Lloyds announces £1bn share buyback, Barratt remains on top of UK housebuilders

London open

The FTSE 100 is expected to open 10 points lower on Wednesday, having closed down 0.01% at 7,246.77 on Tuesday.

Stocks to watch

Lloyds Banking Group announced a £1bn share buyback and increased its annual dividend by a fifth as the bank reported full-year profit short of expectations. Pre-tax profit for the year to the end of December rose 24% to £5.3bn, less than the £5.7bn average analyst forecast. Underlying profit rose 8% to £8.5bn, slightly below expectations for £8.6bn. Lloyds said it would buy back up to £1bn of shares to increase capital returns to investors. The bank also announced a 20% increase in the full-year dividend – an important measure for its army of small shareholders.

Housebuilder Barratt Developments posted its interim results on Wednesday, reporting strong operational and financial performance driven by customer demand. The FTSE 100 company remained the UK's largest housebuilder, with total completions for the six month period to 31 December standing at 7,324 plots, while it also saw good growth in profit before tax, up 6.8% to £342.7m with return on capital employed improving 1.3 percentage points to 28.3%.

Glencore declared a $2.9bn dividend to be paid out in two equal instalments in 2018 after profits surged higher and it looked confidently to the future. The FTSE 100 commodities giant, which had already provided a detailed financial and production guidance update in December and earlier this month, confirmed the numbers investors still awaited: two $0.20 dividends to be paid in May and September.

Newspaper round-up

The true cost of Heathrow expansion is likely to be “grossly” higher than the £14.3bn the airport has cited, airlines have told MPs, adding that transparency and guarantees should be supplied ahead of a crucial vote. Willie Walsh, chief executive of IAG, British Airways’ parent company and the main operator at Heathrow, said parliament should not trust Heathrow and said he had “zero confidence” that a third runway would be delivered on time and budget. - Guardian

The incoming chairman of the Financial Conduct Authority has admitted to an “error of judgment” after investing in a controversial tax avoidance scheme that resulted in him repaying more than £100,000 to the taxman. Charles Randell, a former City lawyer and government adviser at the time of the financial crisis, told the Treasury select committee that he had failed to see a “warning signal” about Ingenious Film Partners 2 LLP, an investment product that promised members tax reliefs but was subsequently challenged by HM Revenue & Customs. – Guardian

Banks need to start preparing for the death of Libor in 2021 or a smooth transition away from the scandal-hit benchmark will be "highly unlikely" and pose considerable risks, a consultancy has warned. Libor, or the London interbank offered rate, is used to price $240 trillion (£170 trillion) worth of financial products globally but is being slowly phased out as regulators transition to an alternative. All 20 banks which submit quotes for Libor, including HSBC, Credit Suisse, JP Morgan and Lloyds, have promised to support the rate until then. - Telegraph

The operator of the Southern rail franchise has moved to add a new line to its business, with its first investment beyond trains and buses into a German car sharing company. Go-Ahead, the FTSE 250 company which runs the Govia Thameslink franchise that includes Southern, has taken a 10pc stake in Frankfurt-based Mobileeee for €300,000 (£264,900). – Telegraph

Investors in Booker Group have been told by a second shareholder advisory group to vote against a planned £3.7 billion takeover by Tesco as doubts about the deal continue to mount. Glass Lewis said that the premium offered by Tesco “clearly lags regional trends”, adding: “We see little cause for Booker investors to support what appears to be a less-than-compelling control transaction.” – The Times

BHP Billiton said yesterday that it was willing to listen to investors over proposals to drop its dual listing structure. As the group unveiled its biggest half-year profit since 2014, Andrew Mackenzie, chief executive, acknowledged that there was “a potential prize around unification . . . but the risks are high”. He said that he would discuss the proposals, which were put forward by Elliott Advisors, tomorrow. – The Times

US close

Wall Street finished mixed on Tuesday, amid some upwards pressure on bond yields as investors looked towards the minutes of the Federal Reserve's latest policy meeting, due on Wednesday.

The Dow Jones Industrial Average lost 1.01% to 24,964.75 and the S&P 500 fell 0.58% to 2,716.26, while the Nasdaq 100 rose 0.13% to 6,779.70.

Earlier, the US Treasury auctioned $96bn-worth of very short-term debt maturing in 13 and 26 weeks, with the sale of a further $55bn in four-week bills and $28bn in two-year notes following.

On Wednesday the Treasury is set to sell $64bn of notes maturing in five years, followed by $29bn of seven-year notes on Thursday.

Against that flood of Treasury issuance, investors were seemingly finding few reasons to keep pushing share prices higher.

That followed a six-day long rally that ended in the biggest single week of gains for indices in years, with a further bounce in the US dollar doing little to help sentiment.