanks’ quarterly results showed that they were coining it between April and June, while strong results from UBS and Deutsche Bank and Barclays this week have shown that the European and British have cashed in on ideal trading conditions. Now Standard Chartered’s second-quarter results show that Asia’s financial services giants are minting it, too.

The headline pre-tax profit figure of $2.3 billion handily beat the analysts’ consensus forecast of $2.1 billion, while chief executive Bill Winters also raised earnings guidance for 2026 alongside a hefty increase in the dividend and a new share buyback programme.

Net interest income was strong, as net interest margins rose year on year by five basis points (0.05%) to 2.03%, but the bulk of the upside earnings surprise came from non-interest income, and Wealth Management and Global Banking in particular.

Its investment bank may not have quite cashed in to the degree that the Americans, Europeans or British have to do date, but Standard Chartered’s results show that the current environment for banks is ideal: the absence of economic upsets means loan losses remain subdued, loan and deposit growth is good and margins on the loan book are holding up as interest rate volatility is low, while there is plenty of opportunity for investment banks to make money thanks to buoyant stock markets and fast-moving bond, currency and commodity markets.

All of this is good news for Standard Chartered’s shareholders. The bank’s shares are up sharply to set a new all-time high, as they hit the £22 mark for the first time ever. The only issue for shareholders to ponder now, it seems, is valuation. Having spent most of the 2010s and the early 2020s trading at a discount to tangible net asset value (TNAV), or book value, per share, the shares now trade at 1.66x times the latest figure of £13.22, although a return on equity in the high teens goes a long way to justifying such a rating, if it can be maintained.

Reckitt Benckiser

Kris Licht has been chief executive at Reckitt Benckiser since October 2023 and the share price is lower now than it was then, to show that investors have yet to really buy into his turnaround plan.

Weak first-quarter results, which cited a mild cold and flu winter season and how higher energy costs were prompting cash-strapped consumers to trade down through brands and seek cheaper options, hardly helped, so the better figures for the April to June period may bring some much-needed relief to Reckitt’s boardroom.

Organic sales growth of 4.2% from the company’s core operations comfortably beat consensus forecasts and represented a big step up from the 1.3% year-on-year increase generated between January and March. A price increase of 2.2% year-on-year was in keeping with the first quarter, so the upside surprise came from volume growth, which accelerated to 2.0% after the woeful 1.0% year-on-year drop in the first three months.

Emerging markets led the charge, helped by continued double-digit growth in China, with India and Latin America not far behind. Good cost control helped to support profit margins and Reckitt reiterated its guidance for 2026 as a whole, of like-for-like revenue growth between 4% and 5% from the core operations, with an operating profit margin between 24.9% and 25.6%.

Those high returns on sales are testament to the strength of Reckitt’s powerbrands, such as Finish, Strepsils, Dettol, Lysol, and Gaviscon. However, Mr Licht has yet to deal with his biggest headache, one that he inherited from his predecessors in the shape of 2017’s failed $16.6 billion acquisition Mead Johnson. He has yet to find a buyer for the infant nutrition business, which is now deemed a non-core business. Rumours of interest from France’s Danone came to nothing this spring.