LONDON (Alliance News) - A rebound in oil prices and heightened expectations of further monetary easing measures from the European Central Bank stimulated a broad rally in UK equities Friday.
The FTSE 100 index ended up 2.2% at 5,900.01 points, helping the blue-chip index to rise 1.7% over the week as a whole, more than making up for Wednesday's bruising 3.5% decline. The mid-cap FTSE 250 index ended up 1.9% at 16,127.99 and the AIM All-Share closed up 1.5% at 687.19.
In Europe, the French CAC 40 closed up 3.1% and the German DAX 30 ended up 2.0%.
On Wall Street at the European equity close, the Dow 30 was up 0.9%, the S&P 500 up 1.6% and the Nasdaq Composite traded up 2.1%.
The rise in oil prices was the main component which fuelled the rally in global equities. Brent oil made sizeable gains above the USD30 a barrel mark and at the London stock market close traded at USD31.37, compared to Thursday's corresponding price of USD28.85. US benchmark West Texas Intermediate was quoted at USD31.56 a barrel.
Bjarne Schieldrop, chief commodities analyst at Nordic bank Skandinaviska Enskilda Banken does not believe the latest rally can be sustained due to the continued oversupply in the market.
"We have witnessed oil price rallies during the last six months being sold back very quickly. Yesterday's US oil inventory data also highlight that ultimately nothing has changed with regards to the fundamental surplus situation," Schieldrop said.
Oil-related stocks closed among the best performers in London's main indices, with Royal Dutch Shell 'A' ending up 5.9%, BG Group up 4.9% and BP up 3.4%. Tullow Oil led the mid-cap gainers, up 16%, Ophir Energy ended up 6.5% and Amec Foster Wheeler up 6.1%.
There could be some more volatility in oil prices later in the day, with the Baker Hughes US oil rig account at 1800 GMT.
Gold prices rose from Thursday. At the London close, the precious metal traded at USD1,098.90 an ounce compared to the Thursday's price of USD1,094.40.
Talk of stimulus by the ECB on Thursday also pushed stocks higher. President Mario Draghi said in his post decision press conference that more stimulus may come at the next policy meeting in March, as downside risks such as global uncertainty, market volatility and geopolitics have intensified.
Draghi also said there are "no limits" to the policy tools the bank can use to reach its inflation goal and to boost euro area growth.
Bank of America Merrill Lynch's European economists Gilles Moec and Ruben Segura-Cayuela brought their call for ECB stimulus forward to the March meeting after Draghi's press conference. The economists expect a 10 basis point cut to the deposit rate to -0.3% but more focus on the central bank's quantitative easing programme.
"We think that, given by how much the Euro area's external environment has changed, mere extension – although necessary, since it is going to take more time to bring inflation back to target – cannot suffice," they said.
"The exact quantification and weighing of extension versus expansion will depend on the distance between the ECB's next batch of forecasts and their target, but as a minimum we expect what we had in mind for December: buying until September 2017 at least, with the monthly pace moving from EUR60 billion to EUR70 billion."
At the end of trade on the London stock market the euro was a touch lower against the dollar from Thursday, trading at USD1.0808 compared to USD1.0828. The pound had rallied and was quoted at USD1.4320 at the close Friday, versus USD1.4180 at the close Thursday.
In company news, Sports Direct International denied rumours the company will go private and delist from the London Stock Exchange, according to a report by the Evening Standard on Thursday.
The newspaper said that following speculation that founder and vice chairman Mike Ashley, who according to Morningstar owns 59% of the company, intends to make an offer to buy out other shareholders and turn the retailer into a private company, a spokesperson for Ashley confirmed the rumours were untrue.
Sports Direct closed as the best performer in the FTSE 100, up 6.1%.
Oxford Instruments said it performed in line with its expectations in its third quarter to end-December, with orders ahead of the same period in the previous year.
The high technology tools and systems provider said that trends it had seen in its first half had continued, with its NanoTechnology Tools performing well and ahead of the previous year, whilst Industrial Products continued to be hit by weak industrial markets.
The company said that its acquisition of service business MIR has "more than offset" a hit from the completion of a contract with Siemens AG in the previous year. Oxford Instruments closed up 13% making it one of the best performers in the FTSE All-Share.
Petroceltic International was the biggest gainer in the AIM All-Share on Friday, up 48% after Worldview Capital Management, which owns a 29.6% stake in the oil and gas company and which has been pushing for the removal of board members and the restructuring of the company, said it was considering making a cash takeover offer for Petroceltic.
Worldview has heavily criticised Petroceltic in the past, with a failed attempt to remove the company's chief executive and accusations of corruption levelled against the company.
Pinnacle Technology Group closed as the second-worst performer in the AIM All-Share, down 32%. The IT services company said it plans to raise around GBP4.6 million to help fund its acquisition of Ancar-B Technologies and Weston Communications, as it reported a narrowed pretax loss for its most recently ended financial year.
Pinnacle will raise the GBP4.6 million through the placing of up to 108.4 million shares at a price of 4.2 pence, a big discount to its closing share price of 12.31p on Thursday. The stock was quoted at 8.50p at the close Friday.
For the year to end-September the company reported a pretax loss of GBP1.4 million, narrowed from a pretax loss of GBP1.9 million a year before, as a fall in revenue to GBP7.9 million from GBP8.4 million was offset by a reduction in operating expenses and exceptional costs not recurring.
In the economic calendar on Sunday, Japanese imports, exports and trade balances data are at 2350 GMT. On Monday, IFO business climate survey results for Germany are at 0900 GMT, before UK Industrial Trends Survey at 1100 GMT and the Dallas Federal Reserve manufacturing business index at 1530 GMT.
In the UK corporate calendar, there are full-year results from staffing company SThree and filtration and environmental technologies company Porvair. Miner Xtract Resources issues a trading statement.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
Copyright 2016 Alliance News Limited. All Rights Reserved.
29 Apr 2016 09:28
