FTSE struggles for direction with Jackson Hole in view, Wood Group revenue slumps
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“The FTSE 100 was heading nowhere fast on Tuesday, starved of any obvious catalysts on the corporate and economic front” says AJ Bell Financial Analyst Danni Hewson.
“Concerns about the spread of the Delta variant seem to wax and wane as often as the weather and a slightly sunnier mood to match the meteorological conditions in the UK helped the travel sector eke out some modest gains early on.
“Also helping sentiment was a steady performance overnight for Asian stocks and a strong showing on Wall Street.
“All eyes remain on the Jackson Hole meeting at the end of the week with the markets likely ferreting around for clues on what central bankers will do next on financial stimulus and interest rates and, crucially, when.”
Wood Group
“Oil prices have had a strong year so you might expect the whole industry to be firing on all cylinders.
“However, there is often a lag between a recovery in the oil market and projects being sanctioned.
“This affects those companies set up to serve the oil and gas explorers, developers and producers and is evident in the falling first-half revenue reported by Wood Group today.
“More encouraging were the forward-facing metrics like order intake which suggest business is beginning to pick up. Margins are also improving but debt remains elevated, and ticked up uncomfortably in the period.
“As a results the company still appears to be some way of being able to resume dividends, arguably investors would be better served by Wood Group investing to secure its long-term future.
“After all a further complicating factor for the business at present is the transition away from fossil fuels which may also be having a chilling effect on new oil and gas developments.
“The good news for Wood Group is that it has the opportunity to respond to this transition and apply its transferrable skills to the renewables space and other cogs in the decarbonisation wheel.
“Unsurprisingly, building on its position in these areas is a key strategic priority for Wood Group.”
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