FTSE 100 closes 2.3% higher as oil rebound buoys sentiment

Britain’s top share index closed up over 129 points, or 2.3%, at 5,770 on Wednesday

CRH PLC - FTSE 100 to open higher but oil rout continues to worry markets
London shares headed north midweek as oil benchmarks started to recover
  • FTSE 100 index up over 129 points
  • Wall Street stocks surge
  • Oil prices higher

5.05pm: FTSE 100 closes firmly higher

FTSE 100 index finished convincingly higher on Wednesday as oil rebounded and global equity markets were on the front foot.

Britain’s top share index closed up over 129 points, or 2.3%, at 5,770.

The mid-cap FTSE 250 was also up, finishing up almost 169 points at 15,568. 

US benchmark crude gained 25% to go to US$14.57 for  a barrel of the black stuff, while Brent crude added nearly 5% to US$20.28.

On Wall Street, the Dow Jones added almost 471 points, or 2.04%, while the S&P 500 gained over 59, or 2.17%.

The "monster rebound" in the oil market has boosted sentiment in stocks, noted analyst at CMC Markets David Madden.

"Oil has been the driving force in the markets this week, so the feelgood factor has boosted confidence across the board. The energy acts as a proxy for global demand, so its sharp recovery from its recent colossal losses, sends out a positive message."

BP (LON:BP.) was unsurprisingly among the top gainers on Footsie, advancing over 6% to 310.75p.

3.25pm: Oil prices recover

Entering the final hour of trading, the FTSE 100 had managed to hold onto most of its gains from earlier in the session, rising 114 points to 5,754 at 3.25pm.

Equities appear to have been lifted alongside a recovery in oil prices, with Brent crude currently up 11.9% at US$21.63 a barrel, while US benchmark WTI crude is up 26.7% at US$14.66 a barrel.

Prices of the black stuff have been boosted by comments from US Treasury secretary Stephen Mnuchin who said he expected WTI prices to recover to around US$30 a barrel by August and that most of the US economy would be reopened by summer.

Recent comments by president Trump that he has instructed the US navy to shoot at Iranian vessels harassing US ships in the key oil artery of the Persian Gulf may also have played a role in lifting oil prices.

2.40pm: US markets open higher

As expected, Wall Street kicked off Wednesday’s session on the front foot as earnings season provided a boost to market sentiment despite prior chaos in oil markets.

Shortly after the opening bell, the Dow Jones Industrial Average was up 1.78% at 23,427 while the S&P 500 jumped 1.86% to 2,787 and the Nasdaq climbed 2% to 8,433.

The solid also seemed to have boosted fortunes in the London, with the FTSE 100 adding 129 points to 5,768 at around 2.40pm.

1.30pm: Wall Street expected to open higher

US markets are pointing towards a higher open on Wednesday as corporate earnings and fresh stimulus from the federal government helped assuage some of the panic from the collapse in oil markets.

US politicians late on Tuesday passed a relief package worth around US$500bn to provide more relief for small businesses who are suffering in the wake of the outbreak and subsequent lockdown, with the measure likely to be formally approved with Trump’s support on Thursday.

More earnings reports from some major US firms are also likely to boost sentiment among investors.

Back in London, the FTSE 100 was up 98 points at 5,738 shortly before 1.30pm.

12.10pm: FTSE 100 holds onto gains into lunchtime

As the morning portion of Wednesday’s session drew to a close, the FTSE 100 has remained in solidly positive territory despite ongoing concerns around the oil markets and was up 79 points at 5,720 shortly before midday.

Building materials group CRH PLC (LON:CRH) was top of the blue-chip risers, up 6.8% at 2,293p after maintaining its dividend despite pausing a share buyback programme, while British Gas owner Centrica PLC (LON:CAN) was the biggest faller, sliding 4.2% to 30p.

Despite the seeming positivity in equities, there are fears that the volatility in oil may not be over yet, with oil futures contracts for June expected to play out in a similar manner to those for May which experienced the recent crash to historic lows.

Analysts at SP Angel have pointed out that storage space at Cushing, Oklahoma, where physical delivery of US oil bought in the futures market takes place, is tightening with the storage hub now 69% full compared to 50% four weeks ago.

Meanwhile, analysts at Saxo Bank have warned that the oil price collapse is leaving multiple firms facing bankruptcy, adding that the European banking sector could also be hit with several players on the continent heavily exposed to oil companies.

Brent crude, however, had made a small recovery around lunchtime trading and was 0.2% higher at US$19.30 a barrel just after 12pm.

10.45am: BoE governor warns against reopening economy early

The governor of the Bank of England, Andrew Bailey, has warned that the UK should not look to relax its lockdown measure too early, saying an early reopening could cause a new spike in coronavirus cases which could result in a second quarantine and inflict more economic damage.

In an interview with the Daily Mail published on Tuesday night, Bailey said a “false start” followed by another period of lockdown could also damage people’s confidence “severely”.

Bailey’s comments come as debate rages around whether the UK should seek to reopen the economy as early as possible to reduce economic damage caused by the pandemic or hold off in order to better reduce the number of fatalities from the virus.

Calls to reopen the economy are also likely to grow louder if infection data shows the UK has passed the ‘peak’ of its coronavirus outbreak.

Meanwhile, following from inflation data this morning the Office for National Statistics (ONS) has also released house price data for February, showing property prices rose 1.1% over the year, although this was down from 1.5% growth in January.

However, with the data the last set of monthly figures before the lockdown, March’s data will be watched closely amid forecasts of a steep decline in home prices as demand falls.

The FTSE 100 was up 85 points at 5,725 at 10.45am.

9.30am: UK inflation falls to 1.5%

Inflation in the UK declined to 1.5% in March from 1.7% in February, its lowest level since December last year.

The figure was pulled down mainly by clothing prices as retailers offered discounts to stem a decline in footfall shortly before lockdown measures were imposed towards the end of the month.

Looking ahead, Howard Archer, chief economic advisor at the EY ITEM Club, said inflation is expected to “fall back sharply over the coming months”, estimating that it could fall as low as 0.5% over the summer.

“Sharply lower oil prices will bring inflation down, along with substantially weakened economic activity in the near term at least…The lockdown of the UK economy – reinforced by appreciable consumer concern over their jobs and pay (despite Government support) – will weigh down on demand and likely exert downward pressure on prices”, he said.

Archer added that measuring inflation during the pandemic will also be faced with “practical and conceptual challenges” as the lockdown severely curtailed spending.

The data seemed to have provided a little bit of lift for the pound, which was up 0.18% at US$1.2322 against the dollar shortly before 9.30am.

Meanwhile, the FTSE 100 was up 77 points at 5,717.

8.30am: Positive progress

The FTSE 100 opened firmly in positive territory on Wednesday in spite of continuing volatility on the oil market, buoyed by progress towards finding a coronavirus vaccine.

The index of UK blue-chip stocks opened 57 points better at 5,698.81.

“Oxford University thinks the vaccine they are developing has an 80% chance of success,” said Jasper Lawler of CMC Markets.

“Corporate partnerships will probably be needed for any vaccine. UK pharmaceutical shares might get their own shot in the arm.”

In fact, it was building materials firm CRH (LON:CRH) that topped the Footsie risers 4% after it maintained its dividend payment, though it did halt its share buyback programme.

Top of the fallers was Newcastle-based accounting software group Sage (LON:SGE), down 4.3%. Earlier this month it cancelled it buyback as it reduced guidance.

Proactive news headlines:

BATM Advanced Communications Limited (LON:BVC) said it has received a €29mln (£26mln) order to deliver 1,000 critical care mechanical ventilators to a European government. The networking tech and medical lab specialist said it has received an upfront fee of €7.25mln and expects the remaining balance to be paid upon completion of the delivery in the second half of 2020.

Sativa Group PLC (LON:SATI) revealed it has signed a letter of intent that could lead to the CBD wellness and medicinal cannabis specialist being acquired by OTC, CSE and Frankfurt-quoted StillCanna Inc. Sativa said the would-be buyer is a leader in cannabinoid extraction and agriculture, focusing on the large-scale manufacturing of CBD in Europe. Sativa also announced that it has appointed Peterhouse Capital as its corporate adviser with immediate effect.

Faron Pharmaceuticals Oy (LON:FARN) NASDAQFIRSTNORTH:FARON) said it has raised gross proceeds of £12.8mln (€14mln) before expenses by selling new shares in the company. The group said the placing, announced on Tuesday after the market close, was significantly oversubscribed and comprises the issue of 2,719,002 Nordic placing shares at the Nordic issue price of €4.00 per share (representing a discount of 7.6% to the closing price of €4.33 on April 21 on Nasdaq First North) and up to 780,998 UK placing shares at the equivalent UK issue price of 348p per share. Faron shares closed trade in London on Tuesday at 395p each.

Pembridge Resources PLC (LON:PERE) has hailed “encouraging” results from operations at its Minto mine in the first quarter of 2020. The firm said over the quarter the mine produced 6,975 wet metric tonnes of concentrate, compared to 7,167 tonnes in the fourth quarter of 2019, while it has also received US$18.7mln in concentrate payments from Japanese firm Sumitomo, up from US$7.1mln in the prior quarter.

Highland Gold Mining Limited (LON:HGM) told investors it produced 63,482 ounces of gold, in line with guidance, for the three months ended March 31, 2020. The Russia-based miner saw an average realised gold price of US$1,593 per ounce during the quarter, and the company repeated its 2020 production guidance for 290,000 to 300,000 ounces of gold and gold equivalent.

Shield Therapeutics PLC (LON:STX) has appointed chief financial officer (CFO), Tim Watts as its new chief executive officer (CEO), replacing outgoing CEO and founder Carl Sterritt who has resigned with immediate effect. Prior to joining the pharma firm, Watts served as CFO of Oxford BioMedica plc (LON:OXB) preceded by 22 years at AstraZeneca PLC (LON:AZN).

NQ Minerals PLC (LON:NQMI) (OTCQB:NQMLF) has unveiled a significant expansion of resources at the Barnes Hill nickel project, as lower grade material is folded into estimates. The new resource now stands at 25mln tonnes, at 0.6% nickel and 0.05% cobalt, up from 14mln tonnes.  Additionally, the group said, findings from metallurgical test work has supported a new flowsheet which is now set to form the basis of the base case in a pre-feasibility study. It includes three-stage leaching and screening for lower grade materials will allow the material to be ‘upgraded’.

Metal Tiger PLC (LON:MTR) has relayed further news from ASX-listed Cobre Limited about a geophysical survey for its Perrinvale project. Downhole electromagnetic surveys (DHEM) have taken place in recently drilled diamond core drill holes across the Schwabe, Zinco Lago and Monti prospect areas at Perrinvale and promising electromagnetic conductors have been identified, Cobre noted. Cobre is 19.99% owned by Metal Tiger and it, in turn, owns 80% of the owner of Perrinvale.

genedrive PLC (LON:GDR), the near-patient molecular diagnostics company, has announced the appointment of finnCap as its joint broker with immediate effect.

AFC Energy PLC (LON:AFC), the industrial fuel cell power company, said it has agreed to grant options over 2,135,000 ordinary shares in the company. The group added that the purpose of the options scheme is to attract, recruit and retain staff and align them with stakeholders' objectives and the grant includes options that are conditional upon meeting certain commercial targets. It said the options are exercisable at a price of 15.4p per share and will vest between the date of grant and April 20, 2023, and expire on April 20, 2030.

6.45am: FTSE 100 set to start on the front foot

The FTSE 100 is expected to open a little higher on Wednesday as investors pause for breath while keeping a close eye on the ongoing rout in the oil markets, as well as another for the latest UK inflation numbers.

Spread bettor IG expects the FTSE 100 to open up around 21 points after ending Tuesday’s session 172 points lower at 5,641.

Oil prices are still causing jitters around the markets as the cost of a barrel of crude continued to collapse overnight in the face of plunging demand and fears of a massive glut of crude.

Prices of West Texas International (WTI) crude, the standard for US oil, were down around 7.3% at US$10.62 a barrel on Wednesday morning, while Brent crude, the benchmark for global oil, has fallen 15.3% to US$16.38 a barrel, its lowest level in around two decades.

Metals prices also found themselves under pressure as the coronavirus pandemic leaves many with concerns that demand for natural resources will take a hit due to economic shutdowns currently in place.

Statements by President Donald Trump that the US will move to support its energy industry also failed to calm markets, as did the news that Congress has agreed a US$484bn relief fund for the US economy which could be signed off by Thursday.

Overnight, the Dow closed down 2.67% at 23,018 while the S&P 500 dropped 3.07% to 2,736 and the Nasdaq fell 3.48% to 8,263.

The anxiety spilled over into Asian markets this morning with the Japanese Nikkei 225 down 1.29% while Hong Kong’s Hang Seng was down 0.26%.

On the currency markets, the pound was down 0.1% at US$1.2286 against the dollar, although UK inflation data could provide a catalyst for movement alter today as investors assess the health of the British economy.

Significant announcements expected on Wednesday:

Trading announcements: CRH PLC (LON:CRH), Antofagasta PLC (LON:ANTO),

Finals: Boohoo Group PLC (LON:BOO), Fevertree Drinks PLC (LON:FEVR), JTC PLC (LON:JTC), RTW Venture Fund Limited (LON:RTW), XLMedia PLC (LON:XLM)

Interims: AB Dynamics PLC (LON:ABDP)

Economic data: UK inflation

Around the markets:

Sterling: US$1.2286, down 0.1%

Brent crude: US$16.38 a barrel, down 15.3%

Gold: US$1,684.72 an ounce, up 0.39%

Bitcoin: US$6,891, down 0.05%

City headlines:

  • The price of US crude oil for June delivery plunged by nearly 50% on Tuesday as global oil markets remained under intense pressure – FT
  • The Treasury is under mounting pressure to expand its furlough scheme as the number of people on taxpayer-funded leave climbed to 1.3 million – Telegraph
  • More than 80 publicly listed companies have used the US Treasury’s $350 billion bailout fund for keeping small businesses afloat – FT
  • Netflix has more than doubled the number of new subscribers it expected in the last three months as more people signed up amid the coronavirus pandemic – Guardian
  • Coca-Cola’s sales volumes have dropped by a quarter this month; the drinks maker has been hit hard by coronavirus lockdown despite initial stockpiling – FT
  • The US Senate passed a near $500bn coronavirus aid package on Tuesday for small businesses, including additional help for hospitals and virus testing - Guardian

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