Having moved within sight of the 10,000 mark a little over a month ago, the FTSE 100 lost momentum again today.
There appears to be little sign of a Santa Rally as concerns about tech valuations continue to knock sentiment in US and Asian markets.
The chances of an interest rate cut from the Bank of England this Thursday, already widely priced in by the market, looked to have ticked higher off the back of an increase in the UK unemployment rate.
This was enough to give a small boost to the housebuilding sector, for whom lower rates help improve mortgage affordability and thereby demand for its homes.
Defence names were lower after comments from Donald Trump that peace between Ukraine and Russia is ‘closer than ever’ after a phone call with Ukrainian president Volodymyr Zelenskyy.
Delayed US jobs data later may offer a window into how the Federal Reserve might manage rates in 2026.
Shell/BP
Reporting around the departure earlier this year of Shell’s M&A chief Greg Gut suggests he left having failed to convince senior management with a pitch for the company to buy BP.
If accurate, this would heavily hint that Shell is unlikely to return with a bid after the restrictions on its ability to do so expire on Boxing Day.
Chief executive Wael Sawan was vocal in dismissing the prospect of a mega-merger between the two companies when rumours first emerged – suggesting he would rather use excess capital for share buybacks.
Completing any deal would involve absorbing a considerable debt pile, and combining two businesses with different cultures would have been demanding and potentially have derailed Sawan’s continuing efforts to drive Shell forward.
However, the question remains about how rapidly Shell can grow its portfolio organically and whether it can compete with its US counterparts on other deals.
Centrica
Across the last two decades there has been a pronounced trend in the North Sea. Oil and gas assets have changed hands from larger operators to smaller, more nimble ones, for whom there is value in exploiting fields of more modest scale.
The decision by Centrica’s subsidiary Spirit Energy to sell a collection of producing natural gas fields to Serica Energy is a deal in this vein.
The disposal will free up Spirit’s time and resources for the development of the Morecambe Net Zero carbon storage project. Meanwhile, Serica gets an appreciable uplift to its oil and gas reserves and an immediate injection of cash flow.
It expects to generate around $100 million of cash from the assets by the end of 2028. That’s significant in the context of Serica’s £650 million market valuation.
On this basis you can see why the deal suits both parties.
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...
