London open: Stocks little changed but energy issues rally as oil prices surge
Stocks in London were little changed in early trade although energy shares racked up healthy gains as oil prices surged after non-OPEC and OPEC members reached a deal on Saturday to cut production for the first time since 2001.
At 0825 GMT, the FTSE 100 was up 0.1% to 6,964.35. Meanwhile, West Texas Intermediate was up 5.4% to $54.46 a barrel and Brent crude was 5% higher at $57.23.
Non-OPEC countries agreed to cut production by 558,000 barrels per day. This is in addition to OPEC’s recent agreement to slash output by 1.2m barrels a day.
BP shares rose 2%, while Royal Dutch Shell was 2.8% higher and Tullow Oil rallied more than 8%.
Spreadex’s Connor Campbell said: “With little to rival it, oil slipped into the spotlight this Monday following news of yet another historic output cut.
“Following the lead of their OPEC peers, a cabal of 11 countries – which includes the likes of Mexico, Malaysia and, crucially, Russia – has agreed to slash their oil output by just over half a million barrels a day. Understandably Brent crude was overjoyed at the news, the black stuff surging by 5.5% to cross the $57 per barrel mark; that’s the commodity’s best price in almost a year and a half, and an increase that has had quite the effect on the oil sector this morning.”
In corporate news, Glencore edged up after saying that it and the Qatar Investment Authority have concluded various agreements providing for the establishment of a 50:50 consortium, to take a chunk of Russian state gas operation Rosneft.
DFS Furniture ticked lower after it said chairman Richard Baker will step down in spring next year after just over six years in the role.
Engineering firm WS Atkins was also a touch weaker as it agreed to sell its minority investment in the M25 motorway to a consortium of institutional investors for £66.3m.
ASOS was on the back foot as the online retailer said it will hire an additional 1,500 people at its London headquarters over the next three years.
Investors were also digesting a report by property website Rightmove, which said that asking prices for UK properties are likely to rise by 2% in 2017, which is down from the 3.4% estimated growth this year.
In inner London, however, asking prices are expected to fall by 5% next year “as its price bubble continues to deflate”.
Rightmove said house prices fell 2.1% month-on-month in December, giving an average price of £299,159.
Looking ahead to the rest of the week, the focus will turn to the Federal Reserve rate announcement on Wednesday, as markets have largely priced in a hike.
“There should be no surprises around this meeting, though the press conference will take on an even greater significance in the context of the signalling of Fed intentions in 2017, as regards further rate rises,” said CMC Markets’ Michael Hewson.
Market Movers
FTSE 100 (UKX) 6,967.11 0.19%
FTSE 250 (MCX) 17,762.84 0.17%
techMARK (TASX) 3,258.06 -0.36%
FTSE 100 - Risers
Marks & Spencer Group (MKS) 349.90p 3.34%
Royal Dutch Shell 'B' (RDSB) 2,256.50p 3.32%
Royal Dutch Shell 'A' (RDSA) 2,154.50p 3.21%
BHP Billiton (BLT) 1,398.00p 3.17%
Anglo American (AAL) 1,249.00p 2.88%
BP (BP.) 485.75p 2.01%
Antofagasta (ANTO) 770.50p 1.85%
Glencore (GLEN) 304.60p 1.53%
Rio Tinto (RIO) 3,265.00p 1.29%
Dixons Carphone (DC.) 364.80p 1.28%
FTSE 100 - Fallers
Mondi (MNDI) 1,583.00p -1.74%
AstraZeneca (AZN) 4,213.50p -1.55%
HSBC Holdings (HSBA) 663.80p -1.48%
Shire Plc (SHP) 4,375.00p -1.30%
Capita (CPI) 473.90p -1.27%
International Consolidated Airlines Group SA (CDI) (IAG) 435.80p -1.27%
Worldpay Group (WPG) 262.50p -1.24%
Randgold Resources Ltd. (RRS) 5,795.00p -1.19%
3i Group (III) 685.50p -1.15%
Sky (SKY) 989.50p -1.05%
FTSE 250 - Risers
Tullow Oil (TLW) 345.60p 10.66%
Evraz (EVR) 255.00p 8.70%
Cairn Energy (CNE) 231.10p 5.86%
Petrofac Ltd. (PFC) 900.50p 3.51%
Amec Foster Wheeler (AMFW) 470.00p 3.30%
Weir Group (WEIR) 1,891.00p 2.77%
Hunting (HTG) 631.50p 2.77%
Vedanta Resources (VED) 953.00p 2.58%
IP Group (IPO) 155.50p 2.57%
Wood Group (John) (WG.) 871.00p 2.53%
FTSE 250 - Fallers
Ladbrokes Coral Group (LCL) 123.10p -5.74%
CMC Markets (CMCX) 96.60p -3.40%
Diploma (DPLM) 928.50p -2.77%
TalkTalk Telecom Group (TALK) 160.30p -2.08%
Bodycote (BOY) 615.00p -1.52%
William Hill (WMH) 286.50p -1.31%
BGEO Group (BGEO) 3,336.00p -1.27%
IG Group Holdings (IGG) 451.30p -1.27%
BTG (BTG) 568.50p -1.22%
PayPoint (PAY) 915.50p -1.13%