FTSE struggles despite Shell's UK shift – latest updates

Shell's announcement this morning has been welcomed by the Church of England Pensions Board, which says it is "very significant".

Adam Matthews, who is chief responsible investment officer at the £3bn pension fund, said:

If this decision will enable the company to be more agile in executing its transition to net zero and strengthening shareholder rights, then it should be viewed positively. As a fund we would be keen to understand how this will drive a more ambitious transition in line with the steps the company still need to take as we detailed in our statement at Shell’s last AGM. 

However, he warned the deal should not be used by Shell to get out of a court ruling in The Hague earlier this year, which ordered the firm to cut its carbon emissions. 

Shell has today insisted that the shake-up will have no bearing on this.

Car drama: McLaren is denying a report by Autocar (see 10:42am post) that it is buying British supercar engineer McLaren.

My colleague Howard Mustoe reports:

The purchase would have posed a challenge for Volkswagen, which is trying to reduce its carbon output. Adding a Formula 1 team would prove a setback in that endeavour.

“McLaren Group is aware of a news media report stating it has been sold to Audi. This is wholly inaccurate and McLaren is seeking to have the story removed,” McLaren said in a statement. 

“McLaren’s technology strategy has always involved ongoing discussions and collaboration with relevant partners and suppliers, including other carmakers, however, there has been no change in the ownership structure of the McLaren Group.”

It’s a very punchy denial! Howard adds:

The report follows speculation that BMW was interested in buying McLaren Automotive, which BMW has also denied, while Audi, owned by Volkswagen, was also reported to be interested in a deal.

It also comes in the wake of the resignation of chief executive officer Mike Flewitt, who said last month he would step down after eight years in charge. 

McLaren is controlled by Bahrain's sovereign wealth fund Mumtalakat. Other investors include the Saudi Public Investment Fund, which invested when the company raised £550m of new equity during the summer.

The fresh capital injection was part of efforts to overhaul the company’s finances after the pandemic temporarily halted vehicle production last year and sales dropped. 

The Government plans to ditch the branch of HS2 that would provide a high-speed rail link between the Midlands and Leeds, the BBC reports.

The broadcaster says:

The Transport Department will instead announce a new rail plan on Thursday, involving £96bn of funding for high speed routes in the North and Midlands.

Sources said the impact of scrapping the Leeds leg of HS2 would make journeys longer by 20 minutes.

It comes after MPs raised concerns about the cost of the project’s eastern leg.

HS2 rail extension between the Midlands and Leeds set to be scrapped, sources tell the BBC https://t.co/8up5sNFvZ0

— BBC Business (@BBCBusiness) November 15, 2021

Prices for UK power hit the second-highest level on record yesterday as low wind supply led to a supply crunch.

Suppliers paid as much as £2,000.01 per megawatt-hour during a day-ahead auction yesterday, the highest level since September 15th. Wind-power generation fell to the lowest level in 56 days.

That spike is likely to signal further pain for UK suppliers, who are struggling to keep up with costs:

• Read more: Third of UK's remaining energy suppliers are at imminent risk of collapse

Retailer B&M is down about 3.3pc currently, leaving it as the biggest faller on the FTSE 100.

The discount store operator has been stung by a brace of downgrades:

• Goldman Sachs cut its rating from neutral to sell, saying higher costs and supply chain problems leave B&M’s earnings growth flat between 2022 and 2025
• RBC cut its rating from sector perform (neutral) to underperform (sell), saying the company is well managed but faces tough comparable figures in the coming year that will result in “much more pedestrian” earnings numbers

Cybersecurity company Avast is leading risers on the FTSE 100 after an offer for the group by NortonLifeLock cleared a US merger review.

The Prague-based antivirus software maker is up about 7pc, with Norton set to buy it for as much as $8.6bn.

As we approach noon, the FTSE 100 is down about 0.1pc despite a softer pound, and is lagging slightly behind Europe’s other top indices.

It continues a long spell of underperformance which has carried on through 2021. Here’s how the blue-chip FTSE 100 and mid-cap FTSE 250 compare with Germany’s DAX and France’s Cac:

Strategists are very bullish on European equities as a whole, and expect the continent’s big listed companies to perform well in the coming months.

Bloomberg reports:

The MSCI Europe Index is valued at a 33pc discount to its U.S. counterpart, based on forward price-to-earnings ratio, the biggest in history, after the latest robust earnings season fueled further upgrades to European estimates.

European equities have been gaining for six weeks straight to record highs on the optimism that economic growth can overcome inflation, tapering and supply risks. 

The European Central Bank is “very unlikely” to raise interest rates next year, its president Christine Lagarde has said. 

In new comments that echo ones she made earlier this month, Ms Lagarde said she wouldn’t be drawn on the likelihood it will increase rates the year after.