What to watch: Shell stocks fall despite dividend, Barratt and Unilever resilience, Bank of England decision

Tom Belger
·Finance and policy reporter
·5 min read
Royal Dutch Shell posted its latest results. Photo: PA
Royal Dutch Shell posted its latest results. Photo: PA

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

Shell stocks fall despite dividend

Shares in energy giant Shell (RDSB.L) lost more than 1% on Thursday, despite the company raising its dividend.

The company posted an 87% decline in its adjusted fourth-quarter profits to $393m (£289m), lower than expected by analysts.

It recorded a full-year loss of $21.7bn (£16bn) after lower oil prices forced it to follow rival BP in writing down the value of its assets.

“Whichever way you look at it these numbers are disappointing, lower production volumes, reduced cash flow and a rise in net debt,” said Michael Hewson, chief market analyst at CMC Markets UK.

“It therefore seems a strange decision, when cash flow is tight, and demand is still difficult to commit the company to a “progressive” dividend policy by raising the payout again with a pledge to increase it by 4% in Q1.”

Shell had slashed its dividend for the first time since 1945 last year, and announced plans to cull thousands of jobs.

Shell five-day chart. Source: Yahoo Finance
Shell five-day chart. Source: Yahoo Finance

Barratt sales up 10.1% as housing demand continues

Housebuilder Barratt Developments (BDEV.L) recorded a 10.1% jump in revenue in the final six months of 2020, as a UK housing market boom defied the wider economic downturn.

Pre-tax profits were up 1.7% in the first half of its financial year, and the housebuilder announced it would resume dividend payments.

Revenues rose to £2.5bn, and total build completions were up 9.2% to more than 9,000.

“Whilst we are mindful of the continued economic uncertainties, the housing market fundamentals remain attractive and our outlook for the full year remains in line with expectations,” said chief executive David Thomas.

Housebuilders are reported to be increasingly optimistic about housing demand remaining buoyant this year in spite of the looming expiry of a stamp duty holiday and rising unemployment.

Barratt five-day chart. Source: Yahoo Finance
Barratt five-day chart. Source: Yahoo Finance

Fake meat and cleaning products help Unilever cope with COVID

Strong demand for cleaning products and fake meat helped offset poor sales of beauty products and on-the-go food last year, consumer goods giant Unilever (ULVR.L) said on Thursday.

Full-year results from the FTSE 100 companies — which owns everything from Dove soap to Ben & Jerry’s ice cream and Comfort fabric softener — showed underlying sales rose by 1.9% last year.

The company was buoyed by strong demand for cleaning products due to the onset of the COVID-19 pandemic. Unilever’s Lifebuoy hand sanitiser saw sales jump 50%, while sales of Domestos bleach grew by 25%.

Elsewhere, Unilever also saw strong growth for new products like its fake meat brand The Vegetarian Butcher. Sales rose by 70%.

The strong performance in these areas helped to offset weakness in other parts of the business.

Worst start to the year for UK car sales since 1970

Britain has suffered its weakest January car sales in 51 years, as showroom closures brought the market to a near standstill.

The Society of Motor Manufacturers and Traders (SMMT) said on Thursday that just 90,249 new vehicles were registered across the UK last month, down 40% on last year. SMMT said the new car registrations total was the lowest in January since 1970.

“Following a £20.4bn [$27.7bn] loss of revenue last year, the auto industry faces a difficult start to 2021,” said SMMT chief executive Mike Hawes.

Sales of diesel vehicles fell by 62%, while petrol car sales dropped 50%. Demand for electric vehicles rose by 8% and hybrid sales grew by 34%.

WATCH: Shell CEO Acknowledges `Painful Year' After Earnings Miss

European stocks edge higher with central banks in the spotlight in UK and China

European stocks edged higher on Thursday, as investors awaited a monetary policy decision from the Bank of England.

Markets are poised for updates on the central bank’s thinking on negative interest rates, though policymakers are expected to leave benchmark interest rates and quantitative easing levels unchanged.

The FTSE (^FTSE) was trading 0.2% higher in London, and the Germany’s DAX (^GDAXI) was also 0.2% higher. France’s CAC 40 (^FCHI) rose 0.3%.

“European equity markets traded broadly higher for a fourth day as the corporate earnings backdrop continued to offer support, whilst the Biden administration is pressing ahead with the $1.9tn stimulus package without Republican backing,” said Neil Wilson, chief market analyst at Markets.com.

READ MORE: Negative rates in focus as Bank of England updates the market

It came in spite of declines for most Asian stock indices overnight. Short-term interest rates rose in China, raising concerns over an apparent shift to monetary tightening.

Japan’s Nikkei (^N225) was off 1.1% and the Kospi (^KS11) in South Korea lost 1.4%. Hong Kong’s Hang Seng Index (^HSI) lost 0.7%, and the Shanghai Composite Index (000001.SS) was down 0.4%.

Meanwhile US futures looked set to open close to flat as the rally at the start of the week started to fade. S&P 500 futures (ES=F) were flat after a third straight day of gains on Wednesday, ending the last session just 0.7% short of record highs.

Dow Jones futures (YM=F) were down 0.1% as European markets opened, while futures on the Nasdaq (NQ=F) rose 0.2%.

WATCH: Deutsche Bank beats earnings estimates, swings to profit

Shares in Reddit favourites GameStop and AMC fall in Frankfurt

German-listed shares in hot ‘memestocks’ GameStop and AMC fell sharply in early trade in Frankfurt on Thursday, suggesting volatility is not over for the two stocks.

GameStop (GS2C.F) shares fell 12.5% in early trade in Frankfurt, while AMC (AH9.F) lost 9.8%.

The two companies, both of which have their main listings in the US, have been the subject of frenzied interest from retail investors over the last two weeks. Investors on Reddit’s r/WallStreetBets forum targeted both companies for investment given the high short interest from hedge funds.

The stock price of both GameStop (GME) and AMC (AMC) surged last week as retail investors sought to ‘squeeze’ hedge funds out of their short trades, leading to billions of dollars in losses for some hedge funds. GameStop and AMC then fell rapidly back to earth this week.

WATCH: What are negative interest rates?