- Wall Street yawns as Hong Kong roars
- Fed not confident enough to begin cutting rates
- Revolution Bars – time for a nightcap?
- Shell beats all expectations
Steve Clayton, head of equity funds, Hargreaves Lansdown:
“Futures markets were indicating a gently firmer start to the day’s trading and indeed, so far, the FTSE has added around 0.2% to trade at 8139. Sterling is edging lower after earlier strength against the dollar faded. UK government bonds are weakening in early trading, compared to modest gains in US Treasuries and Bunds.
Wall Street drifted lower last night, with both the S&P 500 and the NASDAQ Composite indices losing around 0.3%. Within the dip there were signs of a rotation away from the big AI names, towards ‘old Big Tech’. Nvidia and AMD both suffered mid to high single digit drops, whilst Amazon, Meta, Alphabet and Microsoft were all firmer on the day. The dollar gave ground, to trade around $1.254 to the pound before European traders started to speculate that US rates could be the better bet for the next few months. Oil looks to be trying, but so far, failing, to recover the $85 level, with Brent crude futures trading US66c higher at $84.1 per barrel.
Meanwhile, over in Asia, Hong Kong is roaring, with the Hang Seng index some 2% higher with growth led by insurance giant AIA and the exchange’s own parent company Hong Kong Exchanges & Clearing. Bloomberg is reporting that over in HK, a former Options trader is defending his dismissal from SogGen by arguing that whilst the trades he entered into were potentially high risk, the bank was to blame because they should have picked them up sooner.
The US Federal Reserve met yesterday and held US rates steady. The move was widely expected after recent economic data showed the US struggling still to get the inflation genie back inside the lamp. Speaking to reporters after the meeting, Fed Chair, Jay Powell said he did not know how long it would be before the Fed was confident enough to begin cutting rates. Modest gains in US Treasuries suggest this was all that markets were expecting to hear. Rates are still going to come down, but we’ve a way to go first. With economies in the euro zone and UK looking weaker, maybe it will be this side of the Atlantic that takes the first step toward cutting rates?
Looks like it could be time for Revolution Bars to take a nightcap. Revolution have been struggling for many years, even before the pandemic struck. Having racked up operating losses every year bar one since 2018, the group had put itself into a formal sale process a few weeks ago, accompanied by an emergency fund-raising to keep the group afloat through the process. Now press reports, confirmed in a statement from Revolution this morning, reveal that Nightcap plc, a listed late-night cocktail bar operator founded and managed by members of the Willingham-Toxvaerd family has approached Revolution with a proposal to buy all or part of the group.
Energy giant Shell beat market expectations with its Q1 trading results. The group’s earnings came in around $1.5bn higher than many analysts had predicted. My colleague, Derren Nathan, has all the details on this story.”
Derren Nathan, head of equity research, Hargreaves Lansdown:
“Shell’s produced yet another quarter of staggering cash flows. Higher margins and up time at its refineries more than offset lower earnings in the upstream and integrated gas divisions. The strong cash generation is enabling Shell to reduce debt, reward shareholders (it’s also raised the dividend 20% year-on-year) and continue investing into the business as it targets total expenditure of $22-$25bn in both 2024 and 2025.
Shell remains ‘committed to oil & gas’ which may disappoint environmentalists, but it’s made meaningful reductions in its scope 1 & 2 emissions in recent years and slightly increased its renewable power generation capacity in the quarter. The development portfolio has a wide spread of projects across the energy mix, from the deepwater Mero fields in offshore Brazil through to the 1.5GW Atlantic Shores offshore wind farm, the largest such project in the United States. There’s no doubting Shell’s relentless focus on shareholder value and over the long-term the sub 10 times earnings multiple doesn’t look too demanding. Price volatility is an ever-present risk across the sector but it’s one that Shell is navigating admirably.”
