UK stocks steady after jobs update, shareholders applaud BHP’s oil and gas exit, Plus 500 lifts revenue expectations

“After extending yesterday’s losses early on the FTSE 100 had recovered to regain parity in the first hour of trading on Tuesday,” says AJ Bell Investment Director Russ Mould.

“Some well-received corporate results helped balance out wider downbeat sentiment linked to the signs of a Chinese slowdown which emerged at the beginning of the week and the turmoil in Afghanistan.

“UK jobs figures were a smidge better than expected and certainly didn’t contain anything to alarm the market, US retail sales are likely to draw focus later on.

“Investors will be looking for any signs of cracks in the American recovery in the retail numbers but will also alive to evidence of mounting inflationary pressures.”

BHP

“If the trailer whetted people’s appetite then the blockbuster announcement has them swooning in the aisles.

“Just 24 hours after it confirmed it was in talks over an exit from the oil and gas industry, mining giant BHP takes the headlines again as it confirms its plans to merge its oil assets with Woodside Petroleum.

“The market is clearly excited about the move and while investors are set to get shares in the combined venture rather than an immediate cash payout, this will give them the option of selling the shares should they choose and realising value that way.

“The news comes alongside results which encompass a big capital return to shareholders and a plan to tidy up the company’s corporate structure with its main listing widely expected to be in Australia and the green light on a new potash project.

“BHP has a clear strategy now of focusing on future-proofed commodities which are part of the transition away from fossil fuels or in other words being part of the solution rather than part of the problem and it’s an approach which is winning favour from the market.

“CEO Mike Henry is to be commended for the speed at which he is executing the plan having started just before the global pandemic hit.”

Plus500

“Trading platform Plus500 has helped dispel fears that its lockdown-related success is due to come to a juddering halt by upping revenue guidance for the full year alongside first half results.

“Profit for the half year fell, which was expected given the comparison with a period in the early stages of the pandemic which, thanks to significant market volatility, created lots of opportunities for traders.

“Covid restrictions meant there were more people at home with the time to put money to work in the markets and Plus500 seems to have done a decent job of hanging on to a decent portion of these new customers.

“However, there were some less positive elements of today’s update with Plus500 not giving guidance on profit and seeing customer acquisition costs going up – a trend it notably expects to continue.

“For now the market is giving the company the benefit of the doubt but that may change if momentum stalls and the threat of increased regulation remains a pretty constant cloud on the horizon as the authorities look to ensure people are protected from racking up substantial losses.”

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