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Market Wrap - Midday

Shell and BP slide on weaker oil prices

09 March 2017 11:55

A sharp drop in oil prices hit Royal Dutch Shell (RDSB) and BP (BP.) by up to 2.9%, dragging the blue-chip index 0.7% lower.

Lower prices are bad for the sector giants as they imply lower earnings. Due to the massive market cap of Shell and BP, it is unsurprising that the FTSE 100 was affected by the drop.

The oil price was depressed because investors are worried that rising US production will offset Opec's aim of cutting supply and push down prices.

West Texas Intermediate and Brent crude oil slipped by over 1.3% to $49.49 and $52.39 per barrel, respectively.

Gold fell 0.3% to $1,204 per ounce and copper cheapened 1.5% to $5,621 per tonne.

OVERSEAS STOCKS

The Dow Jones and S&P 500 closed lower on Wednesday as energy stocks struggled.

In Asia, the Hang Seng and SSE Composite dropped by 1.2% and 0.7% respectively on Thursday ahead of an expected interest rate hike by the US Federal Reserve this month.

Japan's Nikkei 225 managed to defy subdued investor sentiment as a weaken yen helped the country's exporters.

FTSE 100 RISERS AND FALLERS

Oil giant Royal Dutch Shell (RDSA) announced it will sell all of its on-site and undeveloped oil sands interests in Canada and cut its share in the Athabasca Oil Sands project from 60% to 10%.

Insurance giant Aviva (AV.) gained 6.7% to 545p on annual results that showed improved operating profit, cash and a 12% hike in the total dividend to 23.3p. CEO Mark Wilson said Aviva was 'actively planning a capital return to shareholders' and debt reduction in 2017.

The UK's fourth largest supermarket chain Morrisons (MRW) fell 5.5% to 233.5p as investors take profits following a strong run. Management unveiled a good set of full year results with pre-tax profits of £337m, representing the first year of growth since 2011/12.

Morrisons' like-for-like sales were positive in all four quarters and the retailer hiked the dividend by 8.6% to 5.43p. CEO David Potts insisted 'our turnaround has just started', although investors may be unnerved by the outlook statement. He flagged uncertainties due to higher imported food prices thanks to weak sterling.

FTSE 250 RISERS AND FALLERS

Investors lose their appetite for pizza pusher Domino's (DOM) as full year results revealed slower UK like-for-like system sales for 2016 and a more muted UK sales performance in the first nine weeks of 2017. The stock slumped 16% to 331p.

Popcorn pusher and cinema chain Cineworld (CINE) was flat as pre-tax profit fell 1.5% from £99.7m to £98.2m in 2016.

SMALL CAP RISERS AND FALLERS

Electronic components supplier TT Electronics (TTG) advanced 3.8% on better-than-expected full year results and strong free cash flow. TT issued a positive outlook statement after starting 2017 with a robust order book.

Estate agent Countrywide (CWD) retreated 3.5% as it reported a slump in pre-tax profits and unveiled plans to place over 21 million new shares for additional financial flexibility. Uncertainty following the Brexit vote and stamp duty changes had a significant impact on the property market. The firm said it will use funds from the placing to accelerate its digital rollout and unlock further cost savings.

Mobile financial services provider Vipera (VIP) and its partner Wavepac Infosystems entered an agreement with the Raba Bank for Investment & Foreign Trade for a project for a bill payment solution. The shares rose 11.7%.

AIM-listed Nautilus Marine Services (NAUT) plummeted 22.6% as revenue more than halved from $365,000 to $178,000 in the year to 31 December.

Croydon-headquartered Zotefoams (ZTF) sealed a partnership with international manufacturer Coveris, which will use its MuCell microcellular foam technology to produce polystyrene-free packaging. The market approved the deal, marking the stock 7.4% higher.

Shares in plates maker Portmeirion (PMP) was flat as annual pre-tax profit was 9.7% lower at £7.8m, barely ahead of downgraded estimates. This followed a tough 2016 in India and South Korea although Portmeirion reported a positive start to 2017.

Story provided by StockMarketWire.com

Related Company: RDSA

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