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Good morning. Today we're talking about the denial of a Shell-BP merger, Nike’s road to recovery and Google’s UK regulatory battle.

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Big Stories

Oil mega merger denial

Energy giant Shell has strongly denied a recent report suggesting it is in "early-stage talks" to acquire rival BP. The Wall Street Journal initially broke the story, indicating a potential deal that would mark the largest oil sector merger since Exxon and Mobil combined in 1999. However, Shell quickly dismissed the report as "market speculation," while CNBC separately noted the unlikelihood of Shell purchasing all of BP in any such transaction. If a deal were to materialise, it would unite Shell's substantial $210bn market value with BP's $82bn, forging another colossal energy entity to compete with industry giants like Saudi Aramco, ExxonMobil and Chevron. Following the news, Shell's stock saw a slight decline, whereas BP's shares experienced an uptick. BP's market value has fallen by nearly a third over the past year. This decline reflects investor scepticism that CEO Murray Auchincloss's turnaround plan can reverse the fallout from a botched net-zero energy strategy. The ill-fated green strategy, initiated by former CEO Bernard Looney in early 2020, saw a backtrack on oil production cuts after Russia's 2022 invasion of Ukraine caused energy prices to soar. Looney was later ousted for failing to disclose personal relationships with staff.

Google's UK regulatory battle

British regulators are moving to curb Google's market power, proposing "strategic market status" for the tech giant under new digital laws. With Google handling over 90% of UK online searches, regulators aim to boost competition and simplify user switching. This designation could force Google to alter search result rankings and how its AI summarizes content. Google is resisting, warning of product launch delays. This UK action mirrors global scrutiny, including a potential $4.8bn EU fine and recent US legal losses for Google's search and ads practices. For investors, this mounting regulatory pressure is a key concern, threatening innovation, raising compliance costs, and potentially impacting profit margins. This marks a new phase of oversight, with regulators increasingly securing legal wins and imposing significant fines on tech giants.

Nike’s recovery road

Nike reported a 12% decline in sales last quarter, reaching $11.1bn, a figure CEO Elliott Hill acknowledged is "not where we want them to be." However, the decrease was less severe than Wall Street anticipated, prompting Nike's finance chief to suggest this period marked the lowest point in its ongoing corporate turnaround. The sportswear giant has faced significant pressure from rising competitors like Hoka and On, particularly in the crucial running shoe market. Additionally, anticipated tariffs on its largely Vietnam-produced footwear have impacted performance. Despite the quarterly results, Nike's stock jumped 15% as investors focused on signs the company is effectively managing its revival strategy. CEO Hill, who returned from retirement last year, is prioritising initiatives including a reorganisation to refocus on developing product lines for core sports, asserting, "When we focus on sport, we win." The company is actively clearing existing inventory to make way for new products designed to recapture market share and address competitive challenges.

Elsewhere...

Currency rally: The pound briefly hit its highest level against the dollar for almost four years after markets were unnerved by a report that US President Donald Trump could bring forward the naming of the new head of the US central bank.

New ownership: Donald Trump has said the US government has found a buyer for TikTok that he will reveal "in about two weeks".

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The reported cost of Amazon founder Jeff Bezos and Lauren Sanchez’s three day Venice wedding.

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