Shell taxes tax hit
Shell warned investors today that it will pay about $2 billion (£1.7 billion) in windfall taxes for the last four months of 2022.
For parts of last year the oil giant managed to avoid a windfall tax due to strong investment in the North Sea, a controversial loop hole.
The windfall tax plan was unveiled last year and the terms increased by chancellor Jeremy Hunt in November. Critics say the oil giants have benefitted from the surging cost of energy while their own expenses have mostly stayed the same.
The firm said that it would face a hit to earnings for the final quarter of 2022 because of the increased UK energy profits levy and additional EU taxes.
In the third quarter, Shell benefited from an 80% investment allowance linked to the UK windfall tax. This allowance was significantly reduced as part of the autumn budget.
In the previous quarter, it said its adjusted earnings more than doubled to $9.5bn in the three months to the end of September when compared with the year before.
The oil giant also revealed that trading in its chemicals business is expected to have been “significantly lower” in the final quarter of 2022 compared with the previous quarter.
The shares moved up 25p to 2335p.
Oil stocks drive FTSE 100 higher, Clarkson jumps 9%
The new year outperformance of London’s FTSE 100 index is continuing after the top flight rose another 0.2% or 17.89 points to 7651.34.
In contrast, Wall Street closed sharply lower last night and European benchmarks lost ground this morning after figures showed a bigger-than-expected slide in German factory orders.
A recovery for BP and Shell shares benefited the blue-chip index, with BT and consumer healthcare business Haleon among other risers.
Standard Chartered featured among the fallers as interest in the Asia-focused banking giant cooled after yesterday’s disclosure of takeover interest from First Abu Dhabi Bank. Shares fell 16.8p to 688.4p, having spiked to 794p during the previous session.
The FTSE 250 index weakened 35.76 points to 19,427.67, but shipping broker Clarkson surged 9% or 275p to 3420p after an upgrade to its profits guidance.
US markets focused on payrolls update
US non-farm payrolls rose by 263,000 last month, with the figure due to slow to around 200,000 when December’s report is published this afternoon. The unemployment rate is expected to remain steady at 3.7%.
Any signs of continued tightness in the labour market data will prompt investors to price in a more aggressive path of rate hikes from the Federal Reserve, putting further pressure on US share prices.
Deutsche Bank reported today that Wall Street already thinks there’s a 44% chance that the Fed will continue hiking by half a percentage point at their meeting next month. Looking further out, the rate priced in for June is now at a six-week high of 5.03%.
As well as non-farm payrolls and the unemployment rate, traders will be keeping a close eye on average hourly earnings growth. Deutsche Bank economists are expecting a step down to 0.3%, having come in at a 10-month high of 0.6% last month.
US markets down ahead of payrolls report, FTSE 100 seen higher
A strong start to the year for European stock markets hasn’t been matched in the US, where the Dow Jones Industrial Average and S&P 500 index closed more than 1% lower last night.
The selling came amid fears that tightness in the labour market will be shown in today’s non-farms payroll report, making it harder for Federal Reserve policymakers to ease the pace of interest rate rises.
The Wall Street weakness failed to derail European markets, which has been boosted by signs this week that inflation is near its peak.
Amid strong updates from retailers Next and B&M European Value Retail, the FTSE 100 index last night closed higher for the third day in a row at an eight-month high. CMC Markets expects the top flight to add another 22 points at 7655 this morning.
Samsung profits sink to 8-year low as demand dwindles
Quarterly profits at Samsung fell to an 8-year low at the end of 2022, the firm announced this morning, as dwindling demand for electronic devices and memory chips helped squeeze margins.
The South Korean firm said its its October-December operating profit likely fell 69% to 4.3 trillion won (£2.8 billion) from 13.87 trillion won a year earlier.
“For the memory business, the decline in fourth-quarter demand was greater than expected as customers adjusted inventories in their effort to further tighten finances…,” Samsung said in the statement.
Average house price forecast to fall 8% in 2023
Mortgage lender Halifax today revealed that annual house price growth slowed to 2% in December, having been in double digits earlier this year and at 4.6% in November.
With prices down 1.5% in December on top of November’s 2.4% fall, the cost of the average UK home now stands at £281,272. That’s still 11% more than the beginning of 2021 after a big jump in prices between January and August.
Since then, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, has slowed the market.
Halifax expects that prices will fall by around 8% this year as economic conditions fuel caution among buyers and sellers.
Director Kim Kinnaird added: “It’s important to recognise that a drop of 8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.”
