Proactive Investors -
- FTSE 100 runs out of steam, heads back to opening levels
- US markets expected to extend gains on Friday
- New Shell (LON:RDSa) boss reviewing plans to cut oil and gas output
Wall Street set to extend gains on Friday
Wall Street is expected to end the week on a positive note after stocks staged a recovery on hopes the US Federal Reserve will soon hit pause on interest rate hikes. Key today will be the release of ISM Services PMI data for February.
Futures for the Dow Jones Industrial Average rose 0.2% in Friday pre-market trading, while those for the broader S&P 500 index gained 0.3% and contracts for the Nasdaq-100 added 0.4%.
After a mixed session on Thursday, stocks rebounded in afternoon trading and the 10-year Treasury yield retreated to around 4.02% after hitting 4.1%. The Dow closed 1.1% up at 33,004, the S&P 500 rose 0.8% to 3,981 and the Nasdaq finished at 11,463 for a 0.7% gain.
“Dovish? Atlanta Federal Reserve President Raphael Bostic said he favours a "slow and steady" approach to hikes, calling for a hike of 25 basis points later this month,” commented Neil Wilson, chief market analyst at Markets.com.
“This seemed to placate markets somewhat after being on a relentless ‘higher for longer’ train for the last few days.
"Governor (Christopher) Waller was more direct saying that "if those data reports continue to come in too hot, the policy target range will have to be raised this year even more to ensure that we do not lose the momentum that was in place before the data for January were released."
My view is to focus on Waller more than Bostic,” Wilson added.
With investors eyeing the February ISM services survey release later today, TickMill Group market analyst Patrick Munnelly noted that market watchers anticipate the headline ISM will remain anchored in expansionary territory above the 50-point level.
“The January increase to 55.2 surprised to the upside, however, the uptick was widely attributed to milder weather leading to an increase in activity. The prices index remained buoyant despite retreating from elevated levels over the past 12 months.”
Ahead of the US restart and the FTSE 100i srunning out of steam now at 7,952.47, up 8.43 points, or 0.11%.
BP charges up Northants
BP has opened its fastest, most powerful and largest electric-vehicle charging hub in Kettering in Northamptonshire.
Drivers using the site at the intersection of the A14 and A43 will be able to use one of ten 300kW chargers, capable of adding up to 100 miles of charge in just 15 minutes.
BP's electric vehicle charging business bp pulse has already built hubs in Park Lane, London, and at Gatwick Airport.
A site is under construction in the West Midlands, which when completed will contain 16 ultra-fast 300kW chargers capable of charging 32 EVs at any one time.
Shares in BP were down 1% around midday in London.
Could Pearson (LON:PSON) head stateside?
Could the FTSE 100 educational publisher Pearson follow CRH and move its listing to the US. Well, yes if it were in the best interest of stakeholders, adding to concerns about a potential exodus of businesses from the listed London market.
The Times said Sally Johnson, chief financial officer, told a media call: “We keep all sorts of things under review. We don’t have any plans at the moment but where anything makes sense for our stakeholder groups of course we consider it.”
The company makes more than 60% of its revenue in the US and some of its senior management team are based there.
Shell's new CEO reviewing plans to cut oil and gas output
Shell PLC’s new boss said today that cutting oil and gas output would be bad for consumers, and “not healthy.”
In an interview with The Times, Shell chief executive Wael Sawan stated: “I am of a firm view that the world will need oil and gas for a long time to come.”
“As such, cutting oil and gas production is not healthy,” he continued.
Sawan said Shell is reviewing its current plan to reduce oil output by 1% to 2% per year by 2030 .
"We're reflecting on what is the right guidance to the market," Sawan told the Times.
Shares in Shell fell 0.6% to 2,589.60p each reflecting a fall in the oil price while the FTSE 100 is steadily seeing its gains eroded, now at 7,957.45, up 13.41 points, or 0.17%.
Incentives for listing in London need some work – Panmure Gordon
The debate around the attractiveness or otherwise of London as a listing location for the world’s leading companies remains a subject of debate after CRH confirmed its was moving its primary listing to the US and ARM confirmed its IPO would be in the US and not the UK as reported on Proactive yesterday.
Panmure Gordon’s chief economist Simon French has had his say.
In a series of tweets he highlighted some reasons as to why firms are looking elsewhere.
Firstly liquidity. Low liquidity on UK equity market (vs US & some EU markets) is a serious impediment. He noted average daily volumes have fallen sharply since 2006 and for large funds this means they can’t own significant parts of UK market which fuels a valuation discount.
Second. He pointed out the UK has been out of favour amongst investors since the Brexit referendum which has generated a discount for equivalent firms (controlling for growth, sector) of between 15% to 25%. This is a disincentive for a UK listing.
French noted that historically investors have allocated more to UK equity markets than the relative size of her economy. He said now there is a reallocation going on - although it is hard to know for certain how much is structural and how much is cyclical from persistent underperformance.
Lastly, he highlighted regulation. The playing field on corporate governance, ESG, reporting is very different for public and private companies. Some of the best UK companies have remained or gone private as the disparity has grown, he explained.
Other factors mentioned by French include that sector benchmarks/deep analysis that technology companies need is underweight in the UK. He also questioned whether the tax treatment of debt sufficiently incentivises equity financing.
Overall, French said he was a big fan of the good that public equity markets can have on access to capital returns, financing innovation and supporting UK productivity. But he feels the incentives for UK listing needs work.
Meanwhile the FTSE 100 is holding steady at 7,957.34, up 13.30 points, or 0.17%.