LONDON MARKET CLOSE: Oil majors drive FTSE; Johnson to extend lockdown

Mon, 14th Jun 2021 16:58

(Alliance News) - The FTSE 100 kicked off the new week on the front foot with oil majors Shell and BP driving the blue chip index higher but travel and leisure stocks took a hit from the expected extension to England's current lockdown restrictions.

The FTSE 100 index closed up 12.62 points, or 0.2%, at 7,146.68, paring back from stronger gains earlier in the session on afternoon selling pressure. The mid-cap FTSE 250 index gained 10.38 points, or 0.1%, to 22,744.51. The AIM All-Share index ended up 1.31 points, or 0.1%, at 1,250.96.

The Cboe UK 100 index closed up 0.3% at 713.13. The Cboe 250 ended up 0.1% at 20,485.05. The Cboe Small Companies gained 0.4% to 15,216.53.

In Paris the CAC 40 advanced 0.2%, while the DAX 30 in Frankfurt ended 0.1% lower.

Sterling was suffering from with England possibly shelving its lockdown easing plans.

UK Prime Minister Boris Johnson is facing a furious backlash from Tory MPs as he prepares to put the final lifting of coronavirus lockdown restrictions in England on hold.

The prime minister is expected to announce the ending of social-distancing rules â€“ which had been slated for June 21 â€“ will be delayed for four weeks to July 19, with the BBC reporting early on Monday the decision had been signed off by senior ministers.

The pound was quoted at USD1.4112 at the close on Monday, up from USD1.4105 at the London equities close Friday, amid market expectations of the delay.

England's rate of new cases of Covid-19 has climbed to its highest level for more than three months, with around one in 10 local areas now recording rates above 100 cases per 100,000 people, new analysis shows.

A clear rise in case rates and hospital numbers, driven by the spread of the Delta variant of Covid-19 that originated in India, are likely to have persuaded ministers of the merits of postponing the last stage of the road map out of lockdown.

A total of 37,729 new cases of coronavirus were recorded in England in the seven days to June 9, according to Public Health England.

This is the equivalent of 67.0 cases per 100,000 people: the highest level since March 2, when the rate stood at 69.6.

In London, energy stocks also were getting a boost from higher oil prices on Monday. Brent oil was quoted at USD73.28 a barrel at the close in London, sharply higher than USD72.85 late Friday. The North Sea benchmark was trading at its highest levels since late 2018.

Shell 'A' shares gained 2.7%, while the 'B' shares added 2.5%. Peer BP gained 1.9%. Tullow Oil was the best midcap performer, up 8.7%.

CMC Markets Chief Market Analyst Michael Hewson said: "The resilience in oil prices may well be helping here with prices hit two-year highs providing a tail wind for the likes of Royal Dutch Shell which is leading the gainers on the FTSE100, though todayâ€™s boost for Shell may have more to do with reports it is considering the sale of shale assets in Texas, in a move that could offer proceeds of USD10 billion."

Reuters reported on Sunday that the oil major is reviewing its holdings in the largest US oil field for a potential sale.

Citing people familiar with the matter, Reuters reported the move was part of Shell's shift away from fossil fuels as it faces growing pressure to slash carbon emissions. Recently, a Dutch court ruled that by 2030 Shell must reduce its net carbon emissions by 45%, compared to its 2019 level.

Reuters said the sale could be for part or all of Shell's position in the US Permian Basin, located mostly in Texas, which accounted for around 6% of the Anglo-Dutch company's total oil and gas output last year. The holdings could be worth more than USD10 billion, the people said.

IG Chief Market Analyst Chris Beauchamp added: "Oil's resilience in the face of warming US-Iran relations suggests that the supply dynamic continues to play second-fiddle to the expectation that demand will keep building into the second half of the year.

"Growth forecasts have remained stable, and traffic levels continue their recovery to, or in some cases above, pre-Covid levels. And while inflation concerns bother some, stripping out energy and food in core CPI means that so far the rise does not appear to be perturbing monetary and fiscal policymakers."

In the red, travel and leisure stocks were suffering from continued lockdown restrictions.

AJ Bell financial analyst Danni Hewson said: "It's just four weeks, but for some businesses it will be four weeks too many especially as there are no guarantees 19 July will really bring an end to restrictions. There are many reasons to delay, but delay will bring hardship for some, ruined plans for others and the end of the line for a few.

"Both the FTSE 100 and 250 tell the tale. Whitbread, The Restaurant Group and Wetherspoons have all tumbled. With big soirees and June wedding parties seemingly off the cards Primark's owner Associated British Foods finds itself among the fallers as does the Intercontinental Hotels Group."

Whitbread gave back 1.6%, Restaurant Group 4.3% and Wetherspoons 4.0%. AB Foods lost 2.6% and Intercontinental Hotels Group 1.6%.

"And with current lockdown measures at home standing still, investors seem to have given up on the likelihood of foreign travel opening up in the short term knocking back Wizz Air, EasyJet, IAG and Rolls Royce Holdings," AJ Bell's Hewson continued.

Wizz Air, EasyJet, IAG and Rolls lost 1.8%, 2.7%, 4.2% and 4.1%, respectively.

Hewson added: "There are already calls for changes to the furlough scheme to be delayed and the scheme itself to be extended into next year, plus a continuation of business rate relief. But even if extra help is given there will be those who will miss out as so many sectors will be indirectly affected by the changes. Make no mistake, even for some businesses that have reopened, recovery feels a bit like a carrot being dangled on a stick that keeps being pulled just out of reach."

Stocks in New York were mixed at the London equities close as Wednesday's US Federal Reserve interest rate decision comes into focus. The Dow Jones Industrial Average was down 0.6%, the S&P 500 down 0.2% but the Nasdaq Composite was up 0.3%.

IG's Beauchamp said: "No doubt the early signs of pre-FOMC hesitancy detected on Friday will only get stronger now that the decision and press conference are just over 48 hours away. In one sense, barring something radical, the outlook is quite tough either way for US stocks. No change and Wall Street will be left waiting for the next earnings season to start, but if the Fed talks about an earlier tapering then thin summer markets might be ripe for a bigger pullback. Early gains today were sold, suggesting that a broad atmosphere of caution continues to hang over equities."

Gold was trading at USD1,863.20 an ounce, sharply higher from USD1,855.32 on Friday.

The euro was priced at USD1.2124, up from USD1.2114. Against the Japanese yen, the dollar was trading at JPY109.99, higher from JPY109.68.

The economics events calendar on Tuesday has UK ILO unemployment figures and German CPI at 0700 BST, followed by French CPI at 0745 BST and eurozone trade balance at 1000 BST. In the afternoon, there is US producer price index and retail sales data at 1330 BST and industrial production at 1415 BST.

In the local corporate calendar, full-year results are due from equipment rental firm Ashtead Group, identity firm GB Group and greetings card company IG Design Group. Bellway and Boohoo will issue trading statements.

By Paul McGowan; paulmcgowan@alliancenews.com