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What to watch: BP shares sink on profit 'collapse,' Moonpig IPO, silver drama

Tom Belger
·Finance and policy reporter
·5-min read
BP chief executive Bernard Looney. Photo: Toby Melville/Reuters
BP chief executive Bernard Looney. Photo: Toby Melville/Reuters

Here are some of the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world.

BP shares sink on first annual loss in a decade

BP shares (BP.L) shed more than 3% in London on Tuesday, after it posted its first annual loss in a decade and worse-than-expected profits in the final quarter of 2020.

The energy giant recorded a $5.7bn (£4.2bn) loss on its most-watched measure of underlying replacement cost profits in 2020. The coronavirus pandemic wiped out profits that had totalled $10bn a year earlier, despite a return to profit in the second half of the year.

It recorded underlying profits of $115m (£84m) in the final quarter, behind analysts’ expectations. Analyst Neil Wilson noted it marked a “collapse” on the $2.6bn profits seen a year earlier.

BP five-day share chart. Source: Yahoo Finance
BP five-day share chart. Source: Yahoo Finance

“The company is stuck in a conundrum as oil and gas production pays the bills and, crucially, the dividend. And yet production is at a four-year low, the company is not replacing the resources it is bringing to the surface and 2021 is off to a poor start,” added AJ Bell investment director Russ Mould.

“Cash flow from its traditional assets will also be required to invest in areas like alternative energy, where BP will also face the problem of increasing asset prices and competition from other participants in the sector.”

Silver prices plunge after hitting eight-year high

Silver prices (SI=F) were down almost 6% Tuesday morning, just a day after hitting their highest price since February 2013, briefly trading over the $30 (£22) per ounce mark.

The wild upswings had been largely attributed to the retail investing frenzy that has shaken up markets in recent days.

The surge was followed by the CME Group exchange stepping in, raising margins on silver futures by 18%. It said the decision was based on “the normal review of market volatility to ensure adequate collateral coverage.”

Silver miner Fresnillo (FRES.L), which also surged yesterday, was the biggest FTSE 100 (^FTSE) faller Tuesday morning, with its stock price down about 4%.

Glencore (GLEN.L) and Anglo-American (AAL.L) also ticked lower.

Moonpig shares surge after IPO

Online greeting card retailer Moonpig saw its shares sure 25% Tuesday morning as it made its stock market debut on the London Stock Exchange (LSE.L) in a move that valued the company at £1.2bn ($1.6bn).

The company, trading with the ticker MOON, set its share price at 350p. Shares were at around 440p shortly after they debuted on the exchange, as conditional dealings kicked off. Unconditional trading will begin on February 5.

Moonpig, backed by Exponent Private Equity Partners, which owns a 41.3% stake, is eyeing a place in Britain’s FTSE 250 (^FTMC) index.

It marks the second biggest UK listing of the year after Dr Martens was floated last week.

“Moonpig has been a big beneficiary of lockdowns as card shops have been closed and consumers have found options online to send greetings cards – sales doubled in the six months to the end of October,” said Neil Wilson, chief market analyst at Markets.com.

“Its market share is huge (60% of online cards in the UK in 2019) and the trend towards online that will last beyond the pandemic is supportive of future growth.”

Oil prices at highest in a year as traders bet on vaccine-fuelled recovery

Benchmark oil prices hit their highest level in more than a year on Tuesday, as traders bet on a vaccine-fuelled recovery in global demand.

Production cuts and a rally on wider financial markets this week also saw investors pile into the sector, despite BP (BP.L) posting its first annual loss in a decade.

US West Texas Intermediate crude futures (CL=F) have risen above the $54 mark for the first time since January 2020, trading at $54.22 (£39.58) at around 4am in New York.

Brent oil futures (BZ=F), the international benchmark, hit their highest since last February in a third day of gains. Brent was trading at $77.05 a barrel.

European and Asian stocks make gains after Wall Street rally

European and Asian markets made gains on Tuesday, after a Wall Street rebound lifted sentiment worldwide.

Germany’s DAX (^GDAXI) rose 1.4%, France’s CAC 40 (^FCHI) was up 1.2% and the Europe-wide Stoxx 600 (^STOXX) rose 1.3%. The FTSE (^FTSE) edged 0.2% higher.

“Whatever medicine the market took over the weekend it worked as after experiencing their worst week since October, global equity markets got February off to a strong start as concerns eased over the broader market impact of retail investors,” wrote Deutsche Bank analysts in a note.

Wall Street had rebounded on Monday after its worst week since October. US futures were pointing to continued gains. S&P 500 (ES=F) and Dow Jones futures (YM=F) both edged 0.5% higher as European markets opened, while futures on the Nasdaq (NQ=F) rose 0.7%.

“We can probably put this down to bears lacking any serious catalyst, the combination of stimulus and vaccines still underpinning a broad confidence, and Chinese repo market stress from last week is fading,” said Neil Wilson, chief markets analyst at Markets.com.

Asian markets had also closed higher. Hong Kong’s Hang Seng Index (^HSI) gained 1.2%, and Japan’s Nikkei (^N225) was up 1%. The Shanghai Composite Index (000001.SS) closed 0.8%.

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