Indices are in retreat again, with a drop in oil names pushing the FTSE 100 to a sixty point loss in early trading.

  • Shell warning pushes down FTSE 100
  • Fed speakers dominate the afternoon
  • Dow set for lower open

Indices are down once again in early trading, with the FTSE 100 particularly hard-hit thanks to a warning from Shell which has driven that heavily-weighted stock and its peer BP firmly into the red. In a world of falling oil demand and a bigger push towards renewables, these energy titans increasingly look like creatures from another era, something which should give investors pause for thought. While neither Shell nor BP will be going anywhere soon, their importance as dividend payers will likely diminish relative to other sectors, and yield-hungry investors need to be prepared for this eventuality. 

Most of today will be spent waiting for speeches from key Fed members, including of course chairman Jerome Powell. On a relatively quiet day for data, Powell’s speech is expected to be the main event, particularly if he decides to use the opportunity to push for more fiscal stimulus in the US as the expiration of unemployment support looms on the horizon. Central banks have done their bit, but the longer-term recovery will need big thinking, and at present it looks like this is lacking in the US. At least the UK has made an effort, as the prime minister announces a £5 billion programme of infrastructure, but even this will have to be followed by more if the economy is to get the support it needs.

Ahead of the open, we expect the Dow to start at 25,444, down 151 points on Monday’s close.

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