FTSE 100 up 125 pts
OPEC agrees to hike oil output
Glencore top Footsie riser
Trump in another tariff threat
FTSE 100 romped home to a positive finish on Friday as resource stocks did well as OPEC agreed to lift supply and put more barrels into the market.
The Organisation of the Petroleum Exporting Countries met in Austrian capital Vienna in what was a heated meeting, but resulted in an agreement to add 1mln barrels.
It comes as crude prices have risen and there are fears that a shortage and rising prices could cripple the global economy.
FTSE 100 closed over 125 points higher at 7,682, while FTSE 250 also gained ground, up 280 points to 21,009.
On what has been a volatile week, FTSE 100 was higher - up 0.64% over the five days.
On Wall Street, markets are mixed at the time of writing. The Dow Jones Industrial Average is up nearly 172 points, but the S&P 500 is down over six.
It comes as President Donald Trump has tweeted another tariff threat, targeting imported autos from the European Union.
He said if the he EU does not removed duties on US cars, then the USA will have no choice but to act.
3:00pm: FTSE 100 set for strong finish to bad week, up 1.5%
The FTSE 100 went from strength to strength on Friday afternoon, up 114 points or 1.51% changing hands at 7,670.
Investor sentiment was supported by a positive start on Wall Street, for the Dow at least.
In New York, the Dow Jones was up 125 or 0.51% at 24,587 in opening trade, meanwhile, the S&P 500 was 0.46% higher at 2,761 and the Nasdaq was down 0.06% to 7,705.
12:50pm: Brent crude advances 1.47%, FTSE 100 up 78 points
Brent crude was up 1.47%, at around US$74.17 per barrel, ahead of the OPEC meeting which takes place in Vienna today.
Focusing on the oil market provides distraction from the so-called trade wars, triggered by Donald Trump and stirred up by retaliation in China and Europe.
“All eyes today will be on the OPEC meeting as producers discuss whether and how much to increase production by now that the targets of its previous 1.5 million barrel a day cut have been achieved,” said Craig Erlam, analyst at OANDA.
“There remains some disagreement between some members on how much to increase, with Iran in particular not wanting to bow to pressure from the US, especially at a time when sanctions are being re-imposed on the country.”
Meanwhile, in London the FTSE 100 was up around 1%, or 78 points, at 7,634.
Erlam added: “While people are becoming accustomed to a world in which Donald Trump picks fights with countries – friend or foe – in an attempt to bully them into submission on trade, markets have not yet become desensitized to it.”
“The week started with the world’s two largest economies announcing tariffs against each other and threatening to escalate the spat dramatically and has ended with the European Union imposing its own counter-tariffs against the US in retaliation for those previously announced by the Trump administration.”
12:30pm: FTSE 100 advances 1%, GBP and Brent crude trade higher
The FTSE 100 had advanced around 1%, 75 points, changing hands at 7,632 after midday.
City Index market analyst Ken Odeluga, in a note, highlighted some skepticism towards Friday’s equity rally given that it follows such a weak run.
“Set for the worst week in three months, Europe’s bounce looks more reflexive than committed,” the analyst said in a note.
Elsewhere, XTB market analyst David Cheetham said: “The sharp move higher in sterling weighed on stocks yesterday with sizable declines for the FTSE, but today’s session has enjoyed a bright start with the index looking to recoup some of the losses and higher by more than 50 points, although it still remains on course for a 3rd consecutive weekly decline.”
11:00am: FTSE 100 strengthens as market goes bargain hunting
Changing hands at 7,609 the FTSE 100 had advanced 53 points or 0.7%, as the market went bargain hunting after a number of days of falling share prices.
“Stock markets are higher this morning as dealers are keen to snap up relatively cheap stocks,” said David Madden, market analyst at CMC Markets.
He added: “Equity traders are in risk-on mode today and as a result, stocks like GlaxoSmithKline, AstraZeneca and British American Tobacco are lower today.
“When dealers are willing to take on more risk, it is common for pharmaceutical and tobacco stocks to lose ground as they are deemed to be defensive stocks.”
10:50am: EU retaliates in its own ‘trade war’ with the US
Most of the ‘trade war’ headlines have centred on Donald Trump and China, and, so much Europe related focus is on Brext – not least on the two-year anniversary of the referendum.
But, the trade tension between the European Union and the US shouldn’t be overlooked.
Indeed, Brussels today puts in its own dig via service sector measures.
“Today has seen the EU finally impose their retaliatory trade tariffs on the US, with duties on £2.4 billion worth of US goods coming into force,” said Joshua Mahony, analyst at IG Markets.
“While initial threats from Donald Trump were largely disregarded, we are now seeing a clear sign that trade wars are moving into a new stage, with today’s implementation unlikely to be the end of an increasingly fraught relationship between the US and their traditional allies.”
10:00am: FTSE 100, GBP and Brent crude trade higher as market looks to OPEC meeting in Vienna
Brent crude was up just over 1% changing hands at around US$73.85 as the oil market was in focus for investors ahead of the start of OPEC’s meeting in Vienna.
“The FTSE is supported by oil prices off their lows into today’s OPEC production decision meeting, which could help Energy heavyweights,” said Mike van Dulken, analyst at Accendo Markets.
“This however, may be offset by GBP extending yesterday’s rebound in reaction to hawkish tones from the Bank of England (Aug rate hike?).
“That said the currency remains closer to 7-month lows than April highs, supportive of the FTSE internationals.”
At 10:00am, the FTSE 100 was up 36 points or 0.48% changing hands at 7,594.
9:45am: FTSE 100 on front foot, GBP strength continues
The FTSE 100 continued to strengthen through Friday morning deals, up 30p or 0.4% changing hands at 7,587.
A positive pound - sterling was up another 0.42% to US$1.3295 - has been a factor, following on from an apparent hawkish adjustment at the Bank of England yesterday, albeit it’s not entirely conducive for London’s dollar earning multinational stocks.
Fiona Cincotta, City Index senior market analyst, in a note, said: “The FTSE opened a fraction higher as did most European bourses except for Frankfurt, defying the trend set by US stocks.
“Concerns over the fallout of the US-China trade war have seen the Dow Jones Industrial Average close down for eight consecutive sessions.”
The analyst added: “Although the rate decision was not a surprise the unexpected hawkish vote ended up giving sterling a boost.”
As the day progresses, attentions are expected to turn towards the oil market as OPEC meets in Vienna.
8:45am: FTSE 100 nudges higher as Ocado once again tops the risers; oil prices remain volatile
The FTSE 100 got off on the front foot, with traders putting to the back of their minds trade war worries and seemingly willing to ignore the impact of the rising pound, which normally acts as a bromide to the UK share market.
The blue-chip index opened up 19 points at 7,575.51, with the OPEC providing an interesting side-show – one that could ultimately affect Shell (LON:RDSA) and BP (LON:BP).
"After a consensus seemed to have been built, Iran is now once again opposed to any production uplift - though this is liable to change at any moment," said Neil Wilson of Markets.com.
"But trying to cut through all the noise, it looks as if some kind of production hike is likely, but it should be fairly limited in order to avoid a price shock."
Looking at the share market, Ocado (LON:OCDO) once again led the Footsie with a 3%. The online grocer appears to be picking up a lot of institutional support following its elevation to the index of top shares.
Proactive news headlines:
Kibo Mining PLC (LON:KIBO) has shuffled its Haneti nickel project in Tanzania between subsidiaries to create a clear distinction between its mining and power operations. Katoro Gold PLC (LON:KIBO), majority owned by Kibo, will acquire Haneti for £200,000 in shares. Kibo will also retain a net royalty of 2% over anything produced from the nickel property.
The wait continues for definitive results from 88 Energy Ltd’s (LON:88E) Icewine-2 well in Alaska. Shares in the junior oiler slipped on Friday morning after it told investors that it is yet to reach the connection to the reservoir.
Ireland focused explorer Lansdowne Oil & Gas PLC (LON:LOGP) chairman Lord Tim Torrington told investors that it is refreshing to see a return to drilling activity on the horizon at the Barryroe project. As the AIM-quoted group releases financial results, for the year ended December 31 2017, Barryroe is the main subject of conversation thanks to the farm-out deal struck during the current period, March 2018.
Rose Petroleum PLC (LON:ROSE) has revealed the details of a new competent persons report assessing its Paradox basin acreage, in Utah, United States. The new report, which is informed by recently acquired 3D seismic data, presents resources estimates for a 17,250 acre area (of a total 80,000 net acres in the Rose portfolio) and it solely features a single reservoir the Cane Creek reservoir, which is one of multiple prospective reservoirs in the play.
Victoria Oil & Gas plc (LON:VOG) chairman Kevin Foo told investors that he believes the Cameroon gas company will grow stronger and create a more diverse product base, despite the grid power supply issue it is currently facing. The company, which produces and supplies gas in the Duala region, is presently working through a period of lower volumes after a supply deal with a key customer lapsed without renewal.
The Marketing Group PLC (NASDAQ OMX:TMG) has said its Australian subsidiary, The Lead Generation Company Ltd, has entered voluntary liquidation. The marketing conglomerate said Lead Generation, a B2B telemarketer, was profitable up to 2017 until the loss of a major client caused it to slip into unprofitability and the best course of action was deemed to be liquidation.
6.45am: FTSE 100 set to nudge higher
The FTSE 100 is poised to open slightly higher this morning as investors digest the prospect of an August interest rate hike as well as an expected OPEC production increase.
Spread betting firm IG expects the FTSE 100 index to open around 10 points higher at 7,556 following a near 71 point drop on Thursday as a jump in the value of the pound on the prospect of an August interest rate hike by the Bank of England weighed on equities.
Michael Hewson, chief market analyst at CMC Markets UK, said: “Yesterday’s surprise conversion to the hawk camp by Chief economist Andrew Haldane, he of the August 2016 QE “sledgehammer”, appears to have had a change of heart when it comes to being concerned about the possible risks of inflation, as he joined external MPC members Michael Saunders and Ian McCafferty in pushing for an increase in the level of bank rate.
He added: “At the risk of being cynical this sudden conversion to the hawkish cause could merely be a case of the Bank looking to try and put in a floor for the pound at a time when the US dollar looks set to sweep away all before it in the coming months. While there has certainly been an improvement in some of the more recent data the sudden shift in stance appears more designed to keep markets from pricing out the possibility that rates won’t rise this year than anything else.”
The Oil and gas sector is also expected to see falls as OPEC announces its production decision at today’s meeting, in which it is widely expected to ease its production ceiling and lift supply capacity which could knock oil prices down from their recent highs.
Hewson said: “Iran has already stated that it will oppose any decision to lift production, arguing that OPEC shouldn’t be President Trump’s poodle, however given that Russia is in favour and the Saudi’s also seem keen, Iranian objections aren’t likely to prevent a decision to loosen the taps, the only unknown being by how much the cartel intends to increase its output”.
The Dow Jones closed down 196 points at 24,461 yesterday, in addition to the S&P 500 which closed down 17.5 points at 2,749 and the Nasdaq which was down 68 points at 7,712 as escalating trade war fears between the US, China and the EU weighed on investor sentiment.
In Asia, the Japanese Nikkei slumped 202 points at 22,490, while Hong Kong’s Hang Seng was down 54 points at 29,252 as the wave of trade tension continued around the globe.
In the currency markets, the pound was up 0.15% at US$1.3270 against the dollar and up 0.04% at €1.1422 against the euro.
Quiet end to the week as company results taper off and economic data diary subdued
Friday looks set to be quiet on both the company results and economic data fronts as the City gets ready to clock off for the weekend.
The AIM-listed recruitment business Prime People PLC (LON:PRP) is due to report its final results following an update in May when it anticipated a lower operating profit after taking a majority stake in Command Recruitment Group (HK) Ltd.
At the time the company said its UK business had performed in line with management's expectations in its year to March with annual profitability ahead of the prior year, whilst its International business has been less profitable compared to 2017.
For economic data, the US’s flash composite PMI will be released as the week closes out along with the Baker-Hughes Rig Count, an important barometer for the drilling industry and its suppliers.
Significant announcements expected on Friday June 22:
Economic data: US flash composite PMI, Baker-Hughes rig count
Around the markets:
- Sterling: US$1.3270, up 0.15%
- Gold: US$1,268 an ounce, up 0.12%
- Brent crude: US$73.85 a barrel, up 1.08%
- The Times: The European aerospace company Airbus is preparing to abandon plans to build aircraft wings at its British plants and move production to China, the US or elsewhere in Europe after losing patience with Theresa May’s stalled Brexit negotiations.
- Financial Times: BOE's chief economist Andy Haldane voted to raise interest, stoking expectations of an increase in August and sending sterling higher to $1.32.
- The Daily Telegraph: The Bank of England gets sweeping new powers to pump money into Britain’s banks without sign-off from the Treasury.