London open: Energy shares pace the advance as oil prices recover

London stocks rose in early trade on Tuesday, with energy shares pacing the gains as oil prices recovered.

At 0855 GMT, the FTSE 100 was up 0.8% at 7,436.25.

On the macroeconomic front, figures out earlier from the Office for National Statistics showed that public sector net borrowing excluding public sector banks - PSNB ex - was £13.5bn in October, up from October 2021’s £9.2bn, but well below consensus expectations of £21.0bn.

This marked the second month in a row that borrowing has exceeded last year’s monthly total and was the fourth-highest October figure since records began in 1993.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "October’s high borrowing figure largely is a consequence of the government’s decision to shield households from most of the surge in energy prices.

"The Energy Bills Support Scheme cost the government £1.9bn in October, while the Energy Price Guarantee was the main driver of a £1.1bn rise in subsidies.

"Note that the costs of the Energy Bills Relief Scheme for businesses has not been included in October’s borrowing estimate, due to a lack of data so far. Social assistance payments also were £1.0bn higher than a year ago, reflecting the payment of some of the grants to help households with living costs announced in May."

In equity markets, Harbour Energy, BP and Shell all gushed higher as oil prices recovered after Saudi Arabia denied a report that it and other Opec countries were in talks about lifting output.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Saudi Arabia has rebuffed those suggestions with the energy minister Prince Abdulaziz bin Salman suggesting the complete opposite scenario was more likely and that another production cut could be on the cards.

"With the oil price hovering around $87 a barrel amid expectations of falling demand it does offer some relief for consumers and companies who have had to cope with painful price spikes in the Spring and Summer being passed on."

SSE was lifted by an upgrade to ‘outperform’ at RBC Capital Markets, while ConvaTec was higher after an initiation at ‘buy’ at Jefferies.

Cranswick jumped to the top of the FTSE 250 after the food producer said half-year profits fell, but posted a rise in sales as it worked to keep cost inflation under control.

Telecom Plus and Babcock also gained after half-year results.

On the downside, Severn Trent and building materials group CRH lost ground after their interim results, while Vodafone was knocked lower by a downgrade to ‘underperform’ at Credit Suisse.

TBC Bank tumbled after European Bank for Reconstruction & Development sold 850,000 shares in the company in a placing.

Market Movers

FTSE 100 (UKX) 7,436.25 0.81%
FTSE 250 (MCX) 19,404.28 -0.05%
techMARK (TASX) 4,410.23 0.15%

FTSE 100 - Risers

Harbour Energy (HBR) 316.60p 5.71%
BP (BP.) 483.50p 5.53%
Shell (SHEL) 2,346.00p 3.23%
Glencore (GLEN) 510.00p 2.65%
BAE Systems (BA.) 801.60p 2.51%
Rio Tinto (RIO) 5,373.00p 1.95%
SSE (SSE) 1,726.50p 1.83%
Frasers Group (FRAS) 838.50p 1.82%
Fresnillo (FRES) 876.20p 1.69%
Convatec Group (CTEC) 237.40p 1.63%

FTSE 100 - Fallers

Airtel Africa (AAF) 116.30p -2.92%
Severn Trent (SVT) 2,697.00p -2.21%
Hargreaves Lansdown (HL.) 820.80p -1.94%
Vodafone Group (VOD) 96.64p -1.50%
CRH (CDI) (CRH) 3,294.50p -1.49%
Entain (ENT) 1,279.50p -1.27%
St James's Place (STJ) 1,166.00p -1.06%
Schroders (SDR) 451.30p -1.01%
Flutter Entertainment (CDI) (FLTR) 11,285.00p -1.01%
SEGRO (SGRO) 826.40p -0.98%

FTSE 250 - Risers

Cranswick (CWK) 3,208.00p 3.95%
Tullow Oil (TLW) 45.40p 3.89%
Telecom Plus (TEP) 2,405.00p 3.00%
Babcock International Group (BAB) 298.60p 2.97%
Sirius Real Estate Ltd. (SRE) 84.20p 2.43%
Wood Group (John) (WG.) 159.45p 2.41%
Currys (CURY) 83.95p 2.38%
Energean (ENOG) 1,399.00p 2.34%
Drax Group (DRX) 633.50p 1.93%
Hochschild Mining (HOC) 66.95p 1.83%

FTSE 250 - Fallers

TBC Bank Group (TBCG) 1,992.00p -12.25%
Virgin Money UK (VMUK) 159.20p -4.87%
Petershill Partners (PHLL) 189.00p -3.67%
Big Yellow Group (BYG) 1,134.00p -2.83%
Petrofac Ltd. (PFC) 116.00p -2.27%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 406.00p -1.93%
Bridgepoint Group (Reg S) (BPT) 206.80p -1.80%
Fidelity Special Values (FSV) 275.00p -1.79%
Ferrexpo (FXPO) 139.50p -1.76%
easyJet (EZJ) 381.50p -1.70%