British oil titans Shell and BP will move into the spotlight this week as UK investors search for inspiration, although the prospect of a rise in US interest rates could grab most attention.
Troubled oil giant Royal Dutch/Shell Group is expected to come under attack from shareholders when it holds its first annual meeting following its revelations in January that it overstated its oil reserves by a fifth.
BP, Britain's biggest company, also releases a trading update at the end of the week, while WPP could provide more encouragement on the recovery in the advertising industry when it holds its annual shareholder meeting on Monday.
But investors and analysts said most attention would be on whether the US Federal Reserve will meet expectations and raise interest rates by a quarter of a percentage point for the first time since 2000, lifting rates from their lowest level since 1958.
"The Fed will be the big event. It's obviously a massive driver for the markets," said David Phillips, investment manager at Britannic Asset Management.
He said a rise of 25 basis points is priced into the market, and should have relatively little impact but added: "If for some reason the Fed were to do something else, then that would be a very big shock."
Hilary Cook, director of investment strategy at Barclays Private Clients, said any clues on whether more rises are likely to follow will be key.
"The fact is that rates are going up because the economy is strengthening... So at the end of the day that's really good news," she said. "But if they're going up because of inflation, then that's a bit more worrying."
On the same day as the Fed decision, the US-led coalition will hand power to an interim Iraqi government. Concern about violence in Iraq has continued to unsettle investors.
Analysts expected the FTSE-100 share index to remain in a tight range between about 4,400 and 4,500 points. By mid-afternoon on Friday the index stood at 4,488 points, down 0.4 percent during the week.
Shell's shareholders gather on Monday where the fall-out from the firm's reserves scandal will get top billing and directors are expected to update on structural reforms.
The revelations that Shell overstated its reserves shocked investors and rattled the entire energy sector. Three top executives lost their jobs and the firm faces regulatory investigations and lawsuits.
"It would not be surprising if Shell's directors were feeling unusually nervous about the upcoming meeting," said David Somerlinck, corporate governance manager of Pensions & Investment Research Consultants in a research note.
"It appears that institutional investors, who normally ignore such gatherings, are lining up to ask awkward questions at the AGM, concerned at the lack of transparency of the ongoing reform process."
In a quiet week for corporate results, three house-builders, Persimmon, Wimpey and Redrow will give trading statements.
Analysts said house-builders have enjoyed success as a fall in house prices failed to materialise.
"I suspect their trading statements will be more cautious, but they are still announcing big profit increases and dividend increases," said Andrew Bell, European strategist at Carr Sheppards Crosthwaite.
Comments
Comments are closed.