Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

FTSE 100 moves lower, fall in oil price weighs on BP and Shell

Published 06/06/2023, 10:44
Updated 06/06/2023, 10:40
© Reuters.  FTSE 100 moves lower, fall in oil price weighs on BP and Shell

© Reuters. FTSE 100 moves lower, fall in oil price weighs on BP and Shell

Proactive Investors -

  • FTSE 100 falls back, down 32 points
  • Oil price falls, BP (LON:BP) and Shell (LON:RDSa) weaken
  • Retail sales growth slows in May, BRC

Half of multinationals plan to cut office space

About half of large multinationals are planning to cut office space in the next three years as they adapt to the rise of homeworking since the pandemic, according to estate agent, Knight Frank.

The survey of executives in charge of real estate at 350 companies round the world that together employ 10mln people found that, among major groups cutting their footprint, the largest number was aiming to reduce space by 10 to 20%.

“Better but less space is probably the strap line for the larger organisations,” said Lee Elliott, a commercial real estate expert at Knight Frank.

“It is not the death knell of property markets because what you are seeing is a shortfall of supply, and therefore an increase in rents, for the prime buildings,” he added.

The prospect of big companies making further cuts to office space has prompted worries about the future of older buildings and unpopular locations, as the commercial property market negotiates a painful downturn prompted by higher interest rates.

Nearly half of the companies surveyed are also planning to change their headquarters in the next three years. However, a majority of smaller companies are planning to expand their office space.

Shares in British Land (LON:BLND) fell 0.6% and Land Securities by 0.4%, while the FTSE 100 is now down 32 points at 7,568.

Construction sector picks up but house building remains depressed

May’s construction PMI figures signalled a modest upturn in overall UK output, driven by faster rises in commercial building and civil engineering activity but house building remained depressed.

The headline seasonally adjusted S&P Global/CIPS UK Construction PMI which measures month-on-month changes in total industry activity registered 51.6 in May, up from 51.1 in April and above the neutral 50.0 mark for the fourth successive month.

The report showed that house building was by far the weakest-performing category of activity, with output declining at the steepest pace for three years.

Worries about the impact of higher interest rates and subdued market conditions continued to dampen housing activity.

Commercial building (index at 54.2) was the best-performing segment, with output rising at a robust and accelerated pace, while civil engineering also gained momentum (index at 53.9), with growth hitting an 11-month high in May.

Supply conditions continued to normalise in May, as highlighted by the greatest improvement in vendor lead times since August 2009.

This helped to alleviate cost pressures across the construction sector, with the overall rate of input price inflation easing to its weakest for 32 months.

Although indicative of only modest growth, the latest reading pointed to the strongest upturn in total construction activity since February.

Unilever on the hunt for new Chair

Unilever PLC (LON:ULVR) has appointed executive search firm Spencer Stuart to find a replacement for Chair Nils Andersen, Bloomberg reported, citing "people familiar with the situation".

Bloomberg said the move would continue an overhaul of its leadership after a series of missteps in recent years frustrated shareholders.

The report said the maker of Marmite has shaken up its top ranks after appointing activist investor Nelson Peltz to the board last year.

Victoria Scholar at interactive investor noted Anderson has been chairman since November 2019 “with shares down under his tenure, underperforming the FTSE 100.”

“A new leadership team could help offset recent criticism of profiteering and put its failed acquisition of GSK’s consumer healthcare division to the past,” she thought.

In May, Unilever said Chief Financial Officer Graeme Pitkethly intended to leave the company at the end of May next year, while Hein Schumacher will take over as chief executive from Alan Jope on July 1.

Oil price falls back, BP and Shell slip

The FTSE 100 moved lower in opening exchanges, now down 7 points at 7,593, as a falling oil price dragged down index heavyweights, BP PLC and Shell PLC (LON:SHEL).

Susannah Streeter at Hargreaves Lansdown (LON:HRGV) said: “’The week’s early optimism has been clouded by renewed concerns about a looming recession in America, while the repercussions of the banking crisis appear to be coming back to bite big US lenders.”

“As the world’s largest economy shows more signs of heading for a contraction, with growth in the mighty services sector slowing more quickly than expected last month, worries are rising about the knock-on effect around the world.”

The oil price retreated around 2% as the initial bounce following the Saudi production cut at the Opec+ meeting faded away.

Brent crude was trading down 2.1% at $75.17 while West Texas Intermediate fell 2.0% to $70.73.

Anglo American PLC (LON:AAL) rose 0.8% supported by an upgrade by RBC Capital Markets to outperform from sector perform with an increased price target of 2,700p (up from 2,500p), while a move to buy from hold by Shore Capital boosted Auto Trader PLC, up 0.1%.

The slowing retail sales reported by the British Retail Consortium pushed Next and B&M European Retail into the red by 0.7%.

In the FTSE 250, Chemring PLC jumped 6.2% after reporting a record order book alongside half-year results which it said were “in-line” with its expectations.

The firm said its half-year order intake hit record levels and its order book was at the highest level in over a decade at £750mln.

Michael Ord Chemring Chief Executive said: “The outlook for the global defence market is increasingly positive, with strong growth predicted over the next decade.”

Read more on Proactive Investors UK

Disclaimer

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.