Latest news with #oilpricevolatility
The Independent
5 days ago
- Business
- The Independent
Shell set to report lower earnings after ‘tepid' update to investors
Shell is expected to report lower profits for recent months as the energy giant continues to battle oil price volatility and strives to return cash to its shareholders. The FTSE 100-listed company is predicted to report adjusted earnings of 3.74 billion US dollars (£2.78 billion) for the second quarter, when it publishes its latest figures on Thursday. This would be down sharply on the 6.29 billion dollars (£4.68 billion) made the same time last year. It would mean the company generates earnings of 9.3 billion dollars (£6.9 billion) for the first half of 2025. Russ Mould and Dan Coatsworth, analysts for AJ Bell, said Shell issued a 'tepid' update to investors earlier this month where it 'flagged weaker trading results at the integrated gas division and losses at the chemicals and products arm'. Earnings for its integrated gas division are forecast to come in at 1.8 billion US dollars (£1.3 billion) – down on the 2.7 billion dollars (£2 billion) made this time last year. Analysts are expecting its chemicals and products arm to slip into a 28 million US dollar (£21 million) loss for the quarter, from a 1.1 billion dollar (£820 million) profit the prior year. It comes as oil prices have see-sawed in recent months amid an uncertain geopolitical environment. Prices dropped to four-year lows in April following US president Donald Trump's announcements on tariffs, raising fears over a global trade war. They were then sent higher in June due to worsening conflict in the Middle East which led to worries that supply of the commodity could be disrupted. Brent crude currently stands at around 70 US dollars per barrel. In March, the company revealed a fresh strategy to ramp up cost savings, cut spending and boost investor returns. It said it would look to strip out a cumulative five billion US dollars to seven billion US dollars (£3.7 billion to £5.2 billion) a year by the end of 2028. At the publication of its first quarter results in May, Shell said it was continuing with its shareholder buyback and dividend payments, after raising its dividend by 4% at the end of the last financial year. Investors will be watching closely to see what the latest quarterly dividend will be alongside the results on Thursday.
Asharq Al-Awsat
14-07-2025
- Business
- Asharq Al-Awsat
4 Factors Behind the Decline of Saudi Stock Market in H1 2025
Financial analysts and market specialists have identified four main factors driving the decline of the Saudi stock market during the first half of 2025. Speaking to Asharq Al-Awsat, they pointed to heightened geopolitical tensions in the region, ongoing trade disputes and tariffs between the United States, China, and Europe, oil price volatility, and persistently high interest rates. Collectively, these pressures have squeezed liquidity and weighed heavily on market performance. Despite the downturn, analysts expect the market to gradually recover over the second half of the year, supported by potential global interest rate cuts, stabilizing oil prices, easing economic uncertainty, and forecasts of robust growth in Saudi Arabia's GDP and the non-oil sector, alongside continued government spending on major projects. The Saudi stock market recorded notable losses in the first six months of 2025, with the benchmark index retreating 7.25%, shedding 872 points to close at 11,163, compared to 12,036 at the end of 2024. Market capitalization plunged by around $266 billion (SAR 1.07 trillion), bringing the total value of listed shares to SAR 9.1 trillion. Seventeen sectors posted declines during this period, led by utilities, which plummeted nearly 32%. The energy sector fell 13%, and basic materials dropped 8%. In contrast, telecom stocks advanced around 7%, while the banking sector eked out a marginal 0.05% gain. Dr. Suleiman Al-Humaid Al-Khalidi, a financial analyst and member of the Saudi Economic Association, described the first-half performance as marked by significant swings. 'The index rose to 12,500 points, only to lose nearly 2,000 points before recovering to about 11,260,' he said. He attributed the volatility to several factors: regional geopolitical strains, oil prices dipping to $56 a barrel, and high interest rates, which constrained liquidity. He noted that financing costs for traders now range between 7.5% and 9%, historically elevated levels. 'The Saudi market posted the steepest decline among regional exchanges despite record banking sector profits, which failed to translate into stronger overall index performance,' he observed. Looking ahead, Al-Khalidi anticipates three interest rate cuts totaling 0.75 percentage points by next year, which would bring rates down to about 3.75%. 'That should encourage a recovery in trading activity, improve liquidity, and support an upward trend in the index toward 12,000 points, potentially reaching 13,500 if momentum builds,' he added. Meanwhile, Mohamed Hamdy Omar, economic analyst and CEO of G-World, described the downturn as largely expected, citing external pressures and prolonged trade tensions between the US, China, and Europe. 'Retaliatory tariffs dampened investor confidence globally, and Saudi Arabia was no exception,' he said. Lower oil revenues also strained state finances, leading to a budget deficit of SAR 58.7 billion in the first quarter, further tightening liquidity. Trading volumes fell over 30% year-on-year. Omar pointed out that changes to land tax regulations and heightened regional security risks also weighed on sentiment. Nonetheless, he expects gradual improvement in the second half of 2025, driven by anticipated rate cuts, rebounding oil prices, and continued large-scale public investments. He stressed the need for vigilance: 'Saudi Arabia remains among the most stable markets, thanks to proactive regulation and policies designed to attract foreign capital and bolster investor confidence.'
