The FTSE managed to recover from earlier lows, as gains in energy majors and miners offset weakness in financial stocks.
A rebound in crude oil helped heavyweight energy shares move higher this morning, with BP gaining 1.3% to 553.2p, Cairn Energy rising 1.2% to 2700p and Tullow Oil advancing 1.6% to 1157p.
Yesterday’s 4.5% decline in crude oil was viewed as excessive. ‘In the medium term, six to nine months from now, prices are expected to be back up around $70 again, so people aren’t going to be sitting on their laurels watching the market go lower,’ said Jonathan Kornafel of Hudson Capital Energy. ‘There will be some buying to add some support.’
The price of November crude oil was trading 0.5% higher at $66.20 a barrel this morning, while November Brent futures climbed 0.7% to $65.29 a barrel.
Bucking the positive trend in the sector was oil services company Petrofac, however, which retreated 2.4% to 952p following broker downgrades by Bank of America-Merrill Lynch and Goldman Sachs, who were bearish on the oil services and support sector.
Miners opened lower today, but the majority managed to shake off earlier losses by mid-morning, with BHP Billiton and Rio Tinto gaining 1.6% to 1696p and 0.4% to 2654p respectively, after the price of copper increased for the first time in three days.
In contrast, banks weighed on the blue-chip index today, with Lloyds Banking Group the sector’s worst performer, down 2.4% to 104.55p on the back of renewed rights-issue speculation. In the meantime, Barclays fell 0.7% to 361.9p, Royal Bank Scotland declined 0.5% to 51.75p and Standard Chartered retreated 0.9% to 1493p.
Elsewhere, department store chain John Lewis, seen as a barometer for UK consumer spending, reported an encouraging 6.6% rise in weekly sales. A breakdown reveals that weekly fashion sales jumped 10.6%, electrical and home technology sales climbed 6.2% helped by iPod sales, while homeware registered a 3% improvement.
Shares of Home Retail Group gained 0.50% to 288.9p, Next rose 0.2% to 1813p, while Marks & Spencer lost 1.3% to 367.9p.
Unilever made the headlines this morning, unveiling plans to acquire Sara Lee’s personal Care Unit for €1.28 billion ($1.88 billion) in cash. The transaction still requires regulatory approval, however. Unilever’s share price edged 0.1% lower to 1734p.
Sugar refiner Tate & Lyle fell 1.2% to 410p, after revealing that a drop in commodity prices would weigh on its first-half pre-tax profits.
Euromoney Institutional Investor jumped 9% to 331.8p this morning, after saying that it expects pre-tax profits to be not less than £57 million, substantially ahead of expectations.
Nightclub operator Luminar plunged 31.5% to 89p this morning after warning that it will miss its full-year expectations.
By 10.30am (London time), the FTSE 100 was 19.93 points (+0.40%) higher at 5099.20, while the broader FTSE 250 was 8.85 points (-0.10%) below its previous close at 9084.17.
Investors will be keeping an eye for any news about the G20 meeting as well as this afternoon’s US economic data. Durable goods are scheduled for release at 1.30pm (London time), followed by new home sales and the Reuters/Michigan consumer sentiment index at 3.00pm.
