Oil prices won't top $100 in the next decade, OPEC predicts

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Crude will stay below the $100-a-barrel (bbl) level for at least the next 10 years, according to the Organization of Petroleum Exporting Countries (OPEC). Read More

Market buzz: Glencore drops on SFO report, how much further will dollar rally?
Friday 18 May 2018

(Sharecast News) - 1641: The FTSE 100 ends down on the day at 7,778.79 but 54.54 points higher over the week. 1629: Analysts at Citi think America's so-called 'twin deficits' will eventually drag the US dollar back down. However, should the US dollar rally much higher then you would want to 'overweight' Japan and the UK, while 'underweighting' Emerging Markets and the US, if you hedge the currency risks. On un unhedged basis, 'overweight' US and 'underweight' EM. 1629: "Our proprietary UK consumer survey suggests UK consumers have become less willing to spend. Weak growth may not be a blip. The explanation may be tighter credit conditions, a soft housing market and expectations of rate hikes," say strategists at BofA-ML. 1628: With the SFO said to be preparing a formal bribery investigation into Glencore and Dan Gertler's dealings in Congo, analysts at RBC Capital Markets said the initial share price reaction "seems completely overdone in our view". The decision to proceed with the investigation is still subject to approval and the prosecutor has to show it has jurisdiction with Glencore being based in Switzerland and the shares trading on the LSE. Dan Gertler and DRC President Joseph Kabila have previously been subject to UK and US bribery investigations resulting in sanctions imposed on Gertler. Although clearly not a welcome development, RBC plays down the news as the potential for an SFO investigation "has been around for years", with reports dating back to 2012 speculating on potential investigations, with more following the Panama Papers in 2016. RBC continues to rate Glencore at 'outperform' with a 410p target price. 1547: Is the US dollar rally in recent weeks just a short-term corrective rebound or, wonders Rabobank, perhaps the beginning of an upside trend towards the 2017 high at 103.82? After previously noting the shift in the underlying trend and marking a falling wedge pattern on his weekly chart, forex strategist Piotr Matys noted that the dollar index (DXY) has since rallied well above the upper trendline, making it would be "difficult to dismiss the notion that we have witnessed a valid bullish breakout". "Based on this evidence it is reasonable to assume that the US dollar index is likely to revisit next important tops at 94.219 and 95.149 in the coming weeks. A close above these levels would strengthen the upside bias. "While first important support comes at around 92.35, it would require a much sharper correction well below the 91~ pivot to annul the constructive short-term outlook for the DXY index." 1532: Apple has begun paying back tax to Ireland with an initial €1.5bn as part of a €13bn backlog ordered by the European Commission as part of a state aid ruling, that is still being appealed by the US tech giant and Ireland. Irish finance minister Paschal Donohoe said the initial payment had been made into an escrow account set up by the government. 1425: The yield on the benchmark 10-year US Treasury note down three basis points at 3.09%. 1408: Bank of America-Merrill Lynch's weekly Bull & Bear indicator prints at 4.7 or 'neutral' territory. 1326: Glencore shares have tumbled 4% on reports that the Serious Fraud Office is preparing to open a formal bribery investigation over the commodity's giant's dealings in Congo, via Bloomberg. 1253: Trade unions are highlighting concerns about workers and food producers over the proposed merger between the Sainsbury's and Asda, with analysts expecting competition authorities to order the pair to dispose of scores of stores. Unite, a union that represents thousands of Sainsbury's workers in stores, logistics and in the supply chain, said it was engaging with Sainsbury's to try and secure job guarantees and warned that consideration should be given to more than just competition concerns. Assistant general secretary Diana Holland said promises on jobs and stores by Sainsbury's boss Mike Coupe "could end up worthless if the Competition and Markets Authority gives the green light and orders a disposal of stores". "This proposed merger not only poses major questions about competition, but for food security, as well as jobs in stores, logistics and the wider food supply chain across the UK." 1249: Royal Wedding news - Sainsbury's expects to sell 95,000 bottles of prosecco and champagne on Saturday, with 645,000 punnets of strawberries, 6,000 Taste the Difference lemon cakes. 1238: Italy's Five Star Movement and the right-wing League parties have agreed a deal to govern the country, promising tax changes, a basic income for the poor and pension reforms. The deal was struck after 10 weeks of political interia caused by inconclusive election results in March where no one party gained a majority. 1158: Flight plans post-Brexit have still not been agreed, EU transport official Henrik Honolei has said, warning the effects on aviation could be significant after the deadline of 29 March next year. "The possibility still exists that on day one no flights operate. It hasn't disappeared," Honolei said at a CAPA Centre for Aviation, adding that Britain and the EU first needed to agree the overall Brexit framework before any negotiations could be done specifically on any sector, Reuters reported. 1025: Just a day after surging on the back of solid first-quarter sales figures, Just Group is in the red after private equity investor Permira dumped its entire holding in the retirement services company. Permira has sold just over 166m shares in Just Group at 143p each, which is its entire 17.7% stake. 0953: Embattled retailer Carpetright is on the rise after announcing plans for a £60m placing and open offer as part of its efforts to turn around the business. Carpetright said that £6m of the proceeds will be used to cover the additional costs associated with implementing its company voluntary arrangement, while £12.5m will be used to repay the short-term unsecured loan from its largest shareholder, Meditor, and £33m will be used to fund its capital expenditure plans. The rest of the proceeds are earmarked for ongoing working capital requirements. Independent retail analyst Nick Bubb said: "The earnings dilution is huge, but it has guaranteed the survival of the business and enabled it to fund the restructuring. How many of its core hapless shareholders have stumped up is unclear." 0918: Seems Mark Newton-Jones has taken a 21% pay cut after being re-hired at Mothercare CEO a month after he was given the bootie. The retailer put out a statement that Newton-Jones re-joins the board today on a salary of £480,000, which compares to the £612,000 he was on, according to the last annual report. 0907: A positive view on Dixons Carphone from analysts at RBC Capital Markets, who has lifted its earnings forecasts and upped its price target. "We think under new management it should benefit from its dominant position in UK and Nordic electricals markets, and from changes in the competitive environment." RBC has raised is EPS forecasts by 2-6% post the sale of Dixons' loss-making Honeybee business and the price target is up to 250p from 230p based on discounted cash flow and sum-of-the-parts analyses. 0901: The Competition & Markets Authority has kicked off the process to investigate the proposed Sainsburys-Asda merger, inviting all "interested parties" to submit views on the impact of the deal on competition around the country. The FT reported last night that business secretary Greg Clark had written to the head of the CMA to express his view that when assessing the merger it ought to take account of the "possible impact on the supply chain". 0848: Friday's London open market report shows stocks retreat from the record closing high yesterday. The FTSE 100 is down 0.1% to 7,780.87, having gained 0.7% at 7,787.97 the day before. Spreadex analyst Connor Campbell said: "Whether or not the FTSE can mount a charge on 7,800 may be down to two things this Friday: Brent crude and sterling. The former is sitting at $79.50 per barrel following the latest renewal of the US-China trade war fears; a return to $80 could give the FTSE the fuel to beat its own intraday record." "As for the pound, if the currency sees even a semi-substantial slide against either the dollar, where it is just above $1.35, and the euro, where it is down 0.1%, then that may be enough to push the UK index over the edge." 0841: Among the broker note action, Smith & Nephew was hit by a downgrade to 'hold' at Commerzbank, but outsourcer Capita is higher after an upgrade to 'overweight' at JPMorgan and Ocado was upgraded to 'hold' at HSBC a day after saying it was negotiating a mega deal with US grocery chain Kroger. 0837: AstraZeneca's Q1 sales and earnings numbers fell more than analysts had forecast, with earnings down due to investment in drug launches larger opex than expected, while sales were hit by a larger erosion of its Crestor statin drug than forecast. But there were encouraging performance from newer drugs and management have reiterated full year guidance.

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