BP higher following Gulf of Mexico settlement
Asian shares provided a cue to lead European market lower this morning, as fears were reignited with regards to China; the world’s second largest economy. Premier Wen Jaiboa said the country was aiming for economic growth in the region of 7.5% this year, lower than the 8% plus growth the country has been accustomed to during the last 8 year and which has become somewhat of a symbolic target.
Also weighing on sentiment was a raft of services purchasing managers indices from both the eurozone and the UK. The eurozone figure for February fell to 48.8 against a previously recorded flash reading of 49.4, with the UK’s equivalent below expectations of 55.0 to 53.8. The former shows contraction (as it is below 50) and as such increased fears of eurozone recession.
It was fairly evident that defensive sectors were in demand, with pharmaceuticals, utilities and tobacco all populating the upper end of the UK index. Following from the pessimistic outlook for China, mining and energy stocks were lower. Bucking this trend was BP, with investors reacting positively to news over the weekend that the company has reached a provisional $7.8 billion settlement with tens of thousands of individuals and businesses claiming from the Gulf of Mexico disaster in 2010. Whilst the company is yet to face federal negligence charges (which could potentially amount to a $18 billion fine under the Clean Water Act), the figure was lower than anticipated and added some clarity to the company’s liabilities. Shares opened higher by up to 2% at one stage, although finished the day up 8.1p (1.6%) at 504.6p.
The broader UK market ended the day near its lows, losing 36 points (0.6%) to 5874. The volume of shares traded on the index was once again low, indicating investors were wary at the start of what is anticipated to be an important week. Thursday will see a deadline in the Greek private sector involvement deal with many commentators suggesting that Greece will fail to muster enough support for the deal and collective action clauses will have to be introduced. Friday will also see US Non-farm payroll data which is keenly awaited given the recent uptrend in economic data from across the Atlantic.
This was posted in Bdaily's Members' News section by James .