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FTSE 100 closes higher, boosted by oil stocks

Last updated: 17:55 09 May 2018 BST, First published: 06:40 09 May 2018 BST

London
  • FTSE 100 closes 1.28% higher

  • FTSE 250 also up

  • Oil prices jump as US abandons Iran nuclear deal

  • BP among top risers

 

FTSE 100 closed higher on Wednesday as oil stocks benefitted from a rise in crude prices.

The UK blue chip index added nearly 97 points, or 1.28% at 7,662, while FTSE 250 added over 87 points at 20,681.

"The FTSE 100 is the best performing major European index today thanks to the rally in oil stocks," noted David Madden, at CMC Markets.

"The British equity benchmark has a disproportionally large exposure to the energy sector, and the pickup from BP and Royal Dutch Shell has made it the standout market in Europe.

"The US withdrawal from the Iranian nuclear deal has sent the oil market to new multi-year highs, and the major oil titans are reaping the rewards."

Brent crude is near flat at US$74.85 a barrel at the time of writing, while US benchmark crude - West Texas Intermediate, is up 3.17% to US$71.25 a barrel.

Among the biggest gainers on Footsie was BP (LON:BP.), which added 3.92% to 572p each, beaten only by tobacco giant Imperial Brands (LON:IMB), which gained 6.17% to 2,780p.

The group said it continued to make “significant progress” in next generation products although profits and revenues fell.

Revenue for the six months to end March dipped 0.1% to £14.27mln from £14.29mln a year ago, while operating profit fell 7.6% to £833mln from £902mln.

3.55pm: BMW to recall more than 300K cars in the UK

BMW is to recall more than 300,000 cars in the UK due to an electrical fault that has caused some vehicles to cut out while being driven. 

Last year the carmaker issued a safety call for about 36,000 petrol vehicles over the fault. Now this has been extended after BMW acknowledged the fault could affect more cars. 

"We now recognise that there may have been some cases of similar power-supply issues in vehicles not covered by the original recall,” BMW said.

“In order to reassure customers with concerns about the safety of their vehicles, we are voluntarily extending the recall."

3.40pm: US crude supplies fall for first time in three weeks

Oil prices continued to gain as official data showed a bigger-than-expected decline in US weekly crude inventories.

US crude inventories fell by 2.2 million barrels last week to 433.8 million barrels, according to the Energy Information Administration. 

Analysts were expecting the EIA to report a decline of 400,000 barrels in crude supplies.

It marked the first drop in crude supplies in three weeks. 

Brent crude rose 2.8% to US$77.01 per barrel and West Texas Intermediate increased 2.6% to US$70.95 per barrel.

Oil prices have been rising throughout the day after President Donald Trump pulled the US out of the 2015 Iran nuclear deal and reintroduced sanctions against the oil producing nation.

3.15pm: US wholesale inventories rise less than expected in March

US wholesale inventories rose 0.3% in March from the previous month to total US$627bn, according to the Census Bureau.

Analysts were expecting a 0.5% increase in line with the same growth in February.

Earlier, data from the Labor Department showed the US producer price index (PPI) rose just 0.1% month-on-month in April, held back by a decline in food costs. That compares to a 0.3% increase in March and analysts’ expectations for a 0.2% gain.

Core PPI, which excludes food and energy prices, grew 0.2% as expected after a 0.3% rise. 

2.30pm: US stocks open higher 

US stocks opened in positive territory as energy shares were lifted by Donald Trump’s decision to abandon the Iran nuclear deal and reimpose sanctions against the nation.

The Dow Jones Industrial Average jumped 85 points to 24,445, the S&P 500 increased 9 points to 2,681 and the Nasdaq added 15 points to 7,282.

Oil prices surged after Trump abandoned the 2015 Iran pact that former President Barack Obama forged.

“The question now is how restrictive the sanctions will be on the Iranian economy and its ability to produce and export oil given that the UK, Germany, France, China and Russia remain committed to the deal,” said Oanda’s Craig Erlam.

“Oil has been rallying for days in response to rumours that Trump would announce the withdrawal, which clearly suggests that traders believe the sanctions will further tighten global supply at a time when some of the world’s largest producers have already significantly reduced inventories.

“There is clearly the potential for these countries to fill the void left by the sanctions but if it aids their cause then they’ll likely opt against it.”

1.55pm: US stocks futures gain 

US stocks futures rose with energy shares in the lead as traders continued to assess Donald Trump’s decision to pull out of the Iran nuclear deal and resume sanctions against the oil producing nation.

Dow Jones Industrial Average futures increased 125 points to 24,432, S&P 500 futures added 11.70 points to 2,682 and Nasdaq futures gained 20 points to 6,840.

A jump in oil prices pushed up US-listed energy companies in pre-market trading including Exxon Mobil Corp. (NYSE:XOM), Chevron Corp. (NYSE:CVX) and Devon Energy Corp. (NYSE:DVN).

Heading in the opposite direction, Walmart Inc (NYSE:WMT) shares fell ahead of the opening bell after saying it was taking control of India’s largest e-commerce company, Flipkart Group, for US$16bn. 

1.10pm: Britain has no intention of pulling out of Iran nuclear pact, says Boris Johnson

Britain has no intention of following in America’s footsteps by walking away from the 2015 Iran nuclear agreement, said foreign secretary Boris Johnson.

In a Commons statement, Johnson said the US needs to “spell out” its view of the way ahead after abandoning the Joint Comprehensive Plan of Action (JCPOA) and reinstating sanctions on Iran.

He also urged Iran to show constraint and to comply with its obligations under the JCPOA,

Johnson said a nuclear-armed Iran would never be acceptable to the UK.

He said he shares similar concerns to Donald Trump about Iran and has no difficulty with the president about containing the Middle East nation but the question is how to go about it.

12.20pm: FTSE 100 led higher by oil stocks and Imperial Brands

The FTSE 100 rose 25 points to 7,591 in lunchtime trading as energy stocks jumped after US President Donald Trump reinstated sanctions on Iran and abandoned a nuclear deal with the country.

Oil giants BHP Billiton plc (LON:BHP), Royal Dutch Shell PLC (LON:RDSB) and BP PLC (LON:BP. were among the top risers as crude prices gained on the back of the US-Iran fallout.

Brent crude surged 2.6% to US$76.90 per barrel and West Texas Intermediate crude increased 2.6% to US$70.90 per barrel.

Imperial Brands PLC (LON:IMB) shares shot higher after saying it continues to make “significant progress” in next generation products and expects a stronger second half after profits and revenues fell in the first six months of the year.

On the downside Burberry Group PLC (LON:BRBY) slumped on news that Groupe Bruxelles Lambert (GBL) has sold its entire 6.6% stake in the luxury goods firm.

Shares in TUI Group PLC (LON:TUI) travelled lower even as it narrowed its loss and grew revenue in the first half.

Greggs plc (LON:GRG) plunged on a profit warning while Vodafone PLC (LON:VOD) rallied on a deal to buy Liberty Global’s cable TV and broadband businesses in Europe.

11.30am: Vodafone-Liberty deal will distort competition, says Deutsche Telekom

The chief executive of Deutsche Telekom has repeated his opposition to Vodafone PLC’s (LON:VOD) US$21.8bn deal to buy Liberty Global operations in continental Europe.

Tim Hoetteges said the deal would distort competition in Germany, creating a “giant preening with its convergent technology”.

In light of the merger, Hoetteges will seek clarification on whether Deutsche Telekom should remain subject to market regulation in Germany.

“I personally will fight for fair competition for our customers, to ensure that we do not face a disadvantage,” he said on a results conference call in response to a question on the Vodafone-Liberty deal.

10.30am: Greggs shares plunge on profit warning

Greggs plc (LON:GRG) shares are down more than 14% after warning that profits would be weaker than expected in 2018 after the so-called ‘Beast from the East’ kept customers away.

Snow storms in late February and March meant the bakery chain was unable to open some shops as delivery vans struggled to reach their destinations and staff were unable to make it into work.

But weather was not the only issue for Greggs, according to Russ Mould, investment director at AJ Bell.

“While you can argue that weather is a one-off issue, general footfall weakness suggests a more serious problem, at least in the short term,” Mould said.

“Greggs is clearly doing well with hot drinks and hot savoury items, as it has done for a long time, but the jury is still out on whether introducing the likes of ‘feta and beetroot dip with grains and lemon salad’ is a step too far.”

He added: “The idea of reinventing itself to a ‘food-to-go’ chain has been in motion for some time and the business has seen success with more mainstream items like lower calorie wraps and porridge.

“However, there is a danger that Greggs’ transformation is happening at the wrong time with consumers increasingly cautious about how they spend money.”

9.30am: UK retail sales fall decline in April 

UK retail sales fell "off a cliff" in April, according to the British Retail Consortium, as online competition and weak consumer confidence continued to weigh on the sector.

Like-for-like sales, which strip out the effect of new store openings, fell 4.2% in April from a year ago.

Total sales dropped 3.1%, the sharpest decline since BRC started collecting data 23 years ago.

The BRC said the timing of Easter had an impact on sales but the underlying trend is heading downwards. 

"Consumers' discretionary spending power remains under pressure and the reality is, that with only a gradual return to solid growth in real incomes expected, the market environment is likely to remain extremely challenging for most retailers," said BRC chief executive Helen Dickinson.

8.40am: FTSE 100 gains as US withdrawal from Iran pact boosts energy stocks

The FTSE 100 got off to a solid start even if the political backdrop was slightly shakier than the positive London open suggested in the wake of America's withdrawal from the Iran nuclear deal.

The index of blue-chips was up 30 points at 7,595.83 with the two major UK oil stocks at the vanguard as the market priced in higher oil prices following the US move.

BP (LON:BP.) was up 1.9%, while Royal Dutch Shell (LON:RDSA) advanced 1.5%. A clutch of the mid-tier explorers, led by Tullow (LON:TLW), were in demand as were the rejuvenating oil services firms Weir (LON:WG.) and Wood Group (LON:WG.).

"Oil longs were probably pleased last night with Trump’s decision to back out of the Iran deal but equity markets appear relatively sanguine for the time being," said analyst Neil Wilson of Markets.com.   

"The Dow was flat, although if you strip out financials it was not such a pretty picture. 

"A lot of this risk was already priced in but we now await developments with caution. Although they seem to have batted this away with relative ease, it would be no surprise to see investors start to take more risk off the table as events unfold."

Topping the Footsie leader board was ciggie maker Imperial Brands (LON:IMB) after a smokin' set of interim results, which came in ahead of analysts' forecasts.

The losers' list was led by Burberry (LON:BRBY), which bled 7% of its value after it emerged that Belgian billionaire Albert Frere is selling his £520mln stake in the posh trench coat maker.

Proactive news headlines:

FFI Holdings Plc’s (LON:FFI) trading has stabilised after a profit warning in December prompted by fall-out from the Harvey Weinstein scandal. The business specialises in completion contracts, in effect a guarantee that a film or TV programme will be finished. 

Echo Energy Plc (LON:ECHO) has told investors it has now begun drilling the first of four back-to-back exploration wells in Argentina. All four wells are being drilled within the Fracción C asset. 

Flying Brands Limited (LON:FBDU) subsidiary Imaging Biometrics said its software is being deployed by a leading medical centre in Athens to guide the treatment of patients with brain tumours The General Anti-Cancer and Oncological Hospital will roll out a suite of the company's products, including IB Rad Tech, to image masses and then decide on potential therapeutics. 

Motif Bio Plc (LON:MTFB, NASDAQ:MTFB), developer of a next generation antibiotic, has appointed a vice president of clinical development. Stephanie Noviello, who joins from Bristol-Myers Squibb, will report into chief medical officer David Huang. 

Healthcare facilities owner Primary Health Properties PLC (LON:PHP) has added to its portfolio in Ireland with the €5.8mln acquisition of Mountmellick Primary Healthcare Centre in County Laois. 

TyraTech Inc (LON:TYR LON:TYRU) has seen progress across both its current and developing range of animal health products as the company released an update ahead of its results for 2017. 

Alliance Pharma plc (LON:ALP) has extended its manufacturing contract with AIM-listed Venture Life PLC (LON:VLG). Venture Life already manufactures numerous products for Alliance and the agreement confirms the extension of these arrangements to 31 December 2025. 

Cello Health plc (LON:CLL) said it had a strong start to the year which looks set to continue into the second quarter based on current visibility, and it is confident of achieving a successful result in 2018. 

Ariana Resources plc (LON:AAU) said process recoveries of gold at the Kiziltepe Mine were higher than expected. Gross income for the quarter clocked in at US$6.98mln, with an average realised gold price of US$1,328.79 per ounce, compared to an operating cost of US$612 per ounce.

Shefa Yamim ATM Ltd (LON:SEFA) told investors that it has been granted two extended prospecting permits in Israel. The permits span some 44,045 hectares with the Carmel permit area covering 32,755 hectares and the Ramot Menashe site covering 11,290 hectares.

Cadence Minerals Plc’s (LON:KDNC) investee company Auroch Minerals has terminated its joint venture agreement at the Alcoutim copper-zinc project in Portugal. Aussie-listed Auroch said it fulfilled all obligations required by the agreement but delays in renewing the prospecting licence, the application for which was submitted on time, means it has chosen to terminate the agreement.

Greatland Gold plc (LON:GGP) has updated investors on its operations at the Ernest Giles project in central Western Australia. It revealed results from a recent Mobile Metal Ion (MMI) sampling programme, including 980 samples from the Meadows, Empress and Wishbone areas which have confirmed existing gold targets and generated new targets in each.

Vast Resources PLC (LON:VAST), the AIM-listed mining company with operating mines in Romania and Zimbabwe, announced the appointment of Nick Hatch as an Independent non-executive director, with immediate effect.  

H&T GROUP PLC (LON:HAT) has announced the appointment of Elaine Draper and Mark Smith as non-executive directors with immediate effect. The company also announced the retirement of Malcolm Berryman from the board, effective as of 14 August 2018, following almost ten years of service as a non-executive director.

Base Resources Limited (LON:BSE) (ASX:BSE) said that the latest company presentation, which was presented today at the RIU Resources Round Up conference in Sydney, Australia, is available from the company’s website.

Metminco Limited (LON:MNC) noted that it has been advised Lanstead III LLC. (Lanstead III) has ceased to be a significant shareholder following share offerings made by the miner since 8 February 2018. The company said Lanstead III's holding now represents 1.1% of the group's issued share capital, against 7.1% previously.

6.45am: Crude boost

The FTSE 100 is seen starting a touch higher on Wednesday with energy stocks likely to feature after crude prices jumped again on supply fears after President Trump pulled the US out of an international nuclear deal with Iran.

Spread betting firm IG expects the blue-chip index to open around 8 points higher at 7,573, having shed 1.29 points on Thursday after a choppy session.

Overnight on Wall Street, the Dow Jones Industrials Average ended 2.89 points higher at 24,360 after a similarly choppy session as traders considered the implications of Trump's Iran move, which was not unexpected.

But Asian shares edged lower as oil prices reached back to 3-1/2 year highs, with Iran the third biggest producer in the OPEC cartel.

On currency markets, the pound was fairly flat versus both the dollar and the euro cautiously awaiting Thursday’s Bank of England policy meeting decision, although no change to UK interest rates is currently forecast given recent comments from BoE boss Mark Carney and some dull UK data.

Overnight two surveys showed the UK consumer environment remains weak, with a British Retail Consortium report showing overall retail spending fell by 3.1% in April, while a separate report from Barclaycard also pointed to lacklustre consumer spending last month.

Beer flowing

On the corporate front, trading updates from pubs operator JD Wetherspoon PLC (LON:JDW) and bakery chain Greggs plc (LON:GRG) are likely to offer more interest than any blue-chip numbers on Tuesday.

Wetherspoon’s third-quarter update will be eyed to see if the company’s guidance from its interims in March is starting to reflect in actual performance.

Back then the group issued a cautious outlook expecting lower like-for-like (LFL) sales growth in the second half of the financial year.

In a preview, analysts at City broker Peel Hunt said they think that Wetherspoon’s third-quarter sales will have slowed but would still be ahead of assumptions for the year-to-date.

Pasties eyed

Meanwhile, investors will be hoping that Greggs’ first-quarter trading update will show signs of a continuation of the group’s encouraging LFL sales growth seen at the beginning of the year, which were 3.2% higher in the days up to 24 February in its full-year results.

The company’s spending plans will also be eyed after chief executive Roger Whiteside said with full-year 2017 numbers in February which said 2018 would be “the peak year for investment in our supply chain as we create the platforms for further growth.”

Fags and holidays

Among the blue chips, half-year results from tobacco group Imperial Brand PLC (LON:IMB) are unlikely to be impressive, according to analysts at Hargreaves Lansdown, especially given they’re expected to show some negative price/mix impacts.

The Lambert & Butler to Winston cigarettes maker has upped its investment in e-vapour and heated tobacco of late, with new product launches and entrances into new markets, so any comments on this segment will be of interest.

And shareholders in TUI AG (LON:TUI) are expecting the FTSE 100-listed tour operator to posts good first-half results supported by strong demand for holidays in Greece, Turkey and Cyprus.

Analysts at Deutsche Bank expect TUI to report revenues of €6.7bn driven by good performances at its cruises and hotels divisions, with seasonal underlying losses (LBITDA) of €166mln.

Significant events expected on Wednesday May 9:

Trading updates: JD Wetherspoon PLC (LON:JDW), Greggs plc (LON:GRG), G4S PLC (LON:GFS), IFG Group PLC (LON:IFP), Marshalls PLC (LON:MSLH), OneSavings Bank PLC (LON:OSB), Provident Financial PLC (LON:PFG), Renishaw PLC (LON:RSW)

Interims: Imperial Brands PLC (LON:IMB), TUI AG (LON:TUI), Compass Group PLC (LON:CPG)

Finals: Deltex Medical PLC (LON:DEMG), Mirriad Advertising Plc (LON:MIRI)

Traffic numbers: International Airlines Group PLC (LON:IAG)

Economic data: US wholesale trade; US forward PPI

Around the markets:

  • Sterling: US$1.3545, unchanged
  • Gold: US$1,308.50 an ounce, down 0.3%
  • Brent crude: US$70.63 a barrel, up 2.3%

City Headlines:

  • UK consumer economy fails to bounce back much in April: surveys – Reuters
  • UK recruiters report weakest growth in permanent jobs this year: REC survey - Reuters
  • Vodafone nears €18bn deal for Liberty cable assets in Europe – Financial Times
  • More Carillion jobs go following construction company’s collapse, taking toll to 2,300 – Daily Mail
  • Supermarket price war set to intensify as Aldi and Lidl fight back against Asda Sainsbury’s tie-up – Daily Mail
  • TSB customers unable to access mortgage accounts as IT problems drag into third week – The Independent
  • Disney results top forecasts as Iger expects to prevail in Fox deal – Financial Times
  • Google makes a nod to ‘digital wellness’ as it steams ahead in AI - Financial Times
  • Alibaba buys Pakistani online shopping outlet Daraz from Rocket: - Financial Times
  • Wendy’s sales growth cools as burger price wars heat up: - Financial Times
  • Monster Beverage buzz dulled by underwhelming earnings: - Financial Times
  • High street crisis: Retail workers should transfer skills to other sectors as job losses mount, say experts – The Independent
  • Restaurant chain Cote mulls site closures in ‘very challenging’ sector – Daily Telegraph
  • Tata plans fresh wave of sales of U.K. steel businesses: - Daily Telegraph
  • Swedish fintech group iZettle to seek US$1.1bn valuation in IPO – Financial Times

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