Sector Movers: Resource stocks extend gains

Resource stocks, led by Glencore, rose further on Wednesday, as metal and oil futures stayed in positive territory.

The FTSE 100 ended 1.33% or 78.91 points higher at 5,990.37, while the FTSE 250 closed 0.63% or 101.96 points higher at 16,280.98. At 1619 GMT, Brent front-month oil futures contract was up 1.01% or 32 cents to $32.12 per barrel, while WTI rose 0.13% or four cents to $31.49 per barrel over yet another volatile session, as US Energy Information Administration data indicated the country’s crude stockpiles jumped by 8.4m barrels over the week ending on 22 January.

Gasoline inventories also increased by 3.5m barrels, as did those of distillate fuels up by 4.1m, but peak winter demand sent calls on heating oil higher as inventories of the latter fell by 4m.

Elsewhere, headline base metal futures headed higher on the London Metal Exchange. During late afternoon trading, three-month futures contracts of copper (up 0.2%), lead (up 0.3%), nickel (up 1.2%), tin (up 1.4%) and zinc (up 0.4%) were firmly in positive territory.

Meanwhile, precious metals slipped into negative territory ahead of the conclusion of US Federal Reserve’s monetary policy meeting. Last month, the Fed decided to raise interest rates for the first time in nearly a decade by 25 basis points.

On the COMEX, the front-month gold futures contract fell 0.36% or $4.00 to $1,116.20 an ounce while spot gold was 0.26% or $2.92 lower at $1,116.99 an ounce.

Glencore (up 5.66%) and BG Group (up 3.48%) were among the FTSE 100 risers. Story of the session belonged to BG Group, after its suitor Royal Dutch Shell received shareholder approval for its £35bn takeover of the company.

Over 83% of Shell shareholders backed the move, which would create the world’s largest liquefield natural gas trader. If BG Group shareholders approve the offer at their meeting on Thursday, the deal would be expected to complete on 15 February, subject to the satisfaction or waiver of certain customary conditions.

Away from resource stocks Sage (up 7.49%) led the FTSE 100 after reporting a 6.6% rise in revenue for the three months to 31 December, driven by strong software subscription sales.

Dixons Carphone (up 3.18%) edged up after Investec upgraded the retailer from ‘add’ to ‘buy’, citing an improvement in the company’s core businesses and an increase in market share.

Moving on to banking and financial stocks, Royal Bank of Scotland’s (down 1.99%) shares fell after the bank confirmed it will make a loss for 2015 and said it will set aside £500m of PPI provisions, $2.2bn for US residential mortgage-backed securities probes, and £4.2bn into its pension fund.

Aberdeen Asset Management jumped after reporting a better-than-expected fall in net outflows in the three months to 31 December 2015. Numis upgraded the stock to ‘buy’ from ‘hold’, saying that emerging market assets will “eventually recover and that with hindsight buying on the valuations available today will prove decent value”.