Today's Markets: Stocks tick higher, yields up, Shell chief steps down

Stocks in London and elsewhere across Europe rose on Thursday morning, clawing back some of the losses from the previous session. The FTSE 100 opened up over half a percent, having slid by almost one-and-half-percent in Wednesday’s session. Shares have been assisted by a steadily rising oil price over the last week, though crude prices have eased back about $1 from yesterday’s more than one-week high. Treasury yields remain firm with 10s near 3.44 per cent, which is pressuring gold to $1,685, its weakest since July, lifted the dollar to a two-day high, just short of its 20-year peak struck earlier this month. 

Today...French inflation a tad higher than forecast at 5.9 per cent on the final reading is just adding to the sense that it’s not peaked. Lots of US data today with retail sales, Empire State and Philly Fed manufacturing indices, industrial production figures, plus the weekly unemployment claims data.  

Shell (SHEL) will enter a new era as chief executive Ben van Beurden steps down after almost a decade at the helm. He’s overseen some remarkable changes as the company ditched its dual share structure, moved headquarters to London, committed to becoming a zero carbon business by 2050, endured a pandemic that saw oil prices collapse and a war in Europe that helped produced record profits. It’s been a funny old ten years for the oil industry with drilling now in vogue again. With shares up 38 per cent YTD and 60 per cent in the last 12 months, and with the company reporting record profits of $11.5bn in July, he’s leaving on something of a high.

Read our news analysis of van Beurden's departure. 

Also our recent in depth feature - Shell and BP: time for a rethink

Indices remain range-bound. The FTSE is smack in the middle of the range it’s traded for the last 12 months. US markets are in a range of a shorter time frame – since June – prices sitting around the halfway point from the June lows to the August highs. And yesterday was an indecisive session on Wall Street, with the major US indices oscillating between being in the red and green all day. The S&P 500 eventually closed up a third of one percent, led by tech as the Nasdaq Composite rose three-quarters of a percent.

Oil demand will fall off in the fourth quarter but will recover strongly in 2023, according to the IEA. A switch from gas to oil will add about 700,000 bpd, offsetting some expected demand destruction. An EU ban on maritime services transporting Russian oil will see that nation’s production down to 9.5m bpd by February next year, which is a 1.9m bpd drop compared to February 2022, before the invasion. The IEA trimmed its demand growth for 2022 by 110k bpd to 2m bpd while keeping its 2023 forecast at 2.1 million bpd. The outlook was probably on balance a little bullish. Oil is in a funny place with the uncertainty over the Iran deal, the US to end SPR releases soon, uncertainty over Chinese reopening and the broader macro-outlook and the Fed. And we have OPEC embarking on production cuts...it should all shake out after the mid-terms.

Neil Wilson is chief market analyst at Markets.com