Shell raises target for cost savings

London open

The Footsie is seen starting the session six points lower from Monday´s closing level of 6,273.40.

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Shell said it was increasing the level of cost cuts from its merger with BG Group to $4.5bn from $3.5bn. In an update, the company said it expected to “achieve and exceed the $3.5bn synergies prospectus commitment earlier than expected, in 2017, when synergies should be $4bn. “Our other deal-related financial commitments to shareholders in the form of asset sales, debt reduction, and dividends, followed by share buy-backs, are unchanged, said chief executive Ben van Beurden. Shell also said it expected capital investment for 2016 to be $29bn excluding the purchase price of BG Group.

Direct sales insurance firm Esure announced a strategic review of its Gocompare comparison service on Tuesday, and indicated an interest in spinning it out on its own. The FTSE 250 firm said that, in the first full year of ownership after acquiring the outstanding 50% of Gocompare for £95m, the marketing strategy was “invigorated” driving growth in insurance comparison, the cost base restructures and focus given to a wider range of products.

In the press

Pro-Europe MPs will fight a rearguard battle to stop Britain leaving the single market even after a Brexit vote, senior Tories have warned. Those negotiating Britain’s new relationship with the EU after a Leave vote have been told that they would not be given a “blank cheque” by MPs if they thought the new arrangements were not in the country’s interests. - The Times

High levels of debt and an uncertain global economy will continue to dog the big mining companies in 2016, a new report has warned. The end of the boom in China, and the subsequent crash in commodity prices, has left miners in a race to the bottom, PwC said in its annual review of the sector. - The Daily Telegraph

Fresh from lambasting the “lamentable behaviour” of Sir Philip Green in the sale of BHS, the Institute of Directors is pushing for the accountancy watchdog to investigate the transaction. Simon Walker, director-general of the business lobby group, has written to the Financial Reporting Council to “strongly urge” it to investigate whether the board of Sir Philip’s Arcadia Group had failed in its duties to promote the success of a company. - The Times

US close

Wall Street ended higher on Monday as oil prices advanced and investors digested a fairly upbeat speech by Federal Reserve chair Janet Yellen. The Dow Jones Industrial Average closed up 0.6% and the Nasdaq gained 0.5%, while the S&P 500 rose 0.5% to its highest close this year. At the same time, oil prices settled higher after Exxon Mobil reported a pipeline failure and spill at its Torrance refinery near Los Angeles. Supply disruptions in Nigeria also propped up prices as it helped to soothe the global output glut. West Texas Intermediate rose 2.3% to $49.74 per barrel and Brent crude added 1.8% to $50.55.