London close: Footsie snaps back on gains for Big Oil
By Alexander Bueso
Date: Friday 22 Jun 2018
(Sharecast News) - London stocks bounced back at the end of the week, recovering from the previous session's losses, after OPEC delivered an increase in output that came in on the low side of analysts' expectations.
The FTSE 100 snapped 1.67% or 125.83 points higher to 7,682.27, for a 48.36 point gain over the latest five-day stretch, alongside a 2.48% jump in front month Brent crude oil futures to $74.91 a barrel on the ICE.
The pound meanwhile was 0.19% softer against the euro at 1.1388 but 0.24% firmer versus the US dollar to 1.32730, even as investors continued to digest a more hawkish than expected policy announcement from the Bank of England.
Stocks had ended the previous session in the red as Sterling rallied after the Bank of England's chief economist, Andy Haldane, joined dissenters McCafferty and Saunders in voting for a 25 basis points rate hike.
Oil prices were thus in the spotlight on Friday after the Organisation for Petroleum Exporting Countries announced that - on paper - it would raise its production ceiling by 1.0m barrels a day.
However, increasingly impaired production in countries such as Mexico or Venezuela as some of their major fields aged or as a result of mismanagement, or both, meant that the effective increase might be somewhere closer to 0.6m-0.7m b/d.
"The modest increase in supply only partly offsets the extra barrels that have been lost due to the ongoing crisis in Venezuela and does little to address our concerns about future supply. Prices have picked up in the past 24 hours, as the possibility of a larger increase in production appears to be off the table for now. The backdrop is also supportive, with inventories falling and fundamentals tightening on decent demand growth," said Dan Smith at Oxford Economics.
Housebuilders were on the front foot, clawing back losses suffered on Thursday when the BoE's policy announcement raised the prospect of an August rate hike, sparking worries about the impact of higher borrowing costs on demand. Barratt, Berkeley, Taylor Wimpey and Persimmon all gained. Analysts at Liberum said that nervousness around rate rises on Thursday was overdone, especially as the bond market did not seem to show much reaction to the extra dissenter in the MPC vote.
Luxury fashion brand Burberry advanced after UBS upped its share price target to 2,150p from 1,900p but kept its stance at 'neutral'.
Playtech gained after Italian financial market regulator Consob approved the gambling software group's mandatory takeover offer for the remaining shares of Italian gaming firm Snaitech that it does not own.
Syncona was a high riser after saying that its portfolio company, Autolus Therapeutics, had confirmed pricing of its US initial public offering at the top end of the indicated scale. Syncona's 33.8% stake in the business will be valued at $231m (£174.4m).
Investors looked to take on more risk, piling into cyclicals such as banks and mining shares, with Glencore, RBS and Barclays atop the FTSE 100 leaderboard.
On the other side of the coin, this saw defensive and dollar-exposed stocks in the doldrums, with the likes of AstraZeneca, GlaxoSmithKline and Coca-Cola HBC among the fallers.
Elsewhere, Shire slipped despite saying that tests of patients with metastatic pancreatic cancer have been shown to benefit from a combined treatment with its Onivyde drug.
In broker note action, CYBG was cut to 'sell' at Investec, while Bodycote was under the cosh after a downgrade to 'sell' at Goldman Sachs and Renishaw fell after a downgrade to 'neutral' at GS.
Spire Healthcare was initiated at 'add' by Peel Hunt and FirstGroup rose after an initiation at 'buy' by Goldman.
Market Movers
FTSE 100 (UKX) 7,682.27 1.67%
FTSE 250 (MCX) 21,009.89 1.35%
techMARK (TASX) 3,534.55 0.29%
FTSE 100 - Risers
Glencore (GLEN) 387.80p 4.18%
Royal Dutch Shell 'B' (RDSB) 2,715.00p 3.46%
Royal Dutch Shell 'A' (RDSA) 2,609.00p 3.39%
BP (BP.) 576.60p 3.06%
Fresnillo (FRES) 1,173.00p 2.80%
Anglo American (AAL) 1,697.00p 2.71%
Burberry Group (BRBY) 2,162.00p 2.71%
Reckitt Benckiser Group (RB.) 6,317.00p 2.58%
Severn Trent (SVT) 1,930.00p 2.50%
Aviva (AV.) 514.80p 2.35%
FTSE 100 - Fallers
Coca-Cola HBC AG (CDI) (CCH) 2,535.00p -0.78%
Shire Plc (SHP) 4,075.00p -0.54%
AstraZeneca (AZN) 5,229.00p -0.49%
Melrose Industries (MRO) 221.90p -0.49%
Sage Group (SGE) 632.00p -0.41%
Halma (HLMA) 1,387.00p -0.22%
Scottish Mortgage Inv Trust (SMT) 540.00p -0.18%
Micro Focus International (MCRO) 1,364.00p -0.15%
Smith (DS) (SMDS) 517.80p -0.08%
London Stock Exchange Group (LSE) 4,460.00p 0.25%
FTSE 250 - Risers
Inmarsat (ISAT) 606.00p 10.58%
Syncona Limited NPV (SYNC) 244.00p 8.44%
Premier Oil (PMO) 119.60p 7.75%
Wood Group (John) (WG.) 651.20p 5.58%
Hill & Smith Holdings (HILS) 1,502.00p 4.89%
Hunting (HTG) 795.50p 4.82%
Ferrexpo (FXPO) 196.70p 4.46%
Tullow Oil (TLW) 236.70p 4.14%
Centamin (DI) (CEY) 118.70p 4.03%
Hikma Pharmaceuticals (HIK) 1,430.50p 3.92%
FTSE 250 - Fallers
Renishaw (RSW) 5,200.00p -5.64%
TI Fluid Systems (TIFS) 258.00p -3.73%
Spectris (SXS) 2,718.00p -2.48%
Bodycote (BOY) 985.50p -2.38%
Stobart Group Ltd. (STOB) 244.50p -2.21%
Ibstock (IBST) 290.20p -1.89%
FDM Group (Holdings) (FDM) 1,026.00p -1.72%
Bakkavor Group (BAKK) 181.00p -1.63%
GCP Infrastructure Investments Ltd (GCP) 119.40p -1.00%
888 Holdings (888) 271.60p -0.66%
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