Member Article

BP’s results fail to impress

With strong performances in risks assets since the back end of last week, a slight consolidation was unsurprising at some point. European indices were marginally lower this morning on concerns that German politicians would oppose the granting of a banking license to the European Stability Mechanism. There was also evidence of money fleeing Spain, with outflows of €41.3 billion in May, significantly more than the previous month, as Spanish banks sent money abroad and foreign lenders and investors shunned the region. Eurozone labour data was also released today, showing that the unemployment rate for the Eurozone as a whole rose to a record high of 11.2% in June. With multiple disappointments and markets that have been described by some commentators as getting ahead of themselves in the last few trading days, falls of up to 0.5% during the morning were not surprising.

It was also a busy day for corporate reporting, with the London listed oil major BP disappointing investors with a $5billion write down in its second quarter results, resulting from a decline in the value of its US refineries. The write down ensured an accounting loss of $1.385 billion over the period, but even excluding this one-off charge, profits would have been below expectations. With remaining uncertainty around the 2010 Gulf of Mexico oil spill, and litigation in Russia, the market was unimpressed and duly wiped 4.4% off the share price which closed down at 425p.

The FTSE 100 ended the day at its low, losing 1% to 5635, underperforming its major European peers. Over the month, stock markets in the UK, Germany and France are up a few percent (most significantly the German DAX), whilst the Spanish IBEX is down more than 5% following today’s close, although notably off its lows following the rally in recent days.

This was posted in Bdaily's Members' News section by James .