FTSE 100 closed the day higher on Tuesday as a rise in oil prices helped resource stocks.
The oil market firmed due to concerns about future demand. Despite a plea from the US, the cartel OPEC will not be raising output.
Brent crude is up over 3% at $81.50 a barrel at the time of writing.
FTSE 100 meanwhile, added over 49 points, to finish at 7,507.
FTSE 250, however, was lower, shedding around 27 points at 20,461.
Top riser on Footsie was fashion retailer Next (LON: NXT), which gained over 7% at 5,518p after the company lifted its full-year guidance.
On the losing front, British Airways owner International Consolidated Airlines Group (LON:IAG) was the top loser, down 3.96% at 659.40p after the UK government warned yesterday that a no-deal Brexit could cause disruption to air travel between the UK and EU.
3.45pm: Resource stocks underpin the Footsie
With less than an hour of trading left in London, it was looking like a 50/50 shot that the FTSE 100 would finish above 7,500.
The blue-chip index was up 50 points at 7,508, having reached the heady heights of 7,516 at one point today.
“It took a while but the FTSE was finally able to fully embrace Brent Crude’s rise on Monday afternoon,” said Connor Campbell at Spreadex.
“Climbing half a per cent, the UK index recrossed the 7,500 mark it grazed last Friday, just about hitting a one month-ish high in the process. The oil situation was the main fuel for the FTSE’s gains; Brent Crude spent Monday tickling a fresh four-year peak of $82 per barrel, the OPEC-Trump spat and impending US sanctions on Iran sending the black stuff up 0.8%; this, in turn, lifted a pleased as punch BP and Shell more than 2% higher apiece, with the FTSE also benefiting from Next’s 8% surge and a rebounding mining sector,” he added.
Lukman Otunuga, a research analyst at FXTM, said global oil bulls have clearly made a return this week, “after OPEC and Russia ignored US President Donald Trump’s demand to boost output”.
“This development comes at a time where supply losses from Iran sanctions and a drop in Venezuela’s output could accelerate the tightening of markets. With Saudi Arabia and Russia ruling out any immediate increases in oil production, the near-term outlook for oil remains tilted to the upside.
“While the supply side of the oil story remains heavily influenced by geopolitical risk factors, the demand side is clouded by uncertainty. Escalating trade tensions between the world’s two largest economies present a significant threat to global growth and stability. A full-blown trade war could negatively impact growth, ultimately denting crude demand which would most likely translate to lower oil prices,” the analyst opined.
Randgold shares were up 4.7% today at 5,466p.
Sector peer BHP Billiton plc (LON:BLT) hardened 24.8p to 1,696p despite Morgan Stanley downgrading the stock to ‘equal weight’ from ‘overweight’, although it left its target price unchanged at 1,770p.
The shares rose 3.4% to 341.25p on the day the mining and commodities giant said it would increase its share buyback programme.
2.35pm: The Footsie surges through the 7,500 barrier
The Footsie has now got the bit between its teeth, bursting through the 7,500 barrier as US markets open mixed-to-firm.
The FTSE 100 was up 47 at 7,505, while in New York, the Dow Jones was up 50 points at26,612 and the broader-based S&P 500 was a couple of points to the good at 2,922.
The price of Brent crude remains above US$82 a barrel, providing succour for the oil producers.
The shares were up 46% at 12.75p after the company revealed global electronics gizmos giant Apple had selected the Spire Health Tag wearable device, which incorporates a CAP-XX Thinline super-capacitor, to be a featured health product in Apple stores globally.
The company, which has changed its accounting year-end, saw the loss before tax widen to US$1.73mln in the 12 months to the end of March 2018 from US$1.59mln in the 10 months to the end of March 2017.
The auditor drew attention to the group's ability to continue as a going concern, noting the group will need to meet its cash flow forecasts, renew its overdraft facility and maintain its current borrowings or raise further finance in order to continue as a going concern. The group's overdraft facilities require renewal in May 2019 and its loan is currently in breach of its covenants.
12.45pm: Firmer start expected on Wall Street
FTSE 100 has got a bit of a giddy-up, boosted by expectations of a strong start on Wall Street.
The FTSE 100 was knocking on the door of 7,500, up 41 at 7,499.
Across the pond, the S&P 500 was expected to open around 8 points firmer at 2,928 after yesterday’s retreat.
In the mid-cap space, trading platform operator Plus500 Ltd (LON:PLUS) was the biggest faller, down 5% at 1,447p, in sympathy with CMC Markets PLC (LON:CMCX), which was 9.3% lower following a profit warning.
Greetings card seller Card Factory was another FTSE 250 stalwart on the back foot after the retailer reported that underlying pre-tax profits had fallen 13.9% to £22.7mln in the first half of the year despite revenues rising 3.2% to £185.3mln.
Russ Mould, the investment director at AJ Bell, said: “Cash flow cover for the much-prized dividends is getting thinner, so the days of its special dividends on top of normal ones could be numbered”.
Investors were originally drawn to the stock as an income play and this attraction may soon disappear, Mould warned.
The shares were down 3.5% at 559.2p.
11.30am: The Footsie consolidates early gains
UK equities continue to cling on to modest gains but events remain overshadowed by fun and games in the oil futures market.
The shares were up 8.6% at 5,562p, helped by some favourable broker coverage.
UBS reiterated its ‘buy’ recommendation and 6,600p price target while Shore Capital stuck with its ‘hold’ rating and 5,124p price target, although it conceded Next had performed well in the 26 weeks to July 28. Peel Hunt also reiterated its ‘hold’ rating; it has a price target of 5,250p.
“The shares have been range bound but are likely to enjoy the statement and we are more inclined to be positive than we have been; we will stick with a hold for now, however,” the broker said.
Russ Mould, the quote machine at AJ Bell, said: “As many suspected after the May and August trading updates, Next had been doing its best to keep a lid on sales and profit forecasts but boss Lord Wolfson has now officially raised the company’s guidance for the year to January.
“As a result, Next now expects to hold pre-tax profits broadly flat in its current financial year, ending a run of two consecutive declines,” he added.
“Online now represents two-thirds of profits at Next, which should help to reassure anyone who fears it will be overtaken by the decline of the High Street,” Mould said.
On the futures markets, Brent crude briefly toughed US$82 a barrel.
“Climbing another half a percent or so, the black stuff spent the morning flirting with $82 per barrel, a fresh 4 year high inspired not only by OPEC’s rejection of Trump’s calls for the cabal to bring down the oil price, but the impending US sanctions on Iran,” noted Connor Campbell, at Spreadex.
The most widely traded futures contract for Brent, the November contract, was trading bang on US$82 a barrel, up 80 cents on the day.
10.00am: Oil majors do most of the heavy lifting
Oil majors were once again lending their support to the FTSE 100, which unlike yesterday was in positive territory.
The FTSE 100 was up 9 at 7,468, due in no small part to a 1.8% rise for BP PLC (LON:BP.) and a 1.7% increase for Royal Dutch Shell PLC (LON:RDSB), as the price of Brent crude remained above the US$80 a barrel mark, despite president Trump stamping his feet and pouting over oil cartel OPEC’s unwillingness to take measures to lower oil prices.
“Despite a lot of bluff and bluster and gnashing of tweets, US President Donald Trump was unable to provoke a spike in OPEC oil supply at OPEC’s Algiers meeting over the weekend,” noted Richard Robinson, the manager of the Ashburton Global Energy Fund.
“OPEC’s power does not rest in the oil it produces, but rather in the oil it does not produce. Without spare capacity, OPEC is relatively impotent in relation to preventing rising prices,” Robinson suggested.
“Following four years of collapsing international capital spend, Trump’s removal of the world’s fifth largest oil producer, Iran, from the market – with sanctions to be fully implemented in November – was never going to end well.
“Iran is now likely to focus on influencing oil prices in the only way left available, by disrupting supply from others and elevating the risk premium – hence the military exercises performed over the Strait of Hormuz over the weekend,” Robinson said.
Barclays issued a positive research note on the company, saying that while Glencore clearly warrants a discount for ongoing risks, a 61% discount to peers (based on the bank’s projected earnings for fiscal 2019) “feels extreme”.
The shares rose 8.9p to 338.9p, well below Barclays’ price target of 400p.
8.45am: Positive start
The FTSE 100 index bucked expectations and pushed higher in early trading, ignoring weaker showings overnight from US and Asian markets, boosted by a leap in blue-chip retailer Next PLC (LON:NXT) after results.
Around 8.45am, the UK blue chip index was up 7 points at 7,465, against expectations for a similar-sized opening decline, having shed around 31 points on Monday.
Next was the stand-out gainer, surging almost 8% higher to 5,530p after the clothing and homewares stores group raised its full-year profit estimate following an unusually warm summer led to better-than-expected first-half trading.
The fashion retailer lifted its central guidance for annual pre-tax profit by £10mln to £727mln, broadly in line with last year’s profit of £726.1mln.
Neil Wilson, chief market analyst at Markets.com commented: “This was better stuff from Next as the company did not suffer loss of sales in August as feared.
“This chimes with the indicators from the official retail sales figures that indicated a recovery in real incomes combined with the hot summer has helped retailers.”
He added: “First half full price sales are up 4.5% on last year, and it now expects total full year full prices sales to be +3%, ahead of the 2.2% expected in May and 1% indicated in January.
“On the one hand this consistent raising of guidance throughout the year indicates positive momentum, but on the other it tends to suggest that Next was overly cautious after suffering its worst year in 25 years in 2017. It does look as though the guidance at the start of the year was overly pessimistic.”
The good news from Next buoyed its blue-chip peer Marks & Spencer PLC (LON:MKS), which saw its shares gain 1.3% at 288p, while under-pressure mid-cap department stores operator Debenhams PLC (LON:DEBS) added 3.5% at 10.20p.
Away from the retailers, it was further strength in the heavyweight oil majors which provided the main support for the FTSE 100 index as crude prices continued to climb, with Royal Dutch Shell PLC (LON:RDSA) A shares ahead 1.3% at 2,628p and BP PLC (LON:BP.) up 1% at 575.8p.
Proactive news headlines:
ECR Minerals PLC (LON:ECR) has identified a large gold system in the Dimmocks Main Shale (DMS) exploration targets, part of the wider Creswick project. The Dimmocks Main Shale targets sit between two large gold producing areas in Victoria, Australia, where it is estimated historically 15 million ounces of gold has been produced.
Shares in Learning Technologies Group PLC (LON:LTG) surged early doors after the company said the full-year outcome will be significantly ahead of expectations.
Next Fifteen Communications Group PLC (LON:NFC) has hiked its interim dividend in its half-year results as its pre-tax profit for the period rose by a quarter.
Scancell Holdings PLC (LON:SCLP) boss Cliff Holloway has hailed a “strong” year for the drug developer as it continues to make “significant progress” with its pipeline of cancer immunotherapies.
Directa Plus PLC (LON:DCTA) doubled first-half revenues as more products containing its graphene additives were launched. Clothing and accessory brands such as Alfredo Grassi, Arvind and Oakley are developing graphene-enhanced items using Directa’s G+ technology, while Grafysorber is a treatment to treat water contaminated with oil.
Risk management software specialist KRM22 PLC (LON:KRM) has recorded its first revenues since joining AIM in April. Set up by serial tech entrepreneur Keith Todd, the group raised £10.3mln to acquire businesses to plug into a platform that can instantly assess business and financial risks.
Live Company Group PLC (LON:LVCG) shares rose in early trading Tuesday after its sUBSidiary, Bricklive Education Limited (BLE), secured a content agreement with digital education firm ImmersiveMinds Limited.
Rose Petroleum PLC (LON:ROSE) chief executive Matthew Idiens described as “period of intense activity” as the US-focused oil and gas junior reported interim results. “We are at a really exciting time in the company's development as we look to evolve from an oil explorer to an oil producer in the next quarter," Idiens said.
Cradle Arc PLC (LON:CRA) has put production targets at the Mowana copper mine in Botswana under review for the second half of the year. However, chief executive Kevin van Wouw is confident that the issues will be resolved and that the project has "decades" of production ahead of it.
Savannah Resources PLC (LON:SAV) has acquired an option to buy the 2.94 square kilometre Aldeia Mining Lease application proximal to the 20mln tonne Mina do Barroso lithium project in Portugal. Savannah’s technical and legal due diligence has highlighted excellent lithium prospectivity focusing on a large scale pegmatite in Block A.
Plexus Holdings PLC (LON:POS) told investors that it is seeing an increasing level of interest in its POS-GRIP HG metal-to-metal seal technology amid growing global concerns over the leaking of methane from gas wells.
Solo Oil PLC (LON:SOLO) has confirmed the completion of its deal to sell out of the Horse Hill project and simultaneously acquire a 4.3% shareholding in UK Oil & Gas Investments PLC (LON:UKOG). The transaction was valued at £4.5mln, or 234mln new UKOG shares.
Ceres Power Holdings PLC (LON:CWR), a world-leading developer of low-cost, next-generation fuel cell technology, has announced the appointment of Caroline Hargrove as a non-executive director of the company effective from the 1 October 2018. The group said Hargrove replaces Mike Lloyd who retired from the board in July 2018. The company also announced that as part of its continued growth and focus on the development of both its PLC and executive boards, Mark Selby, its chief technology officer, will step off the PLC board from 1 October 2018.
Premier African Minerals Limited (LON:PREM) has said it plans to publish its interim financial statements for the period ended 30 June 2018 on Friday 28 September. The company added that, therefore, it plans to postpone the webinar announced on 17 September to Wednesday 3 October 2018 at 13:00 pm London time in order to allow shareholders the opportunity to review the Accounts and submit questions pertaining to the Accounts prior to the webinar. To register for the event click
6.45am: Early fall predicted
The FTSE 100 index is seen starting to fall again on Tuesday, extending Monday’s decline following overnight declines by US and Asian markets as Trump’s trade war escalations continue to worry investors, together with higher oil prices and US rate hike expectations.
Spread betting firm IG expects the blue-chip index to open around 9 points lower at 7,449, having shed 31.82 points on Monday in spite of a number of big takeover deals.
Overnight on Wall Street, the Dow Jones Industrials Average dropped 181 points to close at 26,652, unsettled by the trade, political and economic uncertainties, with the broader S&P 500 index also lower, although the tech-laden Nasdaq Composite managed to edge higher.
The cautious mood continued today in Asia as a fresh round of US/China trade tariffs were added and the spike in oil prices fuelled worries about global economic growth, with the Shanghai composite index shedding 0.5%, although Japan’s Nikkei 225 index added 0.2% as exporters were helped by a weaker yen.
Elsewhere on currency markets, sterling was fairly steady against both the dollar and the euro after recent gains as traders await the outcome of the latest two-day Federal Reserve policy meeting, which kicks off today.
The US central bank is widely expected to hike interest rates by another 25 basis points to a range of 2.00%-2.25%, and Fed boss Jerome Powell’s press conference will, as always, also be closely watched for comments on growing risks to the economic backdrop, given the current US trade wars.
Next results barometer for UK high street
In a second-quarter trading update published on 1 August, the FTSE 100-listed company said its full price sales increased by 4.5% in the first half, with online sales up 15.5% and retail sales down 5.3%.
Next also maintained its estimate for full-year 2019 pre-tax profit at £717mln, a 1.3% decrease on the prior year.
However, some clouds have begun to gather over the sector in the past few months, and Next’s last update showed sales growth slowed in the second quarter as it said some sales might have been brought forward from August.
UU hit by volatile weather
Shareholders will be interested to see whether United Utilities can reverse the decline in pre-tax profit it reported in its full-year results back in May.
But given the volatile weather seen in the UK this year, ranging from the winter’s 'Beast from the East' to the scorching Indian summer, there were plenty of issues for UU to deal with in the period.
Further down the food chain, interim results from fizzy drinks maker AG Barr PLC (LON:BAG) will provide an opportunity for investors to see more of how the new formulation of its famous Iron Bru recipe is going down with consumers.
In a preview, Hargreaves Lansdown equity analyst George Salmon said: “It’s easy to see why the decision to change a winning formula prompted a few worries, although recent updates have proven just the tonic to ease concerns. The new recipe has continued to grow market share.”
Significant events expected on Tuesday September 25:
Interims:Next PLC (LON:NXT), AG Barr PLC (LON:BAG), Alltitude Group PLC (LON:ALT), Animalcare Group PLC (LON:ANCR), Card Factory PLC (LON:CARD), Ebiquity PLC (LON:EBQ), Fireangel Safety Technology Group PLC (LON:FA.), Harvey Nash Group PLC (LON:HVN), Keystone Law Group PLC (LON:KEYS), Learning Technologies Group PLC (LON:LTG), Mortgage Advice Bureau Holdings PLC (LON:MAB1), Mi-Pay Group PLC (LON:MPAY), Osirium Technologies PLC (LON:OSI), Premier Technical Services Group PLC (LON:PTSG), Sumo Group PLC (LON:SUMO), S&U PLC (LON:SUS), WANdisco PLC (LON:WAND)
Economic data: FOMC meeting begins; US consumer confidence; US house prices index
Source : http://www.proactiveinvestors.co.uk/companies/market_reports/205601/ftse-100-closes-day-higher-boosted-by-rise-in-crude-205601.html