FTSE 100 flat as volatility picks up, green light for major North Sea oil field, three-way bid race for Pendragon and Saga narrows losses

“The FTSE 100 was pretty much unchanged early on Wednesday but there’s no doubt an air of uneasiness continues to pervade the markets, visible in the recent surge in the VIX index of volatility,” says AJ Bell Investment Director Russ Mould.

“The looming threat of a government shutdown in the US, a weak consumer confidence reading overnight and continued industrial action by the country’s auto workers are creating a mood of instability which, when added to the strong hints that rates will stay elevated for an extended period, is not a happy cocktail for stocks.

“After rowing back on net zero targets the government will have done little to endear itself to environmentalists this morning, though it may be winning the energy industry back on side, as it approves a major North Sea oil development.

“The imposition of windfall taxes and continual tinkering with the country’s fiscal terms for oil and gas have led to a lot of grumbling in the sector – could this be a turning point? Ithaca Energy, which partners Norway’s Equinor on the Rosebank project, gushed higher on the news, helping shift the trajectory for a company which had endured a difficult time since its return to the market last year.

“Strong first half results from Pendragon, against a difficult market backdrop, help explain why there’s a bid battle afoot for the car retailer. The three-way race to buy the business could leave shareholders as the major winners.”

Saga

“Is Saga’s recovery finally gaining traction? Given the ageing population, selling travel and insurance products to an over-50s demographic, many of which are in a stronger financial position than younger cohorts, should be a winning strategy.

“However, Saga’s execution has been horrible since it joined the market the best part of a decade ago. Supported by a travel recovery there are some tentative signs Saga is finally getting its act together.

“First half losses narrowed appreciably and the company says its travel business is on track to return to profit in this financial year.

“In a sign that the company’s financial position is less acute, Saga is putting a sale of its underwriting operations on hold so it can achieve a better price.

“The wider insurance business continues to struggle as, in common with much of its peer group, it faces significant claims inflation. At some point the argument may be made that Saga should jettison the entire insurance operation and focus solely on being a specialist travel operator.”

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