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LONDON MARKET MIDDAY: BP and Shell take hit as oil prices retreat

Tue, 04th Jun 2024 11:59

(Alliance News) - Stock prices in London were lower at midday Tuesday, with oil majors BP and Shell dragging the index lower as oil prices took a hit.

The FTSE 100 down 45.69 points, 0.6%, at 8,217.06. The FTSE 250 was down 201.18 points, 1.0%, at 20,699.31, and the AIM All-Share was down 4.59 points, 0.6%, at 800.57.

The Cboe UK 100 was down 0.7% at 819.51, the Cboe UK 250 was down 1.0% at 18,195.00, and the Cboe Small Companies was down 0.4% at 17,032.97.

In European equities on Tuesday, the CAC 40 in Paris was down 0.8%, while the DAX 40 in Frankfurt was down 1.1%.

Stocks in New York started the week in mixed fashion after conflicting data on the manufacturing sector sparked fears that economic growth may be slowing in the US.

On Tuesday, stocks in Wall Street were called lower. The Dow Jones Industrial Average, the S&P 500 index, and the Nasdaq Composite were all called to open down 0.5%.

Reports on Monday painted a conflicting picture as to the health of the US manufacturing sector.

The S&P Global US manufacturing PMI rose to 51.3 in May, after having posted in line with the 50.0 no-change mark in April. The total was above the flash figure of 50.9.

Of more concern, the Institute for Supply Management's manufacturing PMI registered 48.7 in May, down from 49.2 in April.

"News of slowing activity in US factories is a double-edged sword as it could provide the Federal Reserve with more room for manoeuvre on interest rates," AJ Bell's Russ Mould said.

"Job openings data later today could reveal if a softening economy is being reflected in looser labour market conditions. Friday's non-farm payrolls release is also in focus as investors await the latest decision from the Federal Reserve next week."

In early economic news on Tuesday, UK retail sales grew slightly overall in May, but this was entirely due to food sales as non-food sales remained in decline, figures from an industry group showed.

Total UK retail sales increased by 0.7% from a year before last month, according to the BRC-KPMG retail sales monitor, swinging from an annual decline of 4.0% in April. The May increase was above the three-month annual growth average of 0.3% but below the 12-month average of 2.0%. In May 2023, sales had grown by 3.9% annually.

Food sales grew on year in May, while non-food sales decreased, the British Retail Consortium and accountants KPMG said, without giving percentages for the single month.

"We expect retailers will get a boost as the weather improves and April’s cuts to National Insurance Contributions and uprating of benefits in line with past inflation along with the near 10% rise in the National Living Wage feed through. We think the recovery in disposable income will be strong enough to enable households to ramp up spending while maintaining a higher-than-usual saving rate," commented Pantheon Macroeconomics Rob Wood.

The pound was quoted at USD1.2758 at midday on Tuesday in London, lower compared to USD1.2788 at the equities close on Monday. The euro stood at USD1.0866, down against USD1.0883. Against the yen, the dollar was trading at JPY154.94, lower compared to JPY156.16.

In the FTSE 100, BP and Shell were down 3.8% and 2.4% respectively.

Brent oil was quoted at USD76.84 a barrel at midday in London on Tuesday, down from USD78.22 late Monday.

The OPEC+ group of oil-producing nations agreed Sunday to extend their production cuts in a bid to support prices, as economic and geopolitical uncertainty looms over the market, reported AFP.

The 12-member oil cartel and its 10 allies decided to "extend the level of overall crude oil production...starting 1 January 2025 until 31 December 2025," a statement by the alliance said.

Elsewhere in the FTSE 100 index, British American Tobacco lost 1.1%, after it said it is on track to deliver annual performance that it in line with its guidance.

The London-based cigarette and vaping products maker expects low-single-digit growth in revenue and in adjusted profit from operations growth on an organic, constant currency basis in 2024.

BAT Chief Executive Officer Tadeu Marroco said the group's annual guidance reflects ongoing macro-economic pressures, particularly in the US market and continued lack of effective enforcement against the growing illicit vapour trade.

In the FTSE 250, Carnival jumped 5.0%.

Broker Peel Hunt raised the cruise ship operator's broker rating to 'buy'.

Amongst London's small-caps, Ceres Power shares jumped 6.6%.

Ceres said it has been awarded a further contract for the second phase of its collaboration with oil and gas major Shell.

The Horsham, England-based developer of clean energy technology has been working with Shell since 2022.

Gold was quoted at USD2,333.70 an ounce, down against USD2,341.60.

Still to come on Tuesday's economic calendar, there is US job openings data at 1500 GMT.

By Sophie Rose, Alliance News senior reporter

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