Forex

Investors in BP have banked some strong gains on the back of the company’s strong Q3 earnings report, which saw share price soar 3.5% in morning trading. While those gains have softened as the day goes on, reported profits that are more than double those recorded over the same three months last year bode well for BP share price’s short to medium term outlook at least.

The soaring oil prices over the past year may not generally be good for our pockets with the price of petrol, plane tickets and manufactured goods all also rising as a result. However, for anyone investing online in the shares of oil companies such as BP and Shell, there is certainly a burnished silver lining. Profits are surging on oil prices up around the $80 level and share prices along with them.

Last year BP reported Q3 profits of $1.4 billion. This year they were $3.1 billion, notably ahead of analysts’ forecasts, despite the higher oil price over the period that saw average trade prices of $75 compared to $52 in 2017. Underlying profits, which exclude one-off costs, currency fluctuations and accountancy effects were $3.8 billion against predictions for $2.9 billion.

With the US-China trade war putting buyers of US-produced WTI, wary of China slapping levies on it, Brent crude and oil from other parts of the world, which makes up most of BP’s trading inventory have benefitted. OPEC production cuts, new U.S sanctions on Iran, the world’s fourth largest oil producer, and ongoing mismanagement of PDVSA, the state-controlled Venezuelan oil company (the country has the world’s largest proven oil reserves) are all currently combining to put upwards pressure on oil prices.

With OPEC and Russia quietly resisting U.S. pressure to ramp up production to compensate for its sanctions on Iran, there is also little prospect that prices will drop significantly any time soon. If anything, they are expected to rise again before the end of the year.

The resulting cash flowing into BP’s coffers is not only boosting its balance sheet in the short term but is helping the company build for the future. The company recently announced its biggest acquisition in more than 20 years – a $10.5 billion deal to buy U.S. shale oil operator BHP Shale. Asset sales planned to raise between $5 billion and $6 billion, and a potential new share offering, were to fund the acquisition. However, the recent boost to BP’s profits means that will now be unnecessary with the assets sale cash instead being diverted towards paying down the company’s debt.

As well as capital gains on BP’s rising share price, investors are also profiting from rising dividends. The company increased dividends to 10.25 cents a share, from 10, in the second quarter. It was the first increase in 4 years and while it has been held steady this time, investors might expect further rewards if Q4 results maintain the current trajectory of BP’s finances.

Strong investor interest has seen Uber, the taxi hailing app with big ambitions in the driverless cars industry, pull in $2 billion from a junk bond sale. The massive cash injection is expected to be the company’s last ahead of a massive early 2019 IPO that Uber hopes will value it at $100 billion despite never having come even close to breaking even.

The euro snapped a two-day rising streak following German election results

German elections prompted investors to lock profits into one of the most profitable currency trades of the year ending the euro’s two-day rise. Money managers have piled into the single currency and related bets in 2017, particularly European equities, as the euro zone economy regained momentum and its monetary policy outlook diverged from its counterparts in the United States and Japan, pushing the euro up more than 13 per cent this year. However, and expert termed the impact limited as the effect of the election result is domestic rather than regional. He said that the euro will be more sensitive to any shift in direction from the European Central Bank policy.

The dollar came down against the yen after shutdown remarks by U.S. President Donald Trump

Following U.S. President’s shutdown remarks, the dollar edged down on Wednesday. Trump recalled his election vow to build a wall at the U.S.-Mexican border during a rally in Phoenix. Talking to his supporters, he said, “If we have to close down the government, we are building that wall.” He raised the spectre of a government shutdown to fulfil a campaign pledge. Trump also indicated the possibility of terminating the NAFTA treaty with Mexico and Canada and commented on the U.S.-North Korea crisis.

The euro pulled away from 10-month high after British retail sales

The euro pulled away from almost 10-month highs after data showing that British retail sales slowed in July. The currencies touched the strongest level since October amid expectations that brexit will be more damaging to the UK economy than the euro zone.

Euro slipped back below $1.20 amid investor worries

The euro slipped back below $1.20 as investors worried that the single currency might be running out of steam. The currency had witnessed 14 per cent rise since the beginning of the year. The dollar was recovering from a four-month low against the yen as worries about North Korea´s latest missile test eased.

Royal mail leaves FTSE 100 after shares fall

Royal Mail is out of FTSE 100 after its shares fall more than 15 per cent. Its price was at just above 390p, which is above its worth then the government sold the stock earlier. The mail delivery organization also faces a series of issues which includes industrial action in which the Communication Workers Union rejected a new pension arrangement, raising the possibility of strike. Royal Mail did not deliver compared with other top companies which was another reason for its exit from the listing. This means the mail delivery organization will drop into the FTSE 250 index after trading closes on 15 September.

Thin trading volumes have hit JSE Ltd, with the company reporting a double-digit drop in interim earnings as low volatility and declining investor sentiment hurt revenue.

The civil service prides itself on being able to deliver the crazy and impossible, if ministers so ordain. It even managed to introduce a poll tax for Margaret Thatcher, and to somehow keep it going for three years in the face of riots. But it’s increasingly clear that Brexit may be an impossibility too far, even for Whitehall’s brightest and best.

Index provider FTSE Russell said on Tuesday that a majority of investors it surveyed supported its suggestion that companies should offer at least some voting rights in order to be included in its stock indexes.