London close: Stocks firmer as Democrats lead Georgia race, oil stocks rocket

London stocks closed well into positive territory on Wednesday, as investors bet that a Democrat-controlled Senate in the US would lead to further stimulus, while oil plays surged.

The FTSE 100 ended the session up 3.47% at 6,841.86, and the FTSE 250 was 1.23% firmer at 20,973.16.

Sterling was weaker against its major trading pairs, last falling 0.25% on the dollar to $1.3593, and sliding 0.19% against the euro to €1.1060.

“The FTSE 100 continues to outperform its eurozone equivalents as the rally in oil stocks has boosted the UK index,” said CMC Markets analyst David Madden.

“The mood in Europe is positive across the board but the strong contribution of Royal Dutch Shell and BP to the FTSE 100 in terms of index points has given it a big advantage over the other markets.”

Madden noted that the gains were concentrated in a handful of big oil and mining stocks, naming Anglo American, Glencore and Rio Tinto.

“HSBC, Standard Chartered and Barclays are showing solid gains too. Andrew Bailey, the BoE chief, said he wants banks to be free to set their own dividends.

“Dealers took that as a sign that banks will resume pay-outs.”

Across the pond, vote counting was continuing in two crucial Senate run-off elections in the state of Georgia, with the Democrats needing to win both to cinch control of the upper house.

Raphael Warnock was already called to have won one of the seats, becoming the state’s first black senator, while fellow Democrat Jon Ossoff was leading the other race by around 17,000 votes.

The remaining votes to be counted are primarily from the suburbs of Atlanta, which are Democratic strongholds.

A double-win for the Democrats would give the party effective control of the upper chamber, as it would mean both it and the Republicans hold the same number of seats, handing the ‘tie-breaker’ vote to the Senate president, which would be vice president-elect Kamala Harris.

That in turn would make it far easier for president-elect Joe Biden to enact policies, as the opposition party would no longer be able to vote down legislation by themselves.

On home shores, a survey released earlier showed that UK services activity dropped in December, with margins coming under pressure from rising costs and discounted prices.

The IHS Markit/CIPS purchasing managers’ index registered 49.4, up from November’s score of 47.6 but below the 50 mark that divides contraction from growth.

December’s result took the score for the final quarter of 2020 to 49.5 - a contraction compared with a solid recovery of 57.1 in the third quarter.

The downturn was overwhelmingly linked to business disruption, restrictions and closures caused by the Covid-19 crisis as the government imposed tighter constraints in an effort to contain a resurgence of the disease.

“The UK service sector has swung back into decline after the partial rebound seen during the third quarter of 2020, largely reflecting tighter restrictions on consumer services amid the worsening trajectory of the pandemic,” said Tim Moore, economics director at IHS Markit.

“With a third national lockdown underway, service providers will be braced for a sustained period of subdued UK economic conditions and deferred client spending in the first quarter of this year.

“However, business optimism on a 12-month horizon was relatively upbeat.”

In equity markets, banks were the standout gainers as they benefited from higher bond yields, with Standard Chartered up 9.38%, Barclays ahead 8.27%, HSBC rising 9.92%, NatWest growing 7.21% and Lloyds Banking Group 5.42% firmer.

Oil giants BP and Shell also rallied after oil prices hit an 11-month high, gaining 6.35% and 6.95%, respectively.

High Street bakery chain Greggs was 7.87% higher after it said its sales decline had slowed but warned that profits would not return to pre-Covid levels until 2022 at the earliest as it forecast a £15m loss this year and revealed 820 job losses.

Construction materials company CRH jumped 7.88% amid expectations it could benefit from increased infrastructure spending in the US if Biden has a freer hand.

Marks & Spencer was in the black by 4.42% following reports it is close to buying Jaeger, the loss-making fashion brand hit by the Covid-19 crisis, while Vodafone was boosted 4.12% by an upgrade to ‘buy’ at Berenberg.

Market Movers

FTSE 100 (UKX) 6,841.86 3.47%
FTSE 250 (MCX) 20,973.16 1.23%
techMARK (TASX) 4,197.24 1.23%

FTSE 100 - Risers

HSBC Holdings (HSBA) 416.15p 9.92%
Standard Chartered (STAN) 509.80p 9.38%
Barclays (BARC) 155.04p 8.27%
WPP (WPP) 839.00p 7.98%
CRH (CRH) 3,382.00p 7.88%
Glencore (GLEN) 273.95p 7.81%
NATWEST GROUP PLC ORD 100P (NWG) 167.30p 7.21%
Royal Dutch Shell 'B' (RDSB) 1,430.60p 6.95%
Anglo American (AAL) 2,756.50p 6.55%
Informa (INF) 571.60p 6.44%

FTSE 100 - Fallers

Aveva Group (AVV) 3,377.00p -3.68%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,580.00p -1.76%
Bunzl (BNZL) 2,501.00p -0.83%
B&M European Value Retail S.A. (DI) (BME) 530.00p -0.67%
Polymetal International (POLY) 1,827.00p -0.60%
Sage Group (SGE) 580.00p -0.41%
Admiral Group (ADM) 3,019.00p -0.33%
Croda International (CRDA) 6,622.00p -0.18%
Ocado Group (OCDO) 2,392.00p -0.17%
SEGRO (SGRO) 976.80p 0.02%

FTSE 250 - Risers

Petrofac Ltd. (PFC) 163.15p 9.53%
Greggs (GRG) 1,921.00p 7.92%
Ferrexpo (FXPO) 334.00p 6.98%
easyJet (EZJ) 799.40p 6.05%
Centrica (CNA) 50.68p 6.05%
Virgin Money UK (VMUK) 139.50p 5.92%
IP Group (IPO) 110.20p 5.76%
Energean (ENOG) 804.00p 5.33%
Wood Group (John) (WG.) 356.50p 5.22%
BlackRock World Mining Trust (BRWM) 571.00p 5.16%

FTSE 250 - Fallers

PureTech Health (PRTC) 390.00p -4.65%
TR Property Inv Trust (TRY) 400.00p -3.15%
Coats Group (COA) 67.00p -2.90%
Kainos Group (KNOS) 1,170.00p -2.66%
Greencore Group (GNC) 111.40p -2.62%
Apax Global Alpha Limited (APAX) 190.00p -2.56%
Hochschild Mining (HOC) 226.80p -2.33%
FDM Group (Holdings) (FDM) 1,120.00p -2.27%
Future (FUTR) 1,784.00p -2.09%
Pets at Home Group (PETS) 433.20p -1.99%