LONDON MARKET OPEN: US President Biden unable to stop rising oil price

(Alliance News) - The FTSE 100 index was buoyed by rising oil prices early Wednesday, giving a boost to BP and Royal Dutch Shell, creating a positive mood in London ahead of a big set of US data coming out before the Thanksgiving holiday break.

The FTSE 100 was up 39.97 points, or 0.6%, at 7,306.79 early Wednesday. The mid-cap FTSE 250 index was up 45.96 points, or 0.2%, at 23,267.20. The AIM All-Share index was up just 0.54 of a point at 1,207.35.

The Cboe UK 100 index was up 0.4% at 724.20. The Cboe 250 was flat at 20,733.33, and the Cboe Small Companies was also flat at 15,282.07.

Victoria Scholar, head of Investment at interactive investor said: "European markets are enjoying a reprieve, snapping a four-day losing streak with oil & gas and technology leading the gains. The FTSE 100 is inching closer to key resistance at 7,300, with Intertek's trading statement lifting shares to the top of the basket. Investors are weighing up a deteriorating picture for Covid cases in Europe against a revival in bullish sentiment in the oil markets."

In mainland Europe, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up marginally early Wednesday.

Brent oil was trading at USD82.87 a barrel, up from USD81.49 late Tuesday in London, giving a boost to London's oil majors. BP was up 1.5%, while Shell 'A' shares rose 0.9% and 'B' shares gained 1.1%.

US President Joe Biden announced Tuesday that he has ordered the release of 50 million barrels of oil from the US strategic reserves in a coordinated attempt with other countries to tamp down soaring fuel prices.

"President Biden's efforts to curtail the recent oil market rally by increasing supply to the market has in fact had the opposite effect. After mobilising emergency reserves, Brent saw its biggest percentage gain since August, rallying by over 3%," ii's Scholar continued.

"Biden's decision to release 50 million barrels from December was sharply below expectations and certainly does not go far enough to address the imbalance between demand and supply. The shortfall in supply has lifted Brent for the fourth consecutive session, rallying by more than 6% to push above resistance at USD80 and is potentially on track to test the October highs once again around USD85 a barrel."

In London, Intertek crowned the FTSE 100, up 5.4%, as the quality assurance provider said it has made "strong progress" so far in the second half of 2021.

Revenue rose by 4.8% in July and August, picking up to 8.5% in September and October. Like-for-like revenue growth in July to October was 5.0%, or 6.2% when adjusted for trading days. Intertek said it is on track for "robust LFL revenue growth" in 2021.

"The supply chain disruption being experienced by corporations across multiple industries has made the need for comprehensive risk-based quality, safety and sustainability assurance more critical than ever. Companies are investing in quality assurance to build greater resilience and safety, whilst innovating to deliver new high-quality products and services as consumer expectations rapidly evolve," Chief Executive Andre Lacroix explained.

In the midcaps, Britvic gained 1.5%. The soft drink maker's trading has recovered "strongly" from a first half that was battered by the pandemic, and it pointed to encouraging trading with volumes in first six weeks of the new financial year ahead of financial 2021 and 2020.

In the year to September 30, pretax profit increased 29% to GBP142.9 million from GBP111.2 million.

Revenue was flat on a year before at GBP1.41 billion. The constrained full-year revenue was blamed on a poor first-half performance that saw Britvic's Out-of-Home business take a hit from lockdowns around the UK.

Britvic declared an annual dividend of 24.2 pence, up 12% from 21.6p the year before.

Chief Executive Simon Litherland said: "This year we have recovered strongly from the effects of the pandemic, with underlying revenue, margin, and profit all in growth. Our disciplined cash management enabled us to pay down debt and to increase our dividend by 12.0%, reflecting our confidence in the business."

Genus sank 10%.

The FTSE 250 company, which sells products made using biotechnology to cattle and pig farmers, said the volumes from its pigs business in China saw volumes were lower in the four months to October 31 compared to the year before. As a result, Genus said its full-year pretax profit for financial 2022 will be moderately lower than its previous expectation.

Among London small caps, luxury fashion designer Mulberry surged 26% on AIM as it swung to a profit in the first half of its financial year, with trading returning to pre-Covid levels.

"Sales in the UK recovered strongly once our stores re-opened. The sales lost from the absence of tourists in the UK and the rationalisation of stores in Europe were replaced by strong growth in Asia," the handbag maker explained.

Pretax profit in the 26 weeks to September 25 improved to GBP10.2 million versus a GBP2.4 million loss a year before, as revenue surged to GBP65.7 million from GBP48.9 million.

Mulberry noted its retail revenue in the 8 weeks to November 20 increased 35% compared to the same period last year.

The Nikkei 225 in Tokyo shed 1.6% on Wednesday after returning from a holiday on Tuesday.

Growth in Japan's private sector accelerated in November, according to early survey results from IHS Markit on Wednesday. It was the second successive month of growth.

The latest au Jibun Bank flash composite purchasing managers' index rose to 52.5 points in November from 50.7 points in October, further above the 50.0 neutral mark.

Against the yen, the dollar was soft at JPY114.95 versus JPY114.96 late Tuesday in London.

The Shanghai Composite and Hang Seng index both closed up 0.1% on Wednesday. The S&P/ASX 200 in Sydney closed down 0.2%.

Sterling was quoted at USD1.3376 early Wednesday, higher than USD1.3363 at the London equities close on Tuesday. The euro traded at USD1.1232 early Wednesday, lower on USD1.1262 late Tuesday.

Gold was quoted at USD1,791.60 an ounce early Wednesday, higher than USD1,784.01 on Tuesday.

Wednesday's economic calendar has the German Ifo business climate indicator at 0900 GMT and US durable goods orders and gross domestic product at 1330 GMT. US initial jobless claims, usually out on Thursdays, are due at 1330 GMT on Wednesday with US markets shut on Thursday for Thanksgiving.

At 1500 GMT, there is core personal consumption expenditure and new home sales. At 1900 GMT are the latest Federal Reserve minutes.

"Bond yields have been rising on fears that the Federal Reserve may accelerate the tapering it has already announced, which in turn could bring forward the likelihood of a higher interest rate timetable. Minutes from the recent Fed meeting will be published today, which may give some further clues on its current tapering stance," Richard Hunter, head of Markets at interactive investor, said.

By Paul McGowan; paulmcgowan@alliancenews.com

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