(Alliance News) - Stocks in London were largely higher at the close on Monday, with oil stocks star performers following a surprise production cut from the OPEC+ over the weekend.
The FTSE 100 index closed up 41.26 points, or 0.5%, at 7,673.00 on Monday. The FTSE 250 ended down 48.89, or 0.3%, at 18,879.41. The AIM All-Share closed up 4.12 points, or 0.5%, at 813.39.
The Cboe UK 100 ended down 0.4% at 767.07, the Cboe UK 250 closed down 0.4% at 16,489.39, and the Cboe Small Companies ended up 0.3% at 13,403.80.
The pound was quoted at USD1.2386 at the London equities close on Monday, up from USD1.2370 at the close on Friday.
Saudi Arabia led a coordinated production cut by major oil powers on Sunday, despite US pressure to pump more crude, saying they were aiming at market stability.
Cuts by the Saudis, Iraq, UAE, Kuwait, Algeria and Oman from May to the end of the year will total more than one million barrels per day – the biggest reduction since the OPEC+ cartel slashed two million barrels per day in October.
Russia, a member of OPEC+, said it was also extending its cuts of 500,000 barrels per day to the end of this year, calling it "a responsible and preventive action".
Danni Hewson, head of financial analysis at AJ Bell explained that the decision by the oil producers' cartel, "unusually taken outside of any officially scheduled meeting", represents a "flexing of its muscles" and "potentially a pre-emptive move as it anticipates a drop-off in crude demand relating to the collapse of SVB and ensuing banking crisis."
The move sent oil prices soaring, lifting oil stocks in turn. Brent oil was quoted at USD84.52 a barrel at the London equities close on Monday, up sharply from USD79.14 late Friday.
In the FTSE 100, Shell and BP jumped 4.3% and 4.5%, respectively. Meanwhile, in the FTSE 250, Harbour Energy closed up 7.6% and Tullow Oil finished 6.0% higher.
FTSE 100-listed Glencore dropped 1.1% after New York-listed Teck Resources said its board unanimously rejected an "unsolicited and opportunistic" acquisition proposal from the company.
Glencore offered 7.78 of its own shares for each Teck Class B subordinate voting share, and 12.73 shares for each Teck Class A common share. This represented a 20% premium for both on the date of the offer.
The proposal from the commodity trader and miner would see it buy Teck and then separate to create two businesses, MetalsCo and CoalCo.
Glencore said the merged company would have an estimated post-tax synergy value of between USD4.25 billion and USD5.25 billion. Glencore would own 76% of the merged entity under the offer, with Teck owning the remaining 24%.
Teck said that the offer was inferior to its own planned separation, which it said better positioned the resulting companies, Teck Metals and Elk Valley Resources, for success.
In the FTSE 250, Spirent Communications rose 2.4% as it launched a share buyback programme of up to GBP56 million.
The company said the programme demonstrated the board's confidence in its "attractive structural growth drivers" and ability to deliver "significant future shareholder returns".
Elsewhere in London, Cineworld plunged 34% as it entered into a restructuring support agreement and backstop commitment agreement with lenders to support its financing plan.
Cineworld was hit hard during the Covid-19 pandemic, as it saw the enforced closure of its cinemas. It also backed out of an acquisition agreement in Canada, leading to a legal battle.
Cineworld said that the financial restructuring will see it raise USD800 million through an equity offering to its lenders, as well as USD1.46 billion in new debt financing from its lenders, with these funds expected to reduce Cineworld's USD4.53 billion in debt.
In European equities on Monday, the CAC 40 in Paris ended up 0.3%, while the DAX 40 in Frankfurt ended 0.3% lower.
The eurozone manufacturing sector remained in a state of contraction in March.
The S&P Global manufacturing purchasing managers' index fell to a four-month low of 47.3 points, down from February's reading of 48.5.
Falling further below the 50-point mark which separates growth from contraction, it shows the deterioration in the single currency area's manufacturing sector has accelerated.
"Eurozone manufacturing remains in troubled waters, with factories reporting a fall in demand for goods for an eleventh straight month amid the surging cost of living, tighter monetary policy, a shift to inventory destocking and subdued customer confidence," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The euro stood at USD1.0883 at the European equities close on Monday, higher against USD1.0863 at the same time on Friday.
Stocks in New York were mostly lower at the London equities close, with the Dow Jones Industrial Average up 0.6%, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.9%.
The decline in the US manufacturing sector eased in March.
The seasonally adjusted S&P Global US manufacturing PMI posted 49.2 points in March, up from 47.3 in February and broadly in-line with the earlier flash estimate of 49.3.
"The US manufacturing sector continued to signal concerning trends during March. Although output rose for the first time since last October, growth was fractional, and largely supported by ramping up production following an unprecedented reduction in supply chain pressures," said Sian Jones, senior economist at S&P Global Market Intelligence.
Gold was quoted at USD1,988.83 an ounce at the London equities close on Monday, sharply higher against USD1,979.05 at the close on Friday.
Against the yen, the dollar was trading at JPY132.32, lower compared to JPY132.90.
In Tuesday's UK corporate calendar, there are full-year results from insurance firm Saga and a trading statement from waste-to-product company Renewi.
In the economic calendar, the EU's producer price index will be released at 1000 GMT.
By Heather Rydings, Alliance News senior economics reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Shell (SHEL)
BP (BP.)
Harbour Energy (HBR)
Tullow Oil (TLW)
Glencore (GLEN)
Spirent (SPT)