Sector movers: Commodities and drink bubble up, banks in the red
Various commodities-focused sectors and drinks compnies were bubbling up on Thursday, while personal goods and banks kept a lid on things.
Industrial metals, namely Ferrexpo and Evraz, led the charge as metals price rose, while the big miners were also trundling higher. Iron ore futures in China extend gains to highest close since August 2017.
ANZ banks warned the global iron ore market could move to a 10m tonne deficit this year, compared with previous forecast for a surplus of 15m tonnes, due to the impact of the Vale dam disruption, as well as revised forecasts for Chinese, Indian demand.
Russian steel basher Evraz published a mixed fourth-quarter trading update but was carried higher nonetheless.
Shell was banging the drum for the oil sector, reporting a 36% jump in full-year earnings and a 32% increase in fourth-quarter earnings, beating analyst expectation as it benefited from higher realised oil, gas and liquefied natural gas prices and cost cutting. Annual profits were lifted to a four-year high, up 80% at $23.35bn.
Shell’s not standing still though, observed analyst Nick Hyett at Hargreaves Lansdown. "It’s taking advantage of the benign conditions to undo the damage done by the scrip dividend in years past and repair the balance sheet too. Investment in some major projects continues to power ahead – notably the gigantic Prelude floating LNG facility, a 500m long monster that’s eventually expected to produce 5.3m tonnes of liquid hydrocarbons a year.
"As you would expect, Shell’s fortunes remain tightly linked to the oil price, but following some housekeeping, the group’s better placed than it has been for some time.”
Putting the fizz into the beverages sector, Diageo reported first-half net sales up 6% to £6.9bn, with organic growth strong in Greater China in particular, as sales of Johnnie Walker blue proved popular, partially offset by unfavourable exchange rates. Reported operating profit of £2.4bn was up 11.0%, driven by organic growth, while pre-tax profits were up to £2.6bn from £2.2bn and the interim dividend was raised 5%.
With the share price hitting a record high, market analyst David Madden at CMC Markets suggesting "if the upward move continues it might target the 3,000p region".
Knocking the personal good sector down was final results from Unilever, as the Ben & Jerry's maker churned out underlying sales growth at the bottom end of its guidance for 2018 and said it will be similar in 2019 as market conditions are likely to "remain challenging". This sort of sentiment hit shares in sector peer Reckitt Benckiser.
Banks were all in the red, with mid-sized challengers Metro Bank down 11% and CYBG down 4%, while Standard Chartered, Barclays and HSBC all down around 2%, but RBS and Lloyds both down less than 1%.
There was a double whammy for the eurozone, with Italy slipping into recession and increased chatter of a merger between Germany's Deutsche Bank and Commerzbank.
Italy, the third-largest economy in the eurozone has experienced two consecutive quarters of negative growth and this was "not great news for their banks and the forecasts used in their stimulus package", said Jamie Constable at broker N+1Singer.
CMC's Madden said it had "spooked investors" and "could weigh on the entire currency bloc".
With Deutsche and Commerzbank shares both falling sharply today after it was reported there might be a merger of the two struggling banks. "It is believed the German government would back the move in the hope it would renew confidence in Deutsche Bank. Tie-ups should only take place when it is mutually beneficially, it shouldn’t be pursued to keep the short-sellers at bay," Madden said.
Top performing sectors so far today
Industrial Metals & Mining 4,906.82 +4.26%
Beverages 23,050.09 +3.81%
Oil & Gas Producers 8,688.77 +2.95%
Mining 18,707.24 +1.72%
Oil Equipment, Services & Distribution 11,539.20 +1.44%
Bottom performing sectors so far today
Personal Goods 34,342.84 -2.07%
Banks 3,773.24 -2.06%
Technology Hardware & Equipment 1,165.73 -1.99%
Construction & Materials 5,241.26 -1.43%
Fixed Line Telecommunications 2,681.50 -1.38%
Market Movers
FTSE 100 (UKX) 6,968.85 0.39%
FTSE 250 (MCX) 18,711.75 -0.62%
techMARK (TASX) 3,373.79 0.44%
FTSE 100 - Risers
Diageo (DGE) 2,901.50p 4.67%
Antofagasta (ANTO) 870.80p 4.59%
Royal Dutch Shell 'A' (RDSA) 2,362.00p 3.78%
Royal Dutch Shell 'B' (RDSB) 2,368.50p 3.63%
Fresnillo (FRES) 1,005.00p 3.31%
Severn Trent (SVT) 1,998.50p 2.54%
Scottish Mortgage Inv Trust (SMT) 483.20p 2.44%
Evraz (EVR) 498.20p 2.34%
Anglo American (AAL) 1,939.80p 2.15%
British American Tobacco (BATS) 2,685.50p 2.03%
FTSE 100 - Fallers
Smurfit Kappa Group (SKG) 2,192.00p -5.60%
Standard Life Aberdeen (SLA) 251.65p -5.06%
TUI AG Reg Shs (DI) (TUI) 1,154.00p -3.39%
DCC (DCC) 6,225.00p -3.11%
Smith (DS) (SMDS) 337.50p -3.05%
Kingfisher (KGF) 222.40p -2.97%
Standard Chartered (STAN) 613.90p -2.88%
ITV (ITV) 129.45p -2.82%
RSA Insurance Group (RSA) 512.80p -2.73%
SEGRO (SGRO) 647.00p -2.44%
FTSE 250 - Risers
Ferrexpo (FXPO) 258.40p 11.76%
Rank Group (RNK) 162.00p 8.29%
Renishaw (RSW) 4,670.00p 7.01%
Hochschild Mining (HOC) 188.85p 4.68%
Acacia Mining (ACA) 194.25p 4.10%
Bakkavor Group (BAKK) 147.80p 4.08%
RPC Group (RPC) 795.00p 3.79%
Just Group (JUST) 101.40p 3.52%
Dechra Pharmaceuticals (DPH) 2,370.00p 3.49%
Sophos Group (SOPH) 337.20p 2.99%
FTSE 250 - Fallers
Metro Bank (MTRO) 1,087.00p -11.12%
Contour Global (GLO) 168.00p -6.67%
Vivo Energy (VVO) 129.90p -6.14%
Greencore Group (GNC) 193.00p -5.85%
IP Group (IPO) 106.00p -5.69%
Riverstone Energy Limited (RSE) 1,050.00p -4.89%
FDM Group (Holdings) (FDM) 826.00p -4.84%
Victrex plc (VCT) 2,291.96p -4.82%
CYBG (CYBG) 175.80p -4.40%
Dixons Carphone (DC.) 137.95p -4.23%