Walmart shares soar with business now worth more than $500 billion and Chevron to sell North Sea assets

“The Guinness Book of World Records will need updating given the performance of stock markets this year. UK and US equities have been racking up new highs on multiple occasions and today is it is the turn of the S&P 500, Nasdaq and Dow Jones to ascend to new record levels,” says Dan Coatsworth, investment analyst at AJ Bell.

“Investors have been pumped up by the latest inflation reading, believing it is cool enough to stir the Federal Reserve into action and cut rates in the near future. It also helps that quite a few US companies are getting a positive reaction to their latest results, together lifting the general mood around the markets and firing up enthusiasm to make trades.”

Walmart

“Better than expected results from Walmart suggest the US consumer isn’t in such a perilous state as previously thought. Fears that the US public had depleted their cash savings and were becoming overly reliant on credit had cast a dark cloud over consumer-facing companies, for fear that it could lead to a pullback in spending.

“That might still be true for certain retail items, but a good chunk of Walmart’s products are deemed to be essential items and its first quarter results show the consumer is still merrily spending money. Even Walmart’s non-US operations saw decent growth thanks to strength in food and consumables and an improving picture for general merchandise.

“The strong results might anger the thousands of staff who are being let go from Walmart as it tries to cut costs across the business. Efficiency is the name of the game and Walmart is one of many corporates doing everything they can to introduce more automation and become less reliant on manual workers.

“Its labour force might be grumpy but shareholders will be happy. Walmart’s valuation exceeded $500 billion for the first time, a key milestone for the US retail giant.”

Chevron

“It’s the end of an era as Chevron confirmed plans to sell its remaining UK North Sea oil and gas assets. The company has operated in the region for more than 55 years but now joins a growing line of big players looking elsewhere for opportunities. ExxonMobil, BP and Shell are among the names to have sold assets in the region over the years and Chevron joining the gang is a significant moment for the UK oil and gas industry.

“A windfall tax introduced in 2022 caused quite a few companies in the UK North Sea to rethink their plans, grumbling about the hit to profit margins and making it harder to justify investment in the region.

“The prospect of Labour winning the next general election created even darker clouds for those operating in the UK North Sea as the political party wants to increase the windfall tax from 75% to 78% until 2029. Naturally, that makes the region unappealing to companies with options for where they spend money on future development, and Chevron has plenty of other places it can splash its cash.

“While the UK North Sea may now seem like a graveyard for the oil and gas sector, there will almost certainly be someone prepared to take the risk of buying Chevron’s assets, particularly if they can get a good price. Potential buyers will have a good position in negotiations given the unfavourable tax regime as there is no way that Chevron can expect top dollar.”

These articles are for information purposes only and are not a personal recommendation or advice.