London midday: FTSE stays up as energy shares rally

(Sharecast News) - London stocks were still firmly in the black by midday on Monday, with energy heavyweights boosted by surging oil prices. The FSTE 100 was up 0.8% at 7,690.83.

Over the weekend, OPEC+ unexpectedly announced it would cut oil output by 1.1m barrels a day from next month, pushing oil prices higher.

Danni Hewson, head of financial analysis at AJ Bell, said: "The world needed a spike in oil prices like a hole in the head. Just as one of the pinch points in the global economy had started to ease, Saudi Arabia and its counterparts in OPEC have unveiled a surprise output cut.

"The decision by the oil producers' cartel, unusually taken outside of any officially scheduled meeting, represents a flexing of its muscles and potentially a pre-emptive move as it anticipates a drop-off in crude demand relating to the collapse of SVB and ensuing banking crisis.

"It is this crisis which has helped box central banks in when it comes to their ability to control inflation as they have to think about their role in preserving financial stability too.

"Rising oil prices imply higher costs of energy, transportation and other areas like plastic. The heavy exposure of the FTSE 100 to energy and resources stocks is looking like an attribute again as index heavyweights BP and Shell help lift the index."

Investors were also mulling a survey on the UK manufacturing sector, which showed that it faltered last month.

The latest seasonally-adjusted S&P Global CIPS manufacturing purchasing managers' index eased to 47.9 in March from February's seven-month high of 49.3. It was nominally below both the flash estimate and consensus, of 48.0.

A reading above the neutral mark of 50.0 indicates growth while a reading below that suggests contraction. The index has now been below 50.0 for eight successive months.

The survey found output had been scaled back in response to subdued market demand and declining new export orders. There were downturns in both consumer and intermediate goods sectors, although investment goods production rose for the second month in a row.

However, the survey also showed an easing in input inflation, to its lowest level since June 2020, while supply chains also continued to recover. Average vendor lead times improved to the greatest extent in March in the survey's 31-year history.

Rob Dobson, director at S&P Global Market Intelligence, said: "Companies scaled back production in response to subdued market conditions. Although total new orders saw a fractional increase, this followed on from a nine-month sequence of contraction and suggests that order book levels remain low overall.

"There was better news on the price and supply fronts during March, however.

"This should hopefully filter through to further cost reductions and less the disruption to production workflows in coming months."

Data out earlier from China showed that manufacturing activity unexpectedly eased in March.

The Caixin manufacturing purchasing managers index, which covers smaller and export-oriented businesses, fell to 50.0 - the level that separates contraction from expansion - from 51.6 in February. Economists were expecting a reading of 51.4.

Both output and new orders rose at softer paces while foreign sales and employment fell. Meanwhile, buying activity rose modestly for the second month.

In equity markets, BP and Shell were the standout gainers on the FTSE 100, up 4.5% and 4.4%, respectively. On the FTSE 250, Tullow Oil, Energean, Hunting and Wood Group also gained.

Banks advanced, with Barclays, HSBC, Lloyds and Standard Chartered all higher.

NatWest was in focus after the UK government said it has extended plans to sell down its stake in the bank.

Cineworld tumbled as it said it had ended the sale process for its US, UK and Ireland businesses after failing to find an all-cash buyer. The company also said it has reached a conditional deal with lenders to exit bankruptcy and announced plans to raise $2.26bn (£1.8bn) in new funding.

NCC was under the cosh again, having crashed on Friday after a profit warning.

Market Movers

FTSE 100 (UKX) 7,690.83 0.77% FTSE 250 (MCX) 18,924.78 -0.02% techMARK (TASX) 4,527.88 -0.01%

FTSE 100 - Risers

BP (BP.) 534.00p 4.54% Shell (SHEL) 2,409.50p 4.38% Barclays (BARC) 149.80p 2.74% Prudential (PRU) 1,127.50p 2.31% HSBC Holdings (HSBA) 562.20p 2.27% Lloyds Banking Group (LLOY) 48.74p 2.23% Standard Chartered (STAN) 626.80p 2.05% Imperial Brands (IMB) 1,896.00p 1.72% Coca-Cola HBC AG (CDI) (CCH) 2,250.00p 1.67% Rolls-Royce Holdings (RR.) 151.40p 1.60%

FTSE 100 - Fallers

M&G (MNG) 193.75p -2.15% RS Group (RS1) 894.60p -2.12% Beazley (BEZ) 585.00p -2.09% Hiscox Limited (DI) (HSX) 1,090.00p -1.71% Antofagasta (ANTO) 1,561.00p -1.27% Spirax-Sarco Engineering (SPX) 11,710.00p -1.22% Burberry Group (BRBY) 2,555.00p -1.20% Intertek Group (ITRK) 4,005.00p -1.18% International Consolidated Airlines Group SA (CDI) (IAG) 149.20p -1.18% Rightmove (RMV) 556.60p -1.14%

FTSE 250 - Risers

Harbour Energy (HBR) 292.40p 6.56% Ithaca Energy (ITH) 158.70p 6.15% Hunting (HTG) 250.00p 5.93% Energean (ENOG) 1,367.00p 4.99% Tullow Oil (TLW) 32.92p 4.38% Warehouse Reit (WHR) 106.40p 4.11% Molten Ventures (GROW) 283.80p 3.73% Urban Logistics Reit (SHED) 132.00p 3.13% Bank of Georgia Group (BGEO) 2,820.00p 2.55% Digital 9 Infrastructure NPV (DGI9) 62.60p 2.45%

FTSE 250 - Fallers

NCC Group (NCC) 96.50p -5.58% Man Group (EMG) 223.10p -5.23% Wizz Air Holdings (WIZZ) 2,892.00p -2.72% Centamin (DI) (CEY) 101.60p -2.54% Trainline (TRN) 243.80p -2.01% Games Workshop Group (GAW) 9,465.00p -1.82% Hammerson (HMSO) 25.62p -1.80% Vesuvius (VSVS) 406.60p -1.74% Network International Holdings (NETW) 240.60p -1.72% Diploma (DPLM) 2,762.00p -1.71%