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London open: Miners, big oil and grocers lead push higher
Britain´s top flight index moved into the green early in the session, led by gains in shares of miners, big oil and grocers, lifted by the rising tide in oil prices and somewhat more favourable Brexit poll results.
Acting as a backdrop, traders were busy monitoring the headlines coming out of the G7 finance ministers and central bank governors meeting in Sendai, Japan. According to Bloomberg, Japanese officials had tabled proposals for fiscal stimulus and structural reforms.
As of 08:58 BST the Footsie could be seen 0.23% or 14.36 points higher at 6,277.21, although the domestic-facing FTSE 250 was lingering in the red, drifting lower by 0.03% or 5.56 points at 17,227.53.
Front month Brent crude futures were 0.86% higher at $50.87 per barrel on the ICE with cable edging just above the previous session´s best levels to trade at 1.4727.
In parallel, dollar/yen was trimming an earlier retreat and was last off 0.1% to 110.06.
To take note of, some market participants were sounding a skeptical note regarding the staying power of the recent rally in equities.
“[Thursday´s weaker start] appears to just be a case of profit taking from traders following what has been an unusually positive couple of days when compared with the rest of the month, which has been characterised by indecision and tight trading ranges.
Given that we have two major risk events for the markets in the coming weeks -EU referendum in the UK and possible rate hike from the Fed – I do wonder though whether this rally has the legs to build significantly on the moves of the last couple of days,” Craig Erlam, Senior Market Analyst at Oanda said.
Gains in crude oil came despite unconfirmed reports that Saudi Aramco is set to raise production from its Shaybah field from 750,000 barrels per day to 1.0m b/d.
Speeches from two Fed speakers later in the day were eagerly awaited, especially that from Fed Governor Jerome Powell which was scheduled for 16:00 BST.
Overnight, the president of the Federal Reserve bank of Dallas, Robert Kaplan, argued in favour of a rate hike “in the near future” but not necessarily at its mid-June meeting, so long as the economy evolved as expected.
He also said the risk of Brexit would be “a factor” at the Fed´s 15 June policy meeting and noted the risk of a ‘sell-off’ in the pound, Market News International reported.
On that note, the results of the latest Ashcroft poll show that 65% of those surveyed expected the ‘Remain’ camp to prevail versus the 35% who expected the opposite result.
Similarly, the results of the latest BMG Research poll which was conducted on-line revealed a small up-tick in the proportion of respondents who said they were backing the ‘Remain’ option, which rose by one percentage point to 44.0%.
First quarter UK GDP estimate unrevised
The British economy expanded at a 0.4% quarter-on-quarter clip in the first three months of the year, a second estimate from the Office for National Statistics revealed, bang in-line with estimates and the preliminary estimate.
The Confederation of British Industry´s gauge of service sector firm confidence fell to its lowest mark in more than three years over the three months to May.
Gross mortgage borrowing in the UK was at £12bn in April, for a 12% rise versus a year ago, following March´s spike in activity as borrowers raced to complete purhcases ahead of the increase in Stamp Duty, according to the BBA.
A raft of companies went ex-dividend on Thursday, including Carnival, DCC, Whitbread, Amec Foster Wheeler and Inchcape.
Tate&Lyle in sweet spot
Full year pre-tax profits at Tate & Lyle soared to £126m from 25m as revenues rose 1% to £2.35bn. Adjusted profit before tax was £67m higher at £193 largely as a result of net exceptional costs in the year of £50m.
United Utilities saw underlying profits drop 9% over the twelve months ending on 31 March to reach £604.1m, even as revenues edged up from £1,720.2m to £1,730m. The company declared a final dividend of 25.64p per share, taking the total for the year to 38.45p, for an increase of 2% – in line with its payout policy.
Six international oil firms including BP and Royal Dutch Shell Plc have tabled bids to operate Qatar’s biggest offshore oil field, Reuters reported citing two people familiar with the matter.
Pets at Home reported an increase in pre-tax profit for the year as revenue grew and the company expressed confidence over its outlook. For the 53 weeks to the end of March, statutory pre-tax profit edged up to £92.1m from £90.2m on revenue of £793.1m, up from £777.8m. Meanwhile, group like-for-like revenue grew 2.1% compared with 4.2% growth in the same period last year.
FTSE 250 car dealership Inchcape said on Thursday that it has made a good star to the year, in line with its expectations. In a trading update for 1 January to 25 May, the company said group revenue rose 12.8% at actual currency to £2.47bn, or an 11.7% increase at constant currency.
Daily Mail & General Trust shares tumbled on Thursday as the company posted drop in first-half profit and warned that a weak print advertising market will hit margins in the media business.
B&M European Value Retail, the discounter chaired by Sir Terry Leahy, declared a special dividend as it posted final results showing strong sales, profits and cash generation. The FTSE 250 group, which floated almost two years ago, opened a record 79 UK stores in the UK and six Jawoll stores in Germany in the 52 weeks to 26 March, helping lift revenues increased by 23.6% to £2.04bn.
