The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
Small initial losses in London were quickly replaced by equally modest gains, on a day that is full to the brim with news. Oil giant Shell is the main reason for the gains after its shares enjoyed a 3% jump, its highest level since the beginning of 2012. Although profits were hit by writedowns, the firm beat expectations, and when set against BP's results yesterday the enthusiastic reception becomes easy to understand. BP is still hobbled by a variety of problems, but Shell has been able to spin a much more optimistic story and investors are reacting accordingly.
Staying with the oil sector, Heritage Oil is 22% higher after the company accepted a bid from a Qatari firm that values Heritage at 320p per share, a 25% premium to yesterday’s closing price. From the trading we have seen today it looks to be a done deal, and will be welcome news for shareholders who have seen the company’s share price go nowhere since the beginning of 2012, stuck between 100p and 200p.
It’s a busy day for the US too, with ADP numbers, GDP figures and an Federal Open Market Committee statement all on the calendar this afternoon. US GDP is expected to show a dramatic slowdown from 2013, but to some extent this news is already baked into current market activity. The key will be the Federal Reserve statement, which is expected to underline the FOMC’s view that the US economy still needs careful nursing to reach full health.
Lots of attention will be on Twitter too, in the wake of its disappointing results. The contrast with Facebook is remarkable; Facebook might also be struggling with user growth, but it has other activity to make up for this. Twitter is falling behind on its most important metric, and the market will punish it accordingly.
Ahead of the open, we expect the Dow Jones to start 20 points lower at 16,515.