By Swissquote Analysts
Shell Profit Set to Be Hit by Volatile Natural-Gas Prices, Rising Costs
Topic of the day
Shell PLC said it expects its third-quarter earnings to be hit by lower refining margins along with "significantly lower" profit from trading gas, as a global scramble for energy supplies riles markets. The London-based company said in a trading update that pricing and cost swings from shortfalls of liquefied natural gas would likely cut into profit from its huge gas business, typically its biggest cash generator. But Shell said its overall marketing profit from trading oil and other products was higher in the third quarter compared with the previous quarter. Shares in Shell fell more than 4.5% in early afternoon trading in London. The company is set to report full third-quarter earnings later this month. The tempered outlook reflects how the world's biggest oil-and-gas companies are navigating highly profitable but turbulent markets in the wake of Russia's invasion of Ukraine. The war has precipitated a global struggle to secure enough gas to heat homes and keep power plants and factories running - worries that are particularly acute in Europe.
After staying about the flat line till about mid morning, the Switzerland stock market slipped into negative territory on Thursday and remained weak till the end of the day's session as worries about economic slowdown and inflation weighed on sentiment. The benchmark SMI ended with a loss of 86.56 points or 0.83% at 10,391.13. The index, which advanced to 10,525.38 in early trades, touched a low of 10,358.78 later on in the session. UBS Group and Swiss Re both ended lower by nearly 2.5%. Zurich Insurance Group shed nearly 2% and Swisscom lost 1.7%. Holcim, Sonova, Swiss Life Holding and Novartis ended lower by 1 to 1.46%. Roche Holding, Sika and Nestle also closed notably lower. Credit Suisse rallied 2.6% after JP Morgan upgraded its rating on the stock to 'neutral' from 'underweight'. Lonza Group and Logitech ended modestly higher, while Partners Group edged up marginally. Temenos Group, Belimo Holding, Julius Baer, Galenica Sante, Swatch Group, SIG Combibloc, Clariant and Adecco ended lower by 1.6 to 2.1%.
European markets failed to hold early gains and ended weak on Thursday as worries about slowing growth and rising inflation weighed on sentiment. Data from Destatis showed German factory orders decreased 2.4% month-on-month in August, reversing a revised 1.9% rise in July. Economists had forecast a moderate 0.7% drop in August. On a yearly basis, new orders were down 4.1% after a sharp 11% decline in July. Eurozone retails sales fell 0.3% month-on-month in August and by 2% on an annualized basis, Eurostat said. The pan European Stoxx 600 declined 0.64%. The U.K.'s FTSE 100 ended 0.78% down, Germany's DAX shed 0.37% and France's CAC 40 drifted down 0.82%, while Switzerland's SMI lost 0.83%. Among other markets in Europe, Austria, Belgium, Finland, Greece, Ireland, Netherlands, Norway, Portugal, Russia and Spain ended weak. Czech Republic, Denmark, Iceland and Turkiye closed higher, while Poland and Sweden settled flat. In the UK market, Kingfisher, Centrica, Rolls-Royce Holdings, Smith (DS), St. Jame's Place, Schrodders, Anglo American Plc, B&M European Value Retail and Next lost 2.7 to 5%. Imperial Brands gained 2.5%. The tobacco firm announced a 1 billion pounds ($1.13 billion) share buyback program and said FY22 trading has been in line with expectations. Segro and Haleon gained 2.6% and 2.05%, respectively. Informa, Ashtead Group, Entain, Flutter Entertainment, Dechra Pharmaceuticals, Covatec Group and Prudential gained 1.3 to 2%.
U.S. stocks moved lower Thursday, stumbling again after a red-hot start to the week. The S&P 500 fell 1% as of 4 p.m. ET. The Dow Jones Industrial Average declined more than 1%, or 347 points, while the tech-focused Nasdaq Composite slipped 0.7%. The S&P 500 had soared a combined 5.7% on Monday and Tuesday -- its best two-day percentage gain since April 2020. But Wednesday's performance, when all three indexes finished lower, served as a reminder that rallies in 2022 have often been fleeting. The week's seesaws reflect investors' attempts to wrestle with the U.S. economy's uncertain path as it absorbs the Federal Reserve's interest-rate hikes. Lately, investors have often interpreted bad economic news as good news for markets, believing that economic weakness will force the Fed to slow its interest-rate increases. Elon Musk said Tesla Inc. plans to deliver its first all-electric semitrailer truck to food and beverage maker PepsiCo Inc. in December, roughly five years after the billionaire revealed the vehicle. Mr. Musk reiterated Thursday that the truck would be able to travel 500 miles on a single charge, as had been planned. The truck, introduced in 2017, initially was due out in 2019. Amazon. com Inc. plans to hire 150,000 people in its regular annual hiring spree to meet demand during the holiday shopping season. The hiring target Amazon announced Thursday is the same as it had last year and comes as the e-commerce company has been struggling with slower sales. The company is seeking employees throughout its U.S. fulfillment network, which is responsible for sorting, packaging and delivering products.
After further hawkish statements by U.S. central bankers on Thursday, signalling further significant interest rate hikes, caused losses on Wall Street, share prices in East Asia and Sydney also fell on Friday. The only exception is Seoul, where the Kospi (+0.2%) has since recovered from a weaker start and is now just in the black. The price of the index heavyweight Samsung has meanwhile turned positive.
U.S. Bond yields traded higher. The yield on 10-year U.S. Treasurys rose to 3.823%, from 3.757% Wednesday. The two-year yield, which is more sensitive to near-term rate expectations, rose to 4.247%.
CS lowers Tesco target to 238 (292) p – Neutral
UBS lowers Randstad target to EUR 40 (45) – Sell
UBS lowers Adecco target to CHF 35 (45) – Buy
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