27/06/2025

BIZ & FINANCE FRIDAY | JUNE 27, 2025

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Investors shore up defences against another market rout

Shell says not in talks to buy BP LONDON: British oil major Shell said on Wednesday it was not in talks with BP to acquire its rival, after the Wall Street Journal reported there had been preliminary discussions. “This is further market speculation. No talks are taking place,” a Shell spokesman told AFP, adding that the firm was focused on adding value by improving its performance. The Wall Street Journal said its sources indicated that the two firms had held “early talks” about merging their operations. A tie-up between Shell and BP would be one of the biggest mergers ever in the oil and gas industry and would give it added heft against American oil majors ExxonMobil and Chevron, and France’s TotalEnergies. “All big companies will look hard at any acquisition opportunities in their industry that could greatly increase their size and scale,” AJ Bell investment analyst Dan Coatsworth told AFP. “But that doesn’t mean deals will go ahead,” he added, calling Shell buying BP “the perennial takeover rumour that won’t go away”. City Index analyst Fawad Razaqzada told AFP said a Shell purchase of BP would trigger competition concerns, making it difficult to receive approval from regulators. BP has struggled in recent years against its rivals. In February, it abandoned its ambitious climate objectives to refocus on oil and gas in a bid to boost flagging profits. BP’s first quarter net profit fell by 70% to US$687 million, while Shell beat analyst expectations with a 35% drop to US$4.8 billion in net earnings. – AFP

assets, often buy stocks when the VIX drops and dump them when it surges. This has been cited as a reason behind last August’s brief but sharp selloff. Royal London Asset Management multi-asset head Trevor Greetham said computer programmes the group uses to limit clients’ exposure to market swings were picking up trading cues driving them to buy equities. But fund managers overseeing RLAM’s volatility control robots had decided not to follow them in recent weeks and sold some stocks to manage portfolio risk instead, he said. Goldman asset management partner Simon Dangoor warned, meanwhile, that oil shocks could boost the dollar and upend a consensus it is on a weakening trend. “If we did have a very big disruption in oil markets, that’s exactly the kind of shock that could see the dollar higher into a risk-off environment,” Dangoor said. For sure, while Middle East tensions have eased in recent days, risks from the region and especially potential disruptions to the Strait of Hormuz shipping route remain in focus. Oil has swung between US$81 and US$63 a barrel in June, making it one of the most volatile months for crude in 15 years. UBS European equity strategy head Gerry Fowler said options pricing suggested derivatives traders were betting on a higher frequency of single-day stock market volatility surges, such as last August. This, he warned, may not be the ideal time for vacations. “Given that everybody knows this summer is full of catalysts, there’s going to be far fewer people on holiday this year.” – Reuters

56.7 billion Swedish crowns (RM25 billion), down from 59.6 billion a year ago. Analysts polled by LSEG had forecast revenue of 57 billion crowns. Zara owner Inditex earlier this month also reported disappointing sales, in a sign consumers are pulling back from spending on clothes as US tariffs create risks for global economic growth. H&M’s second-quarter operating profit was 5.91 billion, beating analysts’ forecast of 5.88 billion, and the operating profit margin was 11.9%, up from 8.2% a year ago. “The slightly better than expected margin delivery sends a positive signal to the market,” said Alphavalue analyst Jie Zhang. However, H&M flagged more discounting in the third quarter. Retailers are navigating US President Donald Trump’s rapidly shifting tariff announcements as concerns grow about resurgent inflation. H&M is“monitoring”global trade developments, it said in the statement. – Reuters As the July 9 deadline for a US-EU tariff deal approaches, with scant progress so far towards mutually-agreed baseline levies, concern is growing over how long markets will stay numb to trade risks. “If we continue to get this kind of blasé approach to that risk, then it becomes more tempting to be looking for protection over that (July) event,” Chris Jeffery, head of multi-asset strategy at Britain’s biggest investor LGIM, told Reuters. World stocks, up 7% so far this year, this week touched fresh record highs. And Wall Street’s fear gauge of expected volatility on the S&P 500 index is muted at below 18, down from 52 in April. Still, one-month VIX futures, which cover July 9, are around a 1.5 point premium over the VIX, in a pattern that can signal investors expect market sentiment to sour. Baraton said Trump’s unpredictability remains a broad market risk. “Markets seem to have forgotten everything that the Trump administration has been threatening to do,” he said. Republican leaders are pushing to get what Trump calls his One Big Beautiful Bill Act through Congress and to his desk before the July 4 Independence Day holiday. The bill would add trillions to the US$36.2 trillion national debt. Markets can trade calmly for longer than appears rational in part because of a circular relationship between the VIX and risky asset prices linked to how automated trading funds are programmed to behave. Automated volatility control funds, which according to UBS run about US$700 billion of

STOCKHOLM: Swedish fashion retailer H&M reported a slightly stronger second-quarter profit yesterday, an encouraging sign as CEO Daniel Erver tries to reboot the brand and improve profitability. H&M shares were up 4% at the open as investors focused on the profit rather than second-quarter sales, which fell slightly more than predicted. Erver has said his focus is on profitability rather than solely sales growth. The world’s second-largest listed fashion retailer said it expected sales in June, measured in local currencies, to rise 3% – an improvement after a 6% fall a year ago in the same period. “Our plan, with its focus on the product offering, the shopping experience and brand, is again confirmed by the progress we see,” Erver said in a statement, adding however that these are “uncertain times with cautious consumers”. In the March-May period, H&M’s sales were LONDON: Big investors are preparing for the normally thinly-traded months ahead with even more caution than usual as risks of oil price volatility or fresh tariff shocks could shake up the complacent market mood and spark a repeat of last August’s rout. Scarred by the sell-off a year ago, when global growth fears hit low volume markets to drive big swings in asset prices worldwide, investors see stocks, bonds and currencies vulnerable against the backdrop of a fragile Israel-Iran ceasefire, seesawing oil prices and trade-war uncertainty. Asset managers said they were raising portfolio protections given the geopolitical risks and uncertainty about China and Europe striking US trade deals as a July 9 deadline looms. “Our positioning is that over the (next) three-month horizon markets will not get the positive confirmations they are pricing in,” said HSBC Asset Management Global chief investment officer Xavier Baraton. Baraton is buying equity put options as an insurance, which pay out if stocks fall. In a presentation last week, Goldman Sachs’ asset management chiefs recommended loading up on protection against sell-off scenarios with volatility, interest rate and market-trend strategies. o Options markets bet on more frequent volatility spikes, says UBS

H&M Q2 profit beats expectations despite ‘cautious’ consumers

A H&M store in Times Square, New York. – REUTERSPIC

Judge orders Trump admin to release billions in EV charging funds LOS ANGELES: A federal judge has ordered Donald Trump’s administration to release billions of dollars allocated for the construction of electric vehicle charging stations in over a dozen US states. which was allotted US$5 billion for use from 2022 to 2026. a “hoax,“ abandoned electric vehicle booster programmes and campaigned to drill for oil extensively. Trump has also blocked California’s plan to ban internal combustion engine vehicles by 2035.

largest number of electric vehicles. In responding to the ruling, a Department of Transportation spokesperson on Wednesday blasted the Biden-era NEVI programme as a “disaster” and said Lin was “another liberal judicial activist making nonsensical rulings from the bench because they hate President Trump”. It was not clear whether the administration intends to appeal the ruling. – AFP

Signed into law by then-president Joe Biden in 2021, the NEVI programme was defunded by the Trump administration’s Department of Transportation in February, axing expected funding for 16 states and the District of Columbia. Trump has repeatedly called climate change

In a ruling on Tuesday, US district judge Tana Lin granted a preliminary injunction to require distribution of funds for National Electric Vehicle Infrastructure (NEVI) development,

Seventeen attorneys-general sued the Trump administration to unfreeze funds in May, led by California, the state with the