London midday: FTSE outperforms European peers as BP, Shell rally

(Sharecast News) - London stocks were still in the black by midday on Tuesday, outperforming European markets as heavily-weighted BP and Shell rallied on the back of firmer oil prices. The FTSE 100 was up 0.3% at 7,621.48, with oil prices gushing higher after EU leaders agreed to ban 90% of Russian oil by the end of the year.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "Brent Crude has soared to $123.5 a barrel following this development, with prices the highest they've been in since early March. The upwards trajectory of the oil price may well have room left to run until a solid outline of how supply is going to be sourced.

"Given Russia currently supplies 27% of the EU's imported oil and 40% of its gas, the FTSE's tepidness is reflecting anxiety over supply."

European shares were faring much worse, however, amid worries about rising inflation, with the benchmark Stoxx Europe 600 index down 0.5%.

Lukman Otunuga, senior research analyst at FXTM, said there is a sense of caution in the air "after red-hot inflation readings from Germany sparked concerns over how aggressive the European Central Bank should be in taming the inflation beast."

Earlier on Tuesday, a flash estimate from Eurostat showed that eurozone inflation hit a record 8.1% in May as energy prices surged.

Inflation rose from 7.4% in April, hitting the highest level since records began in 1997. This was driven by food and energy inflation, which jumped to 7.5% and 39.2%, respectively, from 6.3% and 37.5% in April. Analysts had been expecting headline inflation to come in at 7.6%.

Core inflation - which excludes food, energy, alcohol and tobacco - rose to 3.8% in May from 3.5% the month before, as both services and non-energy goods inflation increased.

Andrew Kenningham, chief Europe economist at Capital Economics, said: "With headline and core inflation rising more than expected yet again, the case for exiting from negative interest rates promptly is now irrefutable.

"The ECB looks sure to confirm next week that it will raise rates in July and we suspect that it will leave the door open to a 50 basis points hike."

On home shores, the latest data from the Bank of England showed that credit card borrowing jumped in April at the fastest annual rate in more than 16 years, while mortgage approvals fell to their lowest level since June 2020.

In equity markets, Unilever surged to the top of the FTSE 100 after the consumer goods giant added billionaire investor Nelson Peltz - the founder and chief executive of Trian Fund Management - to its board as a non-executive director. Trian owns a 1.5% stake in the company.

Oil giants Shell and BP were among the best performers on the top-flight index as oil prices advanced.

GlaxoSmithKline ticked higher after it agreed to buy vaccine maker Affinivax for up to $3.3bn.

On the downside, B&M European Value Retail tumbled after it said chief financial officer Alex Russo would be replacing Simon Arora as chief executive and warned that margins would take a hit this year as Britain's cost-of-living crisis hit household budgets.

Market Movers

FTSE 100 (UKX) 7,621.48 0.28% FTSE 250 (MCX) 20,445.08 -0.50% techMARK (TASX) 4,442.16 -0.18%

FTSE 100 - Risers

Unilever (ULVR) 3,686.00p 5.45% Airtel Africa (AAF) 155.00p 2.11% Rio Tinto (RIO) 5,837.00p 1.78% British American Tobacco (BATS) 3,517.00p 1.77% Anglo American (AAL) 3,915.00p 1.69% Antofagasta (ANTO) 1,541.00p 1.48% BP (BP.) 439.65p 1.42% Shell (SHEL) 2,407.00p 1.39% Imperial Brands (IMB) 1,784.00p 0.82% Glencore (GLEN) 530.50p 0.76%

FTSE 100 - Fallers

B&M European Value Retail S.A. (DI) (BME) 402.00p -12.36% International Consolidated Airlines Group SA (CDI) (IAG) 129.48p -4.12% Royal Mail (RMG) 316.20p -3.86% Smurfit Kappa Group (CDI) (SKG) 3,211.00p -2.43% Phoenix Group Holdings (PHNX) 638.20p -2.09% Next (NXT) 6,490.00p -1.87% M&G (MNG) 217.70p -1.76% Intermediate Capital Group (ICP) 1,584.50p -1.71% Fresnillo (FRES) 796.20p -1.61% Halma (HLMA) 2,270.00p -1.52%

FTSE 250 - Risers

CMC Markets (CMCX) 320.00p 2.56% Johnson Matthey (JMAT) 2,180.00p 2.30% Drax Group (DRX) 674.50p 2.20% Playtech (PTEC) 564.00p 2.08% Polymetal International (POLY) 241.90p 2.07% Indivior (INDV) 332.80p 2.02% TBC Bank Group (TBCG) 1,506.00p 1.89% Tullow Oil (TLW) 56.50p 1.62% Apax Global Alpha Limited (APAX) 184.00p 1.55% 4Imprint Group (FOUR) 2,690.00p 1.51%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 2,879.00p -6.95% Baltic Classifieds Group (BCG) 140.60p -6.27% Trustpilot Group (TRST) 99.90p -4.68% easyJet (EZJ) 513.40p -4.07% Abrdn Private Equity Opportunities Trust (APEO) 473.00p -3.86% Bridgepoint Group (Reg S) (BPT) 310.40p -3.66% Smithson Investment Trust (SSON) 1,302.00p -3.56% Pantheon International (PIN) 290.00p -3.49% TR Property Inv Trust (TRY) 405.00p -3.46% Auction Technology Group (ATG) 1,036.00p -3.18%