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London open: Stocks edge up as oil prices rally; B&M slumps
London stocks edged a little higher in early trade on Tuesday, with BP and Shell racking up solid gains as oil prices rose after EU leaders agreed to ban 90% of Russian oil by the end of the year.
At 0840 BST, the FTSE 100 was up 0.2% at 7,611.32.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said the FTSE 100 had got off to a “lethargic” start.
“This comes as EU leaders have agreed on a plan to block more than two-thirds of Russian oil imports. Given Russia currently supplies 27% of the EU’s imported oil and 40% of its gas, the FTSE’s tepidness is reflecting anxiety over supply.
“The UK is in a better position than some European countries when it comes to reliance on Russia for energy supply, but this doesn’t mean supply concerns will be completely glossed over. The move is likely to create a permanent hike in EU oil prices, and the cost of sourcing is going to rise.
“Brent Crude has soared to $123.5 a barrel following this development, with prices the highest they’ve been in since early March. The upwards trajectory of the oil price may well have room left to run until a solid outline of how supply is going to be sourced.”
Investors were also digesting better-than-expected data out of China, where the official manufacturing purchasing managers’ index rose to 49.6 in May from 47.4 in April, versus consensus expectations for a reading of 49.0.
Meanwhile, the official non-manufacturing PMI rose to 47.8 from 41.9 in April, coming in ahead of consensus expectations of 45.5. A reading below 50.0 indicates contraction, while a reading above signals expansion.
On the UK data front, net lending, consumer credit and mortgage approvals for April are due out at 0930 BST.
In equity markets, Unilever surged to the top of the FTSE 100 after the consumer goods giant added billionaire investor Nelson Peltz – the founder and chief executive of Trian Fund Management – to its board as a non-executive director. Trian owns a 1.5% stake in the company.
Oil giants Shell and BP were among the best performers on the top-flight index as oil prices advanced.
GlaxoSmithKline ticked higher after it agreed to buy vaccine maker Affinivax for up to $3.3bn.
On the downside, B&M European Value Retail slumped after it said chief financial officer Alex Russo would be replacing Simon Arora as chief executive and warned that margins would take a hit this year as Britain’s cost-of-living crisis hit household budgets.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Unilever Plc | +6.91% | +241.50 | 3,737.00 |
| 2 |  |
British American Tobacco Plc | +1.82% | +63.00 | 3,519.00 |
| 3 |  |
Antofagasta Plc | +1.61% | +24.50 | 1,543.00 |
| 4 |  |
Shell Plc | +1.50% | +35.50 | 2,409.50 |
| 5 |  |
Bp Plc | +1.35% | +5.85 | 439.35 |
| 6 |  |
Kingfisher Plc | +1.06% | +2.80 | 268.10 |
| 7 |  |
Imperial Brands Plc | +1.05% | +18.50 | 1,788.00 |
| 8 |  |
Centrica Plc | +1.03% | +0.80 | 78.24 |
| 9 |  |
Burberry Group Plc | +0.97% | +16.50 | 1,721.50 |
| 10 |  |
Anglo American Plc | +0.91% | +35.00 | 3,885.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
International Consolidated Airlines Group S.a. | -3.95% | -5.34 | 129.70 |
| 2 |  |
Easyjet Plc | -3.62% | -19.40 | 515.80 |
| 3 |  |
Tui Ag | -2.21% | -4.35 | 192.70 |
| 4 |  |
Croda International Plc | -2.15% | -150.00 | 6,828.00 |
| 5 |  |
Smurfit Kappa Group Plc | -2.13% | -70.00 | 3,221.00 |
| 6 |  |
Segro Plc | -1.95% | -22.00 | 1,107.00 |
| 7 |  |
Micro Focus International Plc | -1.79% | -7.00 | 383.20 |
| 8 |  |
Sage Group Plc | -1.78% | -12.00 | 664.00 |
| 9 |  |
Crh Plc | -1.72% | -57.00 | 3,265.50 |
| 10 |  |
Next Plc | -1.69% | -112.00 | 6,502.00 |
US close: Dow Jones snaps seven-week losing streak
Wall Street stocks closed sharply higher on Friday as market participants digested some key inflation data.
At the close, the Dow Jones Industrial Average was up 1.76% at 33,212.96, while the S&P 500 was 2.47% firmer at 4,158.24 and the Nasdaq Composite saw out the session 3.33% stronger at 12,131.13.
The Dow closed 575.55 points higher on Friday, extending gains recorded in the previous session and snapping a seven-week-long losing streak.
Friday’s primary focus was news that a key measure of inflation in the US dipped last month, even as personal incomes and spending continued growing at a steady clip. According to the Department of Commerce, in April personal incomes and spending grew at a month-on-month pace of 0.4% (consensus: 0.5%) and 0.7% (consensus: 0.6%), respectively. The annual rate of change in the headline price deflator for personal consumption expenditures meanwhile slipped from 6.6% for March to 6.3% this time around.
Elsewhere on the macro front, America’s shortfall in trade with the rest of the world fell sharply last month as imports declined. According to a preliminary estimate from the Department of Commerce, America’s deficit in its international trade in goods and services shrank by 15.9%, in seasonally adjusted terms, to reach $105.9bn. That was considerably less than the -$115.0bn deficit that economists had pencilled-in.
Finally, the University of Michigan‘s May consumer sentiment index was revised down from a preliminary reading of 59.1 to 58.4 for the lowest reading since August 2011 as consumers continued to hold negative views on current buying conditions for houses and durables, as well as the future outlook for the economy, primarily due to concerns over inflation.
Also drawing an amount of investor attention was news that Ukraine’s President has held out an olive branch to the Kremlin, even as he sounded a downbeat note on the likelihood that Moscow would take it.
According to Reuters, in remarks to an Indonesian thinktank, Volodymyr Zelenskiy reportedly said: “There are things to discuss with the Russian leader.
“I’m not telling you that to me our people are eager to talk to him, but we have to face the realities of what we are living through.”
In the corporate space, Gap shares slumped after the retailer lowered its full-year profit guidance, while Ulta Beauty shares rallied after revealing better-than-expected quarterly results overnight.
No major corporate earnings were released on Friday.
Tuesday newspaper round-up: Missguided, Britishvolt, British Airways
Missguided, the online fashion specialist, has called in administrators after failing to secure a rescue bid. Administrators from Teneo were appointed on Monday after the company was issued with a winding-up petition by clothing suppliers who are owed millions of pounds. About 140 jobs are thought to be at risk with one source saying more than 80 people had immediately been made redundant. – Guardian
The UK battery startup Britishvolt has said it will invest more than £200m in a new facility in the West Midlands to test manufacturing methods that will be used at the factory is has planned for in Northumberland. The company will lease a site in Hams Hall, Warwickshire, from the warehouse developer Prologis, with equipment installation expected by the end of autumn 2023. – Guardian
British Airways check-in staff are threatening to strike at the height of summer as unions seize on travel chaos to ram through a new pay deal. Bosses at Unite, the trade union, say check-in staff have missed out on pay rises that bring wages in line with pre-pandemic levels. BA has restored management pay to pre-crisis levels, but the airline is refusing to reverse a 10pc cut imposed on blue collar workers during the pandemic, it is claimed. – Telegraph
Supermarkets have warned Boris Johnson that a return to imperial measures would drive up inflation and make the cost of living crisis worse. Reintroducing measurements in pounds and ounces would be a “distraction” from the country’s problems and increase grocers’ costs according to the British Retail Consortium (BRC), speaking on behalf of the industry’s major players. – Telegraph
Businesses are increasingly confident that they can use high inflation to rebuild their margins, a survey has found. Confidence among firms has risen for the first time since the onset of the war in Ukraine, according to the monthly barometer by Lloyds Bank. It rose by five points on the index to reach 38 per cent, significantly higher than the long-term average of 28 per cent. – The Times
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