Oil, offers and online shopping

The headline index lost further ground in early trading with BP sliding following its full year figures and BHP Billiton falling after a downgrade by Standard & Poor’s. Traders remain cautious over the potential impact of declining growth in China, the decision to implement negative interest rates in Japan and ailing oil prices.

“The combination of asset-write downs, one-off charges and plunging oil and gas prices mean BP’s (LSE:BP.) fourth-quarter results are no thing of beauty, but investors will be relieved to see the dividend for the period left unchanged at 10 US cents per share,” says AJ Bell Investment Director Russ Mould.

“That is equivalent to 6.63p and enough to enable BP to offer a small increase in its total, full-year distribution to shareholders. 

“One final point which may catch investors’ eyes is BP’s reserve replacement ratio, which came in at just 61% excluding disposals and acquisitions, even though underlying oil production volume was flat. 

“This ratio measures the amount of new oil BP has found from its exploration work during the relative to the amount is has extracted from the ground and sold. This means 2016 was the third year in four when the ratio came in below 100%, to show BP is producing more oil than it is finding, something which may in the very long run help restore balance between supply of and demand for crude.

“Supermarket giant Sainsbury’s (LSE:SBRY) was among the small band of blue-chip risers after it agreed key terms of a possible offer for Argos-owner Home Retail (LSE:HOME). Sainsbury’s is aiming to expand outside the fiercely competitive grocery sector and has eyed Argos for some time.

“Online grocer Ocado (LSE:OCDO) continues to make gains boosting its customer base by 20% and increasing statutory profits to £11,9m from £7.2m. And the group looks set for further expansion as it expects to sign multiple deals in multiple territories in the medium term.”

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