Today’s Markets: Equity rally pauses ahead of US inflation report

Companies

Shell investors more interested in more output than green M&A: RBC

The excess cash flow experienced by large energy companies has raised many juicy strategic questions: spend more on production to take advantage of high prices? Keep running massive buyback programs? Buy more low-carbon or no-carbon businesses to polish ESG credentials and prepare for a different energy environment?

Up to this point, Shell (SHEL) it has largely stuck to buybacks as well as paying down its debt. But as the cash keeps pouring in, the other questions keep coming up, especially as governments clamor for more oil and gas production. RBC Capital Markets analyst Biraj Borkhataria said in a note on Tuesday morning that Shell’s top investors had a clear preference.

“Based on our conversations with investors, feedback on potential capex increases was mixed, but on the sidelines we felt more buy-in for increasing oil and gas capex relative to low-carbon projects,” he said. . The context of the energy transition and the continuous forecasts of falling demand for oil and gas in a few years mean that the company still has to think about what comes next. Investors see it differently, Borkhataria added. “As Shell is looking to transition its business to lower-carbon products, we think this may make investors a little nervous about large-scale mergers and acquisitions,” he said.

We note how Shell and BP’s (BP.) fortunes have changed this year in a cover story earlier this month. Read it here. oh

Ocado lowers sales expectations

Ocado Retail, the joint venture between Ocado (OCDO) Y Marks and Spencer (MKS) it said in a third-quarter update that customers are trading lower and spending less due to cost pressures and warned this would hit sales for the year.

The company increased the number of customers and orders in the quarter, with retail revenue up 3% to £532m and average weekly orders up 11% to 374,000.

But Ocado said that “consumers are [buying] smaller baskets and looking for value-for-money items as they respond to inflationary pressures.” This led to a 6 per cent drop in the average basket value to £116. The company now expects “a small decline in sales” for the year and cash earnings “close to break-even”. Shares of Marks & Spencer fell 1.5 percent in response to the news, while shares of Ocado fell nearly 10 percent. California

Listed homebuilders lobbied against electric car chargers

Listed Home Builders Barratt Developments (BDEV), Berkeley Group (BLG), Taylor Wimpey (TW) Y Vistry (VTY) privately lobbied against government policy requiring electric car chargers to be installed in every new home. Then Prime Minister Boris Johnson unveiled the rules in November last year as part of the government’s net-zero emissions strategy, but according to documents seen by The Guardian, homebuilders tried to get the government to scrap the idea. , citing concerns about rising costs homebuilders would face. You have to pay to install the chargers in the new developments. ML

Link Group could face £300mn fine from Woodford: FCA

The Financial Conduct Authority (FCA) has said it could impose a fine of up to £306m on Link Group for its involvement in the Woodford scandal, shedding some light on the regulator’s lengthy investigation into the matter.

A proposed acquisition of Link Group, whose Link Fund Solutions served as authorized corporate director in the failed Woodford Equity Income fund, prompted the FCA to warn that a fine could be imposed and require funds to be held available for such payment as part of take control of it.

“The FCA has investigated the circumstances that led to the suspension of the WEIF and is likely to seek to require LFS to pay a financial penalty and/or consumer compensation,” the regulator said. That said, the FCA noted that this was not a final decision and could be challenged. Link Group released a statement saying it “does not agree with the FCA’s opinion” and would explore all options, including challenges.

As the fund suspended and then began a lengthy process of liquidating its holdings and returning the remaining capital to investors in 2019, investors are eager to hear the outcome of the FCA investigation. The regulator stressed that “multiple parties” are still under investigation, but did not say when an update would come. database

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