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LONDON (Alliance News) - Higher oil prices helped UK stocks rise on Wednesday, with investors now awaiting the publication of the US Federal Reserve minutes for more insight into how divided policymakers are about the timing of future increases in interest rates.
The minutes of the Federal Open Market Committee's March 15-16 meeting are to be released at 1900 BST, after the London close. The market hopes the accounts will shed some light on the outlook for interest rates ahead of the Fed's next meeting at the end of April.
The March meeting revealed Fed members lowered their expectations for US rate increases in 2016 to two from four in the December meeting. This was more dovish than the market expected and sent the dollar lower at the time.
Since the last meeting, several policymakers have said an April rate hike was still on the table, but last week Chair Janet Yellen maintained a dovish tone, suggesting a divide among Fed members on the future path for tightening of US monetary policy. Yellen said she considered it appropriate for the Fed to proceed cautiously in adjusting monetary policy given the risks to the economic outlook.
Analysts at French Bank Societe Generale believe the FOMC minutes will receive less attention than usual because of Yellen's speech last week, but could provide insight into just how divided the committee really is on the "balance of risks" to the US economy.
Ahead of the minutes the pound traded the dollar at USD1.4103 at the close of London equity trading against 1.4133 at the same time on Tuesday. The euro traded the greenback at USD1.1388 versus 1.1370 on Tuesday.
At the London close Wall Street was trading higher. The DJIA was up 0.4%, the S&P 500 was up 0.6%, and the Nasdaq Composite was up 0.8%.
In London, the FTSE 100 closed up 1.2%, or 70.40 points, at 6,161.63. The index was supported by higher oil prices, which rose following comments from Kuwait's OPEC governor and a decline in US crude oil stocks.
On Tuesday, Reuters reported that all signs suggest the meeting of oil producers in Doha on April 17 will deliver an agreement to freeze output, citing Kuwait's OPEC governor Nawal Al-Fuzaia and two other sources.
"There are positive indications an agreement will be reached during this meeting... an initial agreement on freezing production," Al-Fuzaia said.
The comments suggested Iran's aim to increase its production will not scupper a deal aimed at supporting prices and addressing oversupply in the oil market, a big driver of the fall in oil pricing.
Oil prices received a further boost on Wednesday afternoon, when the US Energy Information Administration reported a fall in its crude oil stocks. The US government's official energy statistics body said its crude oil inventory declined by 4.9 million barrels last week. It was the first decline in the EIA's crude oil stocks in eight weeks.
At the London stock market close Brent crude was quoted at USD39.38 a barrel, compared to the USD37.66 a barrel at the London stock market close Tuesday. US benchmark West Texas Intermediate was at USD37.60 a barrel against USD35.66 at the same time on Tuesday.
Elsewhere in commodities, gold was at USD1,221.73 an ounce at the European equities close, versus USD1,228.82 on Tuesday.
The FTSE 250 closed up 0.8%, or 140.52 points, at 16,866.11 and the AIM All-Share ended up 0.5%, or 3.32 points, at 715.44. In Europe, the CAC 40 in Paris rose 0.8%, and the DAX 30 in Frankfurt ended up 0.6%.
On the London Stock Exchange, pharmaceutical companies ended as the best performers in the FTSE 100, with Shire up 4.9%, AstraZeneca, up 3.3%, and GlaxoSmithKline up 1.2%.
Connor Campbell, financial analyst at Spreadex, said UK drugmakers were boosted by the termination of US peer Pfizer's USD160 billion merger with botox maker Allergan.
"The fallout from the failed Pfizer/Allergan merger causing many to speculate that the former might be go shopping again to satisfy its M&A-thirst," Campbell said.
CRH ended up 2.1% after JPMorgan Cazenove lifted its recommendation to Overweight from Neutral. The bank said it believes the Irish building materials company's "attractive" valuation offers an "interesting entry point".
EasyJet closed as the worst FTSE 100 performer, down 3.0%. The low-cost carrier said the number of passengers carried rose in March year-on-year, but its load factor declined following cancellations due to strikes in France.
The number of passengers carried grew by 4.3% in March to 5.7 million from 5.5 million in the same month a year before, the company said. Load factor, however, declined by 1.3 percentage points to 91.3% from 92.6%.
EasyJet said it had 611 flight cancellations in March, with the majority due to air traffic control strikes in France.
Miner and commodities trading house Glencore said it agreed to offload a substantial stake in its agricultural business to a Canadian pension fund in a deal that suggests the company is well and truly on its way to delivering its asset disposal and debt reduction plan in 2016.
Glencore agreed to sell a 40% stake in its Agricultural Products business to Canada Pension Plan Investment Board for USD2.5 billion, with Barclays, Citigroup and Credit Suisse all advising Glencore on the anticipated deal.
The payment for the stake will be made in cash upon closing of the deal, but is still subject to customary working capital adjustments and also needs regulatory approval. Glencore expects the deal to formally close before the end of June.
Glencore closed down 1.7%, making it one of the worst performers in the FTSE 100, but the stock has still increased by more than half to date in 2016.
Telecom Plus ended as the worst performer in the FTSE 250, down 6.1% after Berenberg downgraded it to Hold from Buy. The German bank believes the company will struggle to attract new customers as competitors benefit from lower utility prices whilst it is tied into a long-term contract with npower.
It is another thin economic calendar on Thursday, with the highlight being central banker speeches. The Fed's Yellen is due to speak at 2230 BST, while European Central Bank President Mario Draghi is expected to make a speech in Lisbon.
Also in the calendar is the publication of ECB's monetary policy meeting accounts at 1230 BST, US continuing and initial jobless claims at 1330 BST and US consumer credit at 2000 BST.
The focus in the UK corporate calendar is a trading statement from FTSE 100 food and homewares retailer Marks & Spencer Group.
Elsewhere, there are trading statements from homewares retailer Dunelm Group, specialty chemicals Victrex and European airline Flybe Group. FTSE 250 gold miner Centamin reports first quarter production results, while speciality pharmaceutical company Alliance Pharma and healthcare company PureTech Health both report full-year results.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
Copyright 2016 Alliance News Limited. All Rights Reserved.
27 Oct 2022 08:16
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