Gloomy economic data triggers global pullback in shares, and BP says goodbye to its CEO

“The storm clouds are gathering around the world judging by the latest economic data. Purchasing managers’ index (PMI) figures have been alarming in recent months,” says Russ Mould, Investment Director at AJ Bell.

“India’s latest data puts it among a growing number of countries issuing weak figures with contraction in its services sector.

“China, the Eurozone, the US and the UK have all reported poor PMI data of late with particular weakness in manufacturing activity. One could easily deduce that we’re heading towards a global recession. Indeed, the UN last month warned that was a clear possibility in 2020.

“Stock markets have been very jittery this year with big rallies and then sudden pullbacks. The economic outlook would suggest volatility is only going to increase on the markets.

“The UK’s economic prospects look particularly fragile judging by the latest set of data on services, construction and manufacturing. A reduction in workforce numbers looks possible in the coming months, possibly companies not replacing leavers. However, if life gets worse one could imagine actual job cuts would be next on the agenda.

“Against this prickly backdrop, the FTSE 100 is on track to record its worst week for three years, falling by approximately 4.7%. That’s wiped out significant gains for investors and means the index has now only risen by just over 5% this year.

“The scale of this week’s decline for the FTSE 100 is much worse than any other major global stock market index."

1 week change*

FTSE 100 (UK) -4.7%
Bovespa (Brazil) -3.9%
DAX Xetra (Germany) -3.7%
CAC 40 (France) -3.6%
Nikkei 225 (Japan) -2.5%
S&P BSE 100 (India) -1.9%
S&P 500 (US) -1.7%
SSE Composite (China) -1%
Hang Seng (Hong Kong) -0.8%

*Market close 27 Sep 2019 to early trading on Friday 4 Oct 2019

BP

“Oil major BP’s parting of the ways with chief executive Bob Dudley was not difficult to predict as he becomes the latest in a succession of FTSE 100 bosses to depart.

“There had been whisperings he was preparing to step down after the best part of a decade in the driver’s seat.

“The successful rescue act he has performed means the departure of US industry veteran might be a bit of wrench for the company and his shareholders.

“Taking over the company in the wake of the worst crisis in its history, the huge oil spill in the Gulf of Mexico which badly tarnished its reputation and led to billions in compensation claims and clean-up costs, Dudley has streamlined the business and returned it to the dividend list.

“The improvements in cash flow performance achieved under Dudley even allowed BP to increase the dividend last year and all this was achieved despite an oil price crash midway through his tenure in 2014.

“These achievements perhaps explain why the firm is keen on a continuity candidate, promoting the head of its upstream division (the oil exploration and production bit of the business) to the top job.

“If Dudley had to deal with a burst tyre, his successor Bernard Looney faces more of a slow puncture as he looks to reshape the business amid growing pressure on the industry from politicians and the investment community over its contribution to climate change.”

These articles are for information purposes only and are not a personal recommendation or advice.