BP bounces while Chemring slumps

Better-than-expected Q3 figures offer BP shareholders hope while TalkTalk finds that teenagers and phones are a recipe for trouble.

London city
Source: Bloomberg

BP has posted better-than-expected figures this morning and appears to be benefiting from its management’s rebalancing of its upstream and downstream production, as oil prices continue to trade at subdued levels. A combination of cost cutting, asset stripping and a more sizeable dividend contribution from its Rosneft venture have all contributed, but ultimately oil prices at $60 a barrel will be needed to balance the company’s cash flows.

TalkTalk has seen its shares bounce as a Northern Irish teenager has been arrested in connection with the firm’s recent hacking problems. This might relieve worries over ransom demands but still leaves the company’s security reputation in tatters.

Sluggish  sales in the Middle East and shrinking defence budgets have seen Chemring announce a profits warning; the combination of slashed profit expectations and a rights issue have seen investors fear for the worst, with the shares down 40% so far this morning.

The last quarter saw Chinese sales outpacing US sales for iPhones, and now investors will be watching to see if this was a short-term anomaly or a more permanent shift in global demand. Cloud exposure was a key theme for Amazon, Microsoft and Alphabet last week, and it will be interesting to see if Apple can follow their lead. 

Considering the last couple of weeks have seen Twitter’s management slash the workforce and then gift $200 million worth of shares to those that survived the cull, it is particularly difficult to second guess what else they might do with these quarterly figures.

Expectation for M&A activity has circled Pfizer for much of the last year and as the company has been  facing stiffer competition, with a number of their exclusivity patents expiring, the board will be required to show a firm hand on the tiller.

We are expecting the Dow Jones to open 30 points lower from Monday’s close at 17,500.  

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