London close: Commodities help FTSE keep its head above water

London stocks were mixed at the close on Tuesday, with the top-flight index managing to cling to gains as heavily-weighted BP and Shell rallied on the back of firmer oil prices.

The FTSE 100 ended the session up 0.1% at 7,607.66, while the FTSE 250 was 0.63% weaker at 20,417.95.

Sterling was also going in different directions, and was last trading 0.3% weaker against the dollar at $1.2614, while it strengthened 0.12% on the euro to change hands at €1.1750.

“Once again stronger commodity prices, led principally by oil, have been the foundation of the FTSE 100’s strength,” said IG chief market analyst Chris Beauchamp.

“Having suffered less during the recent volatility thanks to its raw material names, the index is now clinging to positive territory for the time being.

“Unilever’s surge thanks to the arrival of John Peltz has also helped support the FTSE, but with the mood turning sour across markets again perhaps the FTSE 100 is fated to join the selling in due course.”

In economic news, fresh data from the Bank of England earlier showed fewer mortgages were approved in the UK in April, although net consumer credit increased as the cost-of-living crisis began to hit household budgets and spending.

Mortgage approvals for house purchases dropped to about 66,000 in April, from 70,700 in March - well below consensus expectations for a much smaller fall to around 70,500.

At the same time, net consumer credit increased by £1.4bn over the month, above expectations for a rise of £1.2bn.

Households, however, still appeared unwilling to dip into their savings, with their total liquid assets - deposits at banks and building societies, and cash in NS&I accounts - rising by £6.3bn.

“On the face of it, households’ continued unwillingness to draw on the savings they accumulated during the pandemic points to a sharp decline in real expenditure in the second quarter,” said Pantheon Macroeconomics senior UK economist Gabriella Dickens.

Dickens pointed out that the £6.3bn rise in liquid assets was above the £4.9bn average rise in the two years prior to the Covid-19 pandemic, and “a bit bigger” than the £5.9bn increase in March.

“We define ‘excess savings’ as the difference between their actual level and the level they would have reached if they had continued to rise at the average monthly rate between 2018 and 2019 - in April, total ‘excess savings’ increased to £187.9bn, from £186.4bn in March.”

Across the pond, US consumer confidence declined slightly in May amid worries about inflation, according to new survey data.

The Conference Board’s consumer confidence index fell to 106.4 from 108.6 in April, but was above consensus expectations for a reading of 103.8.

The present situation index, which is based on consumers’ assessment of current business and labour market conditions, dipped to 149.6 in May from 152.9 the month before.

“The decline in the present situation index was driven solely by a perceived softening in labour market conditions,” said Lynn Franco, senior director of economic indicators at the Conference Board.

“By contrast, views of current business conditions- which tend to move ahead of trends in jobs - improved.

“Overall, the present situation index remains at strong levels, suggesting growth did not contract further in the second quarter.”

On the continent, eurozone inflation hit a record 8.1% in May as energy prices surged, according to a flash estimate from Destatis, adding pressure on the European Central Bank to hike rates.

Inflation rose from 7.4% in April, hitting the highest level since records began in 1997.

That 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 inflation to come in at 7.6%, while the ECB has an inflation target of 2%.

Finally, fresh official data showed economic activity slowing further in China in May, with measures for both the manufacturing and non-manufacturing sectors remaining in contraction territory.

The official manufacturing purchasing managers’ index (PMI) came in at 49.6 for the month, up from 47.4 in April and just ahead of consensus expectations for a reading of 49.0.

May’s official non-manufacturing PMI, meanwhile, was 47.8, rising from 41.9 in the prior month and well above the 45.5 market watchers had pencilled in.

Both measures, however, were still below the 50-point level that separates expansion from contraction.

Back in equity markets on home shores, Unilever surged 9.43% 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 maintained their gains after oil prices advanced earlier, closing up 0.11% and 0.17%, respectively.

GSK ticked 0.27% higher after it agreed to buy vaccine maker Affinivax for up to $3.3bn.

On the downside, B&M European Value Retail tumbled 15.04% 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.

Peers in the retail sector were also in the red, with Currys down 4.45% and Marks and Spencer Group 1.61% weaker.

Royal Mail was also under pressure, sliding 5.56% after Ofcom said it had launched an investigation into its failure to meet delivery targets.

Market Movers

FTSE 100 (UKX) 7,607.66 0.10%
FTSE 250 (MCX) 20,417.95 -0.63%
techMARK (TASX) 4,423.62 -0.60%

FTSE 100 - Risers

Unilever (ULVR) 3,825.00p 9.43%
Airtel Africa (AAF) 154.60p 1.84%
BT Group (BT.A) 187.25p 1.79%
Harbour Energy (HBR) 384.20p 1.40%
British American Tobacco (BATS) 3,502.00p 1.33%
Imperial Brands (IMB) 1,790.50p 1.19%
United Utilities Group (UU.) 1,058.00p 1.05%
Vodafone Group (VOD) 130.58p 0.97%
Anglo American (AAL) 3,887.00p 0.96%
HSBC Holdings (HSBA) 533.00p 0.83%

FTSE 100 - Fallers

B&M European Value Retail S.A. (DI) (BME) 389.70p -15.04%
Royal Mail (RMG) 310.60p -5.56%
International Consolidated Airlines Group SA (CDI) (IAG) 127.64p -5.48%
Fresnillo (FRES) 774.20p -4.33%
Persimmon (PSN) 2,177.00p -3.42%
Halma (HLMA) 2,229.00p -3.30%
Bunzl (BNZL) 2,767.00p -3.18%
Sage Group (SGE) 656.60p -2.87%
Antofagasta (ANTO) 1,477.50p -2.70%
Rolls-Royce Holdings (RR.) 86.20p -2.58%

FTSE 250 - Risers

Syncona Limited NPV (SYNC) 210.00p 3.96%
TI Fluid Systems (TIFS) 182.60p 3.05%
Baltic Classifieds Group (BCG) 154.40p 2.93%
Fidelity China Special Situations (FCSS) 254.00p 2.83%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 658.00p 2.81%
IntegraFin Holding (IHP) 301.60p 2.79%
FirstGroup (FGP) 136.50p 2.40%
The Renewables Infrastructure Group Limited (TRIG) 133.40p 2.30%
Mediclinic International (MDC) 389.00p 2.26%
Centrica (CNA) 79.18p 2.25%

FTSE 250 - Fallers

Trustpilot Group (TRST) 95.75p -8.64%
Wizz Air Holdings (WIZZ) 2,920.00p -5.62%
Auction Technology Group (ATG) 1,014.00p -5.23%
Currys (CURY) 83.75p -4.45%
Baillie Gifford US Growth Trust (USA) 168.00p -4.44%
Micro Focus International (MCRO) 372.90p -4.43%
Oxford Instruments (OXIG) 2,290.00p -3.89%
Watches of Switzerland Group (WOSG) 945.00p -3.57%
BH Macro Ltd. GBP Shares (BHMG) 4,215.00p -3.55%
Hammerson (HMSO) 27.49p -3.54%