By Swissquote Analysts
Shell to Take $2 Bln Tax Hit for 4Q as Integrated Gas Trading Rose
Topic of the day
Shell PLC said Friday that it expects to take a $2 billion hit for the fourth quarter from additional taxes in the European Union and the U.K. government's energy windfall tax, and that its integrated gas trading and optimization results significantly rose on quarter. Recently announced additional taxes in the European Union, and the deferred tax hit from the increased U.K. government's energy profits levy are expected to amount to around $2 billion for the fourth quarter. The company said the taxes and levies will be reported as identified items, and so won't affect fourth-quarter adjusted earnings. They will have a limited cash hit in the fourth quarter given the expected timing of payments. The energy group said production for the fourth quarter in Integrated Gas is anticipated to be between 900,000 and 940,000 barrels of equivalent oil per day compared with 924,000 barrels in the third quarter and prior guidance of 910,000 to 960,000 barrels. This reflects a longer-than-expected outage at its Prelude site.
Despite opening on a cautious note and staying somewhat sluggish till about a couple of hours past noon, the Switzerland market ended on a firm note on Friday as stocks surged higher in the final hour on strong buying. Data showing a contraction in U.S. private sector activity in the month of December and a slight drop in non-farm employment compared to a month earlier helped ease concerns about any aggressive tightening by the Federal Reserve in the coming months. The benchmark SMI ended higher by 87.15 points or 0.79% at 11,144.54, slightly off the day's high. Logitech surged nearly 3% and Richemont gained about 2.5%. Geberit and Swiss Re gained 1.66% and 1.56%, respectively. Novartis, ABB, Roche Holding, Swisscom, Zurich Insurance Group and Sika gained 0.78 to 1.02%. Alcon, Nestle and Swiss Life Holding posted modest gains. Lonza Group drifted down 2.05%. Sonova declined nearly 1% and Partners Group shed about 0.5%. In the Mid Price Index, Belimo Holding, VAT Group and AMS gained 3.3%, 2.75% and 2.03%, respectively. Galenica Sante, Clariant, SIG Combibloc, Georg Fischer, Baloise Holding and Flughafen Zurich surged 1 to 1.6%.
European stocks closed higher on Friday, as data showing a weaker than expected reading on U.S. service sector activity, and a drop in unemployment rate helped ease concerns about any aggressive tightening by the Federal Reserve in the coming months. Data showing a drop in Eurozone consumer price inflation, and an improvement in eurozone economic confidence contributed as well to the positive mood in the European markets. The pan European Stoxx 600 gained 1.16%. The U.K.'s FTSE 100 climbed 0.87%, Germany's DAX advanced 1.2% and France's CAC 40 ended stronger by 1.47%, while Switzerland's SMI gained 0.79%. Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Portugal, Spain, Sweden and Turkiye closed with sharp to moderate gains, while Russia ended flat. Shares of mining companies moved higher on hopes for normalization in Chinese economic activity after authorities said that the first wave of infections has hit a peak in cities including Beijing and Tianjin. In the UK market, Anglo American Plc surged 5.75% and Endeavour Mining climbed 4.3%, while Smurfit Kappa Group, Entain, Antofagasta, Smith (DS), IHG, Johnson Matthey, Glencore, BT Group, JD Sports Fashion, Mondi, Centrica, Ashtead Group, Fresnillo and Rio Tinto gained 2 to 3%. Rentokil Initial dropped about 3.7%. DCC, Compass Group, Standard Chartered and Pershing Suqare Holdings also ended weak, albeit with less pronounced losses. In Paris, Renault rallied 3.5%. STMicroElectronics, Safran, Hermes International, Veolia, LVMH, Air Liquide, ArcelorMittal, Michelin, Carrefour and Saint Gobain gained 2 to 3%. Engie dropped more than 3% and Danone drifted down nearly 2%. In the German market, Infineon Technologies, Continental, Zalando, BASF, Linde and Fresenius Medical Care gained 2 to 3%.
The Dow Jones Industrial Average rallied about 700 points on Friday after fresh data showed a slowdown in wage growth, an upbeat sign for the Federal Reserve's battle against inflation that could ease pressure for further interest-rate increases. The Dow rose 700.53 points, or 2.1%, to 33630.61. The broad-based S&P 500 climbed 86.98, or 2.3%, to 3895.08. The technology-heavy Nasdaq Composite advanced 264.05, or 2.6%, to 10569.29. The day's rally put all three major U.S. stock indexes in positive territory for the first week of 2023. All three rose about 1% or more for the week. The Labor Department's monthly jobs report showed that employers added 223,000 jobs in December, the smallest gain in two years but more than the 200,000 expected by economists. The ability of U.S. companies to keep hiring shows that the job market has held up even as the Fed's rate increases have sparked worries about a potential recession. Friday's rally was broad-based, with all 11 sectors of the S&P 500 posting gains. Costco Wholesale was among the best-performing stocks in the index. Its shares advanced $32.68, or 7.3%, to $482.87 after the bulk retailer reported strong holiday sales. World Wrestling Entertainment surged $12.23 per share, or 17%, to $84.27 after its former chief executive, Vince McMahon, said he plans to return to the company and pursue a sale of the business. Bed Bath & Beyond continued its plunge, tumbling 38 cents, or 22%, to $1.31 per share a day after the retailer warned that it might file for bankruptcy protection.
The Asian stock markets are moving upwards on Monday. Besides the Hong Kong stock exchange, the Chinese renminbi also benefits from the opening of international borders, the latter jumping to a four-month high against the US dollar. While the Shanghai Composite gains 0.4 per cent, the HSI in Hong Kong rises 1.6 per cent.
U.S. bond yields fell after Friday's jobs report. The yield on the benchmark 10-year Treasury note dropped to 3.570%, from 3.720% Thursday.
UBS lowers DSM target to EUR 140 (143) – Buy
UBS raises Fresenius target to EUR 32.50 (30.50) – Buy
Bank of America raises Sainsbury target to 200 (180) p – Underperform
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