Market Report: Oil price surge makes Shell swoop for BG more palatable

There is an old stock market adage that says, 'as goes January, so goes the year'

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The oil price surge made Shell’s swoop for smaller rival BG slightly more palatable for investors, despite concerns the deal could be called off. The regulatory hurdles have all been cleared, but shareholders must now give their views on the cash and shares deal, currently worth £37bn – £10bn less than when it was struck in April last year.

That was when the oil price was near $60 a barrel. It now stands at $38 a barrel, even after a 2 per cent jump yesterday.

Shell and BG’s backers vote on 27 and 28 January respectively, but the former could be forced by its own shareholders to renegotiate.

Shell’s ended 5p lower at 1,538p and BG dipped 8.1p to 976.9p, among the least affected by the global stock market rout which knocked 148.89 points or 2.4 per cent off the FTSE 100 to 6,093.43.

There is an old stock market adage that says, “as goes January, so goes the year”, meaning that this month sets the tone for the whole year. If that is the case, then judging by yesterday’s performance, miners are in for another tough time.

More dismal manufacturing data from China caused Anglo American and Glencore, the two biggest blue-chip fallers of 2015, to slump 21.6p to 277.85p and 5.21p to 85.27p respectively.

The hangover for Marks & Spencer, down 17.1p at 435.3p, extended into the new year as investors bet on poor Christmas sales again for its struggling clothing division.

It comes ahead of the high street stalwart’s trading update on Thursday, which the City fears could be almost as bad as last year’s when like-for-like general merchandise sales crashed 5.8 per cent. The shares have fallen 100p since November as the cold weather failed to arrive in the UK, sparking concerns about sales of winter ranges.

Elsewhere, Ocado continued on its slippery slope, 18.7p cheaper at 285.4p, as concerns grow over the ramp-up of Amazon’s rival grocery delivery service, Pantry.

According to FCA data, short-selling of the FTSE 250 firm’s shares is at its highest since May 2013, with 11.8 per cent of the stock on loan to investors betting the price will fall.