BHP cuts deep, Persimmon profits build

London open

The FTSE 100 is expected to go into reverse on Tuesday morning, with a 45-point decline that would have its gains from the previous day.

Stocks to watch

After absorbing a half-year loss of US$5.67bn, BHP Billiton sliced its dividend deeper than most analysts predicted and adopted a new more cautious payout policy as it hunkered down for what it believes will be a prolonged period of low and volatile commodity markets. The Anglo-Australian colossus also cut its capital and exploration spending by 40% to $3.6bn, which combined to help keep its half-time net debt at $25.9bn in line with consensus forecasts.

Steady sailing was the theme of the year at GKN, with the company reporting growth in sales and earnings across most of its operations on Monday. Sales increased 4% through the year to 31 Decembet to £7.23bn, from £6.98bn, with the board citing good growth in automotive and aerospace, though Land Systems was down in what it called a tough market.

Persimmon has increased its full year underlying profit before tax by 34% to £637.8m. In the FTSE 100 housebuilder’s results for the year to 31 December 2015, it said revenue had also risen 13% to £2.9bn, driven by an 8% increase in legal completions rising to 14,572, and a 4.5% increase in the average selling price to £199,127.

Newspaper round-up

The current crash in oil prices is sowing the seeds of a powerful rebound and a potential supply crunch by the end of the decade, but the prize may go to the US shale industry rather Opec, the world's energy watchdog has predicted.
America's shale oil producers and Canada's oil sands will come roaring back from late 2017 onwards once the current brutal purge is over, a cycle it described as the "rise, fall and rise again" of the fracking industry. – Telegraph

The bosses of some of Britain’s top companies, including budget airline easyJet, defence contractor BAE Systems and oil group Shell, have signed a letter in support of the UK remaining inside the European Union.The letter is signed by the chair or chief executive of about a third of the businesses on the FTSE 100 index of Britain’s largest stockmarket-listed companies.

House prices in some areas are rising so fast that in many cases they “earn” more than the families who live in them. Research by The Times and the Halifax, Britain’s biggest mortgage lender, shows that one in four homes is going up in value by more than their owners get paid after tax. The figures raise fears that house prices in some regions are a bubble that is bound to pop before long. – The Times

US close

US markets started the week with a bang on Monday, off the back of some serious rises in oil prices during the session.
The Dow Jones Industrial Average gained 228.53 points, closing up 1.4% to 16,620.52. The S&P 500 gained 1.45%, or 27.71 points, to finish at 1,945.49, and the Nasdaq Composite closed up 1.47% - 66.18 points - to end the day at 4,750.61.
Oil prices rallied throughout the day, with Brent crude last up 4.79% to $34.67 per barrel and West Texas Intermediate up 4.83% to $33.36.
The increase in prices came after the International Energy Agency said in its medium term outlook that US shale oil production was expected to fall by 600,000 barrels per day this year, and by another 200,000 bopd in 2017.