Market Report: Stocks drift sideways as Xi and Trump herald trade breakthrough
Derren Nathan, head of equity research, Hargreaves Lansdown: “News of the emerging thaw in trade relations between the US and China wasn’t enough to power the FTSE 100 to another record this morning. It has retreated a little at the open, after reaching its best ever close of 9,756.14 on Wednesday.
Following the conclusion of talks in South Korea, president XI said that a consensus had been reached on major trade issues, while Donald Trump revealed he’d be reducing tariffs after resolving a roadblock on Chinese exports of rare earth minerals. Details, however, were thin on the ground.
Shell’s third quarter saw underlying earnings surge by 27% to $5.4bn compared to market forecasts of just $5.1bn. Most of the beat came from the upstream division, which is benefitting from increased production in Brazil and the recently renamed Gulf of America, as well as from a good performance in Integrated Gas, which was boosted by the contribution from trading and optimisation. That part of the business typically does well in volatile times and can counter price weakness. Investors should also take heart from the dent made to net debt, which should leave the path open for quarterly buybacks similar to the $3.5 billion repurchase announced today.
Yesterday’s rally in oil prices proved to be short-lived. Brent Crude prices have dropped marginally to around $64.5 per barrel. The absence of a mention of a trade agreement on energy products after the summit between China and the US is playing on traders’ minds. Meanwhile, a tightening of sanctions by the US on Russian oil exports hasn’t alleviated concerns of a supply glut.
US stock futures are trading broadly flat after a mixed performance on Wall Street yesterday. While the tech-led NASDAQ broke yet another record, the wider indices were down after a much-anticipated quarter point cut by the Fed. However, Jerome Powell’s comment around a further reduction in December being far from a foregone conclusion saw some caution creep back into the market.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “Big Tech’s latest results show strong momentum in AI, but with different stories under the surface. Alphabet delivered a record-breaking quarter, proving its core search and cloud businesses remain resilient in the face of AI disruption. Microsoft showed solid growth and rising demand, though supply constraints are starting to bite, while Meta’s strong engagement was overshadowed by rising costs and cautious guidance, reminding investors that bold AI bets come with trade-offs.”