London close: Oil majors buoy top-flight index even as CPI spikes

lse dl lse group paternoster square city — Aerial view of Paternoster SquareWaid 1995 Pixabay

London's top-flight index outperformed on Wednesday, buoyed by gains for index heavyweights BP and Royal Dutch Shell on the back of fast-rising energy prices globally.

Shell 'B'

1,894.60p

17:05 28/01/22

-1.24%

-23.80p

Together with a positive start to trading on Wall Street, that saw the FTSE 100 end the day down by just 0.025% to 7,016.49.

The second-tier index on the other hand tracked the losses that were being seen across the rest of Europe, losing 1.07% to 23,432.81.

In parallel, front-dated Brent was rising 2.94% to $75.75 a barrel on the ICE.

Sterling meanwhile was up 0.17% to 1.3834 against the Greenback.

"Also in focus this afternoon has been a remarkable spike in oil prices, which seem to be entirely unaffected by the growth worries that continue to afflict equity markets," said IG chief market analyst Chris Beauchamp.

"Here too the inflation narrative will come back into play, with many worried that higher energy prices will choke off the recovery just as it looked to be gathering renewed strength."

On that note, before the opening bell, the Office for National Statistics reported a jump in the annual rate of consumer price inflation from 2.0% in July to 3.2% for August (consensus: 2.9%).

And worse was expected going forwards, although Samuel Tombs, chief UK economist at Pantheon Macroeconomics, expected things to quieten down thereafter.

Tombs forecast that CPI would jump further over the last three months of 2021 to average 4.0% and 3.9% in the first quarter of 2022.

"Thereafter, however, the headline rate likely will drop quite quickly," he added, before returning to bank's 2.0% target at the very end of the following year.

Also dampening investor sentiment, data released overnight for Chinese retail sales, industrial production and investment in August all undershot the market consensus.

That was particularly so in the case of the former, which slowed from an 8.5% year-on-year pace in July to 2.5% for August (Barclays: 6.0%).

In equity markets, oil exploration outfit Tullow Oil jumped higher after saying it swung to a profit in the first half and narrowing its production guidance upwards.

Redrow ticked up after posting a rise in full-year profit as the housebuilder said it expects sales rates will return to historical averages over the course of the current financial year.

On the downside, Trustpilot slumped as the online review website upgraded its full-year revenue growth guidance but posted a widening of its interim losses.

Just Eat was under the cosh following news that rival Deliveroo has partnered with Amazon to offer members free delivery.

Market Movers

FTSE 100 (UKX) 7,016.49 -0.25%
FTSE 250 (MCX) 23,432.81 -1.07%
techMARK (TASX) 4,632.46 -0.71%

FTSE 100 - Risers

Evraz (EVR) 607.00p 3.62%
Antofagasta (ANTO) 1,472.00p 3.12%
BP (BP.) 309.25p 3.08%
Imperial Brands (IMB) 1,557.50p 2.10%
Royal Dutch Shell 'A' (RDSA) 1,476.20p 1.81%
Royal Dutch Shell 'B' (RDSB) 1,475.20p 1.65%
Reckitt Benckiser Group (RKT) 5,911.00p 1.55%
Lloyds Banking Group (LLOY) 44.14p 1.34%
Glencore (GLEN) 340.40p 1.34%
NATWEST GROUP PLC ORD 100P (NWG) 210.60p 1.20%