The FTSE 100 is down 0.6% at time of writing on Tuesday and the more domestically-focused FTSE 250 is off 0.4%. A few hours ago, Labour leader Jeremy Corbyn announced that his party would support the government’s call for a general election either on December 11 or 12, as a no-deal Brexit scenario has been postponed until at least January 31. With almost all parties in agreement — on this issue at least — a trip to the polls seems inevitable. There will be some further manoeuvring — for instance, some Labour MPs are in favour of electoral reforms like lowering the voting age to 16, and for allowing EU nationals to vote, both of which would favour Remain candidates.
The implications for investors in all this are complex. On the one hand, they should be hoping for the election to finally provide some closure for the Brexit issue, in essence acting as a second referendum. On the other hand, if the Labour party were to come out on top, a Corbyn-led government would be seen as being hostile towards business, particularly the financial sector. The polls suggest that this is unlikely, but anyone who has been covering politics over the last few years would agree that that is not a guarantee of any outcome.
BP
Shareholders of BP (LSE: BP) appeared unimpressed as third-quarter profits at the oil giant fell to £1.79bn compared to £2.96bn over the same period last year. Outgoing CEO Bob Dudley cited lower oil prices and costs due to hurricane season. A non-cash divestment charge of £2.02bn resulted in the company booking its first quarterly net loss in over three years. Slowing global industrial activity has been weighing on oil demand in recent months, which in turn affects BP’s bottom line in a very significant way.
Management said that it did not plan to raise BP’s dividend, which remains at 8p a share. With today’s share price drop, that is good for a yield of 6.2%, outstripping the FTSE 100 average of 4.5% by a fair margin. Shares of BP are down 3.3% as I write.
Plus500
Elsewhere, shares of spread betting company Plus500 (LSE: PLUS) are up almost 6% today due to a very strong third-quarter trading update. Revenues for the three-month period increased to £85.6m, driven by an 18% increase in the number of new customers.
The recent volatility in the financial markets provides a good operating environment for spread betting firms as customers feel like there are more opportunities and swings to take advantage of. In this sense they are something of a hedge against volatility, although obviously, if economic conditions get too bad then consumers will want to curtail the amount of capital that they are willing to risk. Shares of Plus500 are currently trading at 835p a share.
