The optimism which has persisted for much of this week about the prospects for a deal between the US and Iran is being severely tested.
A fresh exchange of strikes between the two countries is testing the fragile ceasefire and forcing a reassessment of the chances of a near-term agreement which can reopen the Strait of Hormuz and dial down the pressure the crisis is putting on the global economy.
For now, oil prices remain out of the $100 per barrel danger zone but government bond yields are ticking higher and the FTSE 100 and other European markets followed Asian shares in chalking up material losses.
US futures also point to a lower open when trading resumes on Wall Street later. In London there was an abrupt reversal of yesterday’s trends. BP and Shell made gains along with other energy firms, while retailers and housebuilders sold off. Several stocks were also lower as they traded without the rights to their upcoming dividends.
SSE
If the UK is to reduce its reliance on increasingly volatile global energy markets then SSE may play a role given its big investment in renewables and the electricity network.
The good news for shareholders and the rest of us is that the company’s major spending programme is progressing to plan.
While the pressure on earnings from variable weather conditions is a reminder of one of the main drawbacks of renewables – namely their short-term unpredictability – management’s decision to deliver a meaningful hike in the dividend is a show of confidence in the outlook as it sticks with medium-term guidance.
SSE was among the names to see some selling yesterday on news of the new energy price cap which created fears about pressure on margins and risks around higher bad debts. However, because it exited its retail energy operations several years ago it suffered less than some of its peers.
PPHE Hotel
PPHE Hotel is the latest UK-listed name to receive a takeover approach, and it is one which is getting a favourable hearing from the company in a tricky environment for the hospitality sector.
PPHE effectively put a for sale sticker on itself last year as its stock market valuation continually lagged the worth of its hotel assets. Unlike some peers, PPHE typically owns its hotels rather than operating an asset-light franchise model.
There are some regulatory hoops to jump through, and it is worth noting that, while the bid from Israel’s Fattal Hotel Group is at a significant premium to the undisturbed share price, it is still at a chunky discount to the estimated value of PPHE’s properties.
However, it seems likely that shareholders, and most significantly the founders Eli Papouchado and Boris Ivesha who hold 44% of the stock, will come to an agreement.
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...
