Daily market update: Markets in retreat, FTSE 100, BP, Shell

Investors didn’t get what they wanted from President Trump’s address to the American people and have reacted accordingly.

Famously, uncertainty is kryptonite for the markets and between the contradictory messages from Trump, disputed claims on both sides, and the lack of clarity on a plan which can provide a resolution to the conflict they are getting a heavy dose of it right now.

Stocks have been volatile in recent weeks as sentiment shifts on the latest signals, but oil, though it has also experienced significant shifts, has rarely dipped below $100 per barrel since its initial surge.

This may be a better indicator of where we are than the latest movements in global indices as the world is forced to confront a situation where around 20% of the world’s supply is disrupted.  

Once again on a down day for markets in general, the FTSE 100 is spared the scale of losses seen elsewhere as heavyweight constituents BP and Shell enjoy gains. Traditionally defensive names in the tobacco and utilities sectors also helped to provide some ballast.

Shares in SSE managed a modest move higher as the company narrowed its earnings forecast to the higher end of guidance on robust renewables output. The company said it had seen no impact from events in the Middle East and the importance of the energy infrastructure it is building out is arguably only going to become more prized in an environment where energy security is paramount.

A retreat in precious metals prices saw Fresnillo and Endeavour on the back foot while other mining names and housebuilders are also among the fallers.

Lloyds

There will be some relief that Lloyds is not being forced to change its provisions, at least for the time being, in the wake of the redress scheme for the motor finance mis-selling scandal being announced.

Details had shifted slightly from previous indications on average levels of compensation, but it seems Lloyds had been conservative enough in its assumptions to absorb this.

Lloyds shares were lower this morning but the fall was similar to that seen for its peers amid broader market weakness relating to Iran.

The hope for shareholders will be that Lloyds can now leave this issue firmly in the rearview mirror and motor ahead with its strategy of revving up its wealth management and fintech capabilities.

A potential roadblock is the risk of legal action from complainants unhappy with the FCA settlement and this may linger over the stock like nagging creaks in a car’s suspension for some time to come.