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LONDON MARKET CLOSE: HSBC and oil majors help FTSE 100 start week well

Mon, 25th Oct 2021 17:05

(Alliance News) - London's blue-chip FTSE 100 index on Monday was bolstered by oil prices soaring, boosting its heavyweight energy sector.

The FTSE 100 index closed up 18.27 points, or 0.3%, at 7,222.82. The FTSE 250 ended just 10.12 points higher at 22,941.78, and the AIM All-Share closed down 5.18 points, or 0.4%, at 1,229.01.

The Cboe UK 100 ended up 0.2% at 716.59, the Cboe UK 250 closed up 0.2% at 20,672.15, and the Cboe Small Companies ended up 0.6% at 15,592.44.

In European equities on Monday, the CAC 40 in Paris ended down 0.3%, while the DAX 40 in Frankfurt rose 0.4%.

Buoying the FTSE 100 on Monday was its sizeable natural resources sector.

"The main gainers today, given the continued rise in oil prices to multiyear highs, have been the likes of BP and Royal Dutch Shell, while BHP Group is also doing well given its exposure to US shale, as US oil prices make new seven-year highs," said Michael Hewson, chief market analyst at CMC Markets.

Brent oil was quoted at USD86.57 a barrel at the London equities close Monday, surging from USD84.77 late Friday. West Texas Intermediate was priced at USD84.34, up from USD83.87 at the New York equities close on Friday and topping the USD85 mark earlier on Monday for the first time in seven years.

The price of petrol in Britain hit a record high of 149.94 pence, or USD2.05, per litre, the RAC motoring organisation said on Monday.

The previous record at the pumps, set in April 2012, was broken on Sunday as global oil prices rise dramatically, doubling from around USD40 a barrel a year ago to over USD85 now. The price of diesel fuel in Britain, at 146.5 pence a litre, is also nearing its 2012 record.

Shares in BP closed up 1.6% and Royal Dutch Shell 'A' and 'B' shares advanced 1.5% and 1.2% respectively. Mid-cap oil and gas company Harbour Energy rallied 5.2%, topping the FTSE 250 index.

Miners also advanced. Antofagasta closed up 3.0%, BHP Group up 2.8% and Anglo American up 2.0%.

Also pushing the FTSE 100 higher was HSBC, with shares closing up 1.9% after the lender reported a sharp rise in profit in the third quarter.

In the three months to September 30, the bank reported pretax profit of USD5.40 billion, up sharply from USD3.07 billion the year before. HSBC benefited from a USD659 million expected credit benefit compared to a USD785 million charge a year before.

"We had a good third-quarter performance, with strong growth in profits supported by additional credit provision releases. Our strategy remains on track, with good delivery in all areas. This was reflected in more consistent top-line growth, robust lending pipelines across our businesses, and rising trade and mortgage balances," Chief Executive Noel Quinn said.

At the bottom of the FTSE 250 was Darktrace, tumbling 21% after Peel Hunt started coverage on the cybersecurity provider with a Sell rating, amid concerns over intensifying competition, limited research & development spend, and controversy around its products.

"Having considered the potential market size, the intensifying competition, and Darktrace's limited R&D spend, we take a more grounded approach to our valuation," the broker said.

Elsewhere in London, James Fisher shares collapsed 35% after the company announced further delayed projects, an increase in bad debt risk and a downgrade to guidance for its badly performing Tankships division.

A raft of negative trading updates on the group's businesses included the announcement of a poor performance in September for James Fisher's Tankships division, which as a result now has a more cautious outlook for the full year. Along with that, a "recent deterioration in the condition of a financially distressed customer" has increased bad debt risk by around GBP2 million for the company.

In the US this week, eyes turn to the tech sector as heavyweights such as Facebook, Apple and Google parent Alphabet release earnings.

Stocks in New York were higher at the London equities close on Monday, with the DJIA up 0.1%, the S&P 500 index up 0.3%, and the tech-heavy Nasdaq Composite up 0.5%.

Outside of earnings, focus this week will lie on central bankers, with monetary policy decisions from Canada and the eurozone. In addition, some key data out of the US - GDP on Thursday and core personal consumption expenditures on Friday - will be monitored ahead of next week's US Federal Reserve meeting.

In the UK, traders are awaiting Chancellor Rishi Sunak's budget this week.

The Office for Budget Responsibility is expected to deliver a raft of economic upgrades as Britain recovers faster than expected from the Covid-19 crisis. But, despite the fiscal windfall, experts believe Sunak will not loosen the grip on his fiscal squeeze as the recovery starts to slow and with soaring inflation meaning higher interest payments on the UK's mammoth debt pile.

Ahead of Wednesday's budget, it was confirmed that millions will get a pay rise next year when the national living wage is increased to GBP9.50 an hour, from GBP8.91.

The Treasury confirmed on Monday that the increase for all over-23s will take place on April 1. The 59p hourly boost will mean a full-time worker on the living wage will get a pay rise of more than GBP1,000 per year.

The pound was quoted at USD1.3772 at the London equities close Monday, flat compared to USD1.3773 at the close on Friday.

The euro stood at USD1.1612 at the European equities close Monday, down from USD1.1650 at the same time on Friday after some downbeat survey data from Germany.

The Munich-based ifo Institute for Economic Research on Monday said economic sentiment has "clouded" in Germany. In October, the ifo business climate index fell to 97.7 points from 98.9 in September, with companies more sceptical about the coming months.

Against the yen, the dollar was unchanged at JPY113.68 late Friday.

Gold was quoted at USD1,807.93 an ounce at the London equities close Monday, down slightly against USD1,809.80 at the close on Friday.

The UK corporate calendar on Tuesday has third quarter results from consumer goods firm Reckitt Benckiser, half-year results from Premier Inn owner Whitbread, production figures from precious metals miner Polymetal International and a trading statement from online retail platform THG.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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