US tech may be letting the side down when it comes to third quarter earnings but bumper profit from index heavyweight Shell helped lift the FTSE 100 on Thursday morning
Once again, the wider market seems to be pinning some hopes on central banks looking at evidence of a deteriorating economy and reacting accordingly by slowing the pace of rate rises.
Unilever’s third quarter numbers highlighted an extremely bleak consumer outlook in both emerging and developed markets and the likes of the US Federal Reserve will increasingly need to decide how much pain they are prepared to inflict as they look to bring surging prices back under control.”
Given it now plans to reward shareholders with a windfall of their own through its pledge to increase the fourth quarter dividend, calls for a further levy on Shell’s bumper profits are only likely to increase.
AJ Bell head of investment analysis, Laith Khalaf, said: “In fairness, chief executive Ben van Beurden has been self-aware enough to acknowledge this fact and he could argue he has to reward shareholders who, after all, saw the first cut in the dividend since the Second World War during the pandemic.
“The optics of paying out more to investors aren’t too clever when many households are really struggling with their energy bills.
“Shell isn’t making as much money as it was in the second quarter when it posted record figures, though the company’s new habit of trailing its numbers a week or so early means there’s nothing here to really alarm investors.
“The oil and gas industry tends to be highly cyclical and things may not be as good again for Shell as they were in 2022 for some time. Oil prices are coming under some pressure as the economy slows and gas prices in Europe have fallen as storage levels increase – though whether this will last once winter really hits is open to question.”
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