Stocks mostly retreat, pound drops

Shares in Shell slid in Thursday trading after the British energy giant revealed that its third-quarter profit would be hit by a slump in refining margins

Equity markets mostly fell Thursday and the pound retreated once more against the dollar on lingering recession fears despite hopes that the US Federal Reserve will tame the pace of aggressive interest rate hikes.

Oil prices also dropped, failing to power ahead after OPEC and other major producers led by Russia decided to slash output by two million barrels per day.

The cut, the biggest since the pandemic struck, was viewed by traders as an attempt to boost prices.

The Kremlin on Thursday said the OPEC+ decision was designed to stabilise global oil markets.

And Washington said it was a concession to Moscow. The United States has been lobbying to hold down fuel prices and isolate Russia over its Ukraine aggression.

The European Union has proposed introducing a price cap on Russian oil as part of new sanctions over Ukraine.

Moscow has said a price cap on its oil would have a "detrimental effect" on global markets and warned it would not supply crude to countries that introduce it.

Shares in Shell slid about 4.5 percent in Thursday trading after the British energy giant revealed that its third-quarter profit would be hit by a slump in refining margins.

"Shell enjoyed record profits in the first and second quarter spurred by a surge in underlying oil and gas prices following Russia's invasion of Ukraine," noted Victoria Scholar, head of investment at Interactive Investor.

"However, since June, oil has posted four consecutive months of declines, with Brent crude down by around 25 per cent."

Scholar said Shell was "grappling with a dysfunctional and volatile gas market as well as expectations of softening oil demand, particularly from China as the global economy cools".

Markets remained on guard over the economic outlook awaiting the release of US non-farm payroll jobs Friday.

The pound was down about half-a-percent against the dollar after Fitch ratings agency lowered the outlook for British debt to negative from stable.

This after the government of new Prime Minister Liz Truss recently announced a budget packed with debt-fuelled tax cuts.

Ahead of the downgrade Wednesday, sterling had plunged more than two percent after Truss failed to reassure investors with a speech at her Conservative party conference.

The pound, however, has recovered since reaching a record-low close to parity against the dollar at the end of September.