London close: Oil majors send FTSE 100 into the red for 2017
(ShareCast News) - London stocks ended on a mixed note as a sharp spill in shares of Shell and for precious metals miners weighed on the top flight index, even as their more UK-focused brethren on the second-tier index benefitted from the prospect of looser fiscal policy after the upcoming general elections.
The FTSE 100 closed down 0.46% to 7,114.36 - slipping into negative territory for the year - while the FTSE 250 gained 0.62% to close at 19,417.76.
According to analysts at Morgan Stanley, the Prime Minister's call for snap elections meant a reduced risk of a disorderly exit from the European Union because she would now have more power to clinch whatever deals might be needed during the negotiations.
Morgan Stanley also expected the Conservative election manifesto to include a focus on housing and infrastructure together alongside indications of a greater willingness to intervene in the economy.
That, the investment bank said, pointed to a risk of looser fiscal policy (and perhaps a hike in Bank Rate too).
IG analyst Chris Beauchamp said the mid-cap index "leapt out of bed" as investors looked to buy up UK-focused assets.
On a related note, the likelihood of the Conservative party gaining a stronger majority was seen as generally currency positive, since it tends to reduce the prospect of political wrangling, with Michael Hewson at CMC Markets saying there was "no reason we can't head higher in the coming weeks".
"The market still remains in a negative mind-set for sterling with short positions still elevated. While there is likely to be a few twists and turns over the course of the next few weeks, the US dollar side of the story suggests that we could see further US dollar weakness, pushing the pound back through the 1.3000 level in the longer term."
Nevertheless, by the closing bell the pound was on the backfoot against the greenback amid 'profit taking' from traders and trading lower by 0.39% at 1.2789.
Speaking of the dollar-side of the story, strategists at Bank of America-Merrill Lynch inked a note on Wednesday telling clients that investors' worries that US tax reforms will be pushed back into 2018 were wide of the mark.
As well, in their view the near-term probabilities of another interest rate hike by the US Federal reserve "look rather high".
In corporate news, Associated British Foods rallied after it lifted its dividend and said profits surged in the first half of the year as the sugar business benefited from higher prices and Primark opened 16 new clothes stores across eight countries.
Royal Bank of Scotland was also in the black after Chancellor Philip Hammond said the government was prepared to sell its stake in the bank at a loss.
Oil majors Royal Dutch Shell and Tullow retreated as oil futures slid on the back of official US inventory data showing a smaller than expected decline in commercial stockpiles of crude in the States, together with an unexpected rise in those of gasoline.
Sainsbury topped the leaderboard after news broke that Deutsche Bank was now holding more than 5% of the voting rights in the grocer.
Luxury fashion brand Burberry was in the red as it posted a drop in total underlying revenue in the second half as an "exceptional" performance in the UK was offset by efforts to improve brand positioning in the US and in the beauty business.
Shares in outsourcing company Bunzl fell despite reporting a rise in first quarter revenue following new business wins and acquisitions.
Pest control and hygiene group Rentokil Initial declined despite posting a jump in first-quarter revenue and saying it expects its performance this year to be in line with expectations.
Card Factory was boosted by an upgrade to 'Buy' from Liberum, but Paysafe fell following a downgrade from Macquarie.
FTSE 100 (UKX) 7,114.36 -0.46%
FTSE 250 (MCX) 19,417.76 0.62%
techMARK (TASX) 3,403.65 0.11%
FTSE 100 - Risers
Sainsbury (J) (SBRY) 267.40p 5.03%
easyJet (EZJ) 1,117.00p 4.98%
Royal Bank of Scotland Group (RBS) 235.70p 4.90%
Next (NXT) 4,321.00p 3.20%
International Consolidated Airlines Group SA (CDI) (IAG) 542.50p 2.65%
Hargreaves Lansdown (HL.) 1,351.00p 2.50%
Persimmon (PSN) 2,297.00p 2.45%
Taylor Wimpey (TW.) 203.30p 2.37%
Lloyds Banking Group (LLOY) 63.66p 2.35%
Morrison (Wm) Supermarkets (MRW) 233.40p 2.32%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,566.00p -7.94%
Fresnillo (FRES) 1,545.00p -2.95%
Randgold Resources Ltd. (RRS) 7,155.00p -2.92%
Royal Dutch Shell 'B' (RDSB) 2,067.00p -2.73%
Severn Trent (SVT) 2,357.00p -2.28%
Royal Dutch Shell 'A' (RDSA) 2,004.50p -2.20%
Diageo (DGE) 2,201.50p -1.92%
Centrica (CNA) 209.40p -1.83%
Smurfit Kappa Group (SKG) 1,988.00p -1.83%
Rolls-Royce Holdings (RR.) 801.00p -1.78%
FTSE 250 - Risers
Ferrexpo (FXPO) 145.90p 6.34%
Cobham (COB) 126.40p 5.02%
Kaz Minerals (KAZ) 456.50p 4.53%
Dunelm Group (DNLM) 627.50p 4.50%
Dixons Carphone (DC.) 333.00p 4.16%
Virgin Money Holdings (UK) (VM.) 303.20p 4.16%
Card Factory (CARD) 314.20p 3.94%
Debenhams (DEB) 55.30p 3.85%
Bellway (BWY) 2,868.00p 3.69%
Marshalls (MSLH) 376.50p 3.60%
FTSE 250 - Fallers
Tullow Oil (TLW) 208.30p -4.45%
Fisher (James) & Sons (FSJ) 1,647.00p -3.46%
Elementis (ELM) 284.00p -2.84%
Vectura Group (VEC) 147.30p -2.84%
Sanne Group (SNN) 705.00p -2.22%
Greencore Group (GNC) 244.50p -2.04%
Acacia Mining (ACA) 455.70p -1.94%
Redefine International (RDI) 37.61p -1.90%
Victrex plc (VCT) 1,869.00p -1.89%
Polymetal International (POLY) 1,049.00p -1.87%