BG tumbles and Barclays faces further investigation

BG tumbles and Barclays faces further investigation

Trading volumes are picking up again  following yesterday’s  very light session  which saw volumes at the second lowest daily level for the year,  as many investors remained on the sidelines while Wall Street stayed closed.  This afternoon depends a great deal on how things develop in the US when the market reopens. It is only then that we will see whether the storm damage will become something more significant for the US economy. The FTSE made little progress during early trading on Wednesday. Downward pressure was felt from BG and Barclays following shock announcements, whilst most other stocks traced the positive sentiment across the rest of Europe.

BG & oil firms

BG lost over 12% by mid-morning, after it reported an increase in third quarter pre-tax profits. However, it was the production guidance which concerned the market after the company said that it did not expect 2013 production to show any growth. The shock announcement comes as a result of a number of delays to project start-ups, and investors are unsure as to how the company will maintain current earnings.

Other oil firms did not follow their sector peer down and put in a strong start to the morning tracking oil prices upwards. Tullow Oil gained 3%, topping the FTSE gainer board, whilst BP and Royal Dutch Shell rose 1%.

Barclays probe

Barclays also added pressure to the UK market, losing over 3.5% in early trading. The bank reported third quarter revenue below market expectations, although pre-tax profit was broadly in line with expectations at £1.73billion in the three months leading up to September.  However, overshadowing these results was the news of two new investigations that Barclays will be adding to the list of probes that have dented the bank’s reputation.

The US Federal Energy Regulatory Commission could propose penalties after claiming that Barclays manipulated energy prices in Western US between 2006 and 2008. A separate probe is also underway concerning its fundraising from Middle Eastern investors in 2008. Clearly the bank has a lot of work to do to restore its trust in the eyes of shareholders.

Eurozone crisis

Economic data from eurozone shows unemployment rose to 11.6% in September, up from 11.5% for August and the highest on record. This news did not come as much of a surprise considering the growing rate of unemployment in Spain and Italy. Germany also joined the ranks of rising unemployment yesterday, with double the number of those in unemployment than expected. The rate did, however, remain at 6.9%.

With little economic data due, investors will be focusing on the US open this afternoon for an indication on sentiment and risk appetite.