Donald Trump’s claim that Russia and Ukraine had entered an ‘energy ceasefire’ has not had a significant impact on energy prices, leaving the two major oil benchmarks – Brent and WTI – at elevated levels.
Brent crude traded 0.3% lower at $104 per barrel early on Monday while WTI settled 0.7% lower at $91 per barrel. There is scepticism over any energy ceasefire given Russia attacked various energy facilities in Ukraine after Trump made his statement.
The news follows a pact by Trump with Russia on diesel supplies to seemingly try and lower energy prices before the midterm elections to help reverse his waning popularity with voters. Energy market experts believe the deal to import certain amounts of Russian diesel into the US won’t move the needle as the quantities are small and any impact won’t be felt before the midterms.
Financial markets have taken even the smallest pullback in energy prices to be a win. European equities rose on the news, including a 0.6% gain in the FTSE 100 which was powered by a rally in banking shares.
HSBC, Lloyds and Barclays were among the index’s biggest risers. Banks have faced headwinds in recent weeks as investors feared a steady increase in interest rates could make it too expensive for many businesses and consumers to borrow money, thereby curbing growth opportunities for the sector.
Should energy-related inflationary pressures not be as intense as previously feared, it could lead to the Bank of England avoiding big interest rate hikes over the coming year. Markets are currently pricing in four quarter point hikes by next July.
Hays
Hays’s trading update implies the jobs market is as tough as ever, particularly for permanent roles. This suggests that companies lack confidence and don’t want to invest in their business for growth.
The exception is in North America where Hays is seeing growth in placing staff into permanent positions. Economic resilience certainly helps in that part of the world. There are pockets of positivity elsewhere, including Portugal and Spain which are proving to be lucrative regions for Hays.
Investors are disappointed with the latest update as it is clear life is hard for recruitment agencies. While Hays has put a positive spin on the period, the numbers speak for themselves. First quarter like-for-like net fees are down across its key regions, with only its ‘rest of world’ operations avoiding losses and even that division was flat year-on-year.
Hays has been through enough up and down cycles to know that the key to survival is to adapt to changing market conditions. That’s not simply just cutting back on recruitment consultants when times are harder. It also means pivoting to more vibrant regions and being more selective in the types of roles, such as its current strategy to target higher salary positions on the permanent side.
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...