Sector movers: Oil and banks higher, food retailers mixed
Oil stocks and banks marched the FTSE 100 back upwards on Wednesday, while a dejected Sainsbury's weighed on the food retail sector.
Even though oil stocks flattened on Tuesday and then fell on Wednesday, oil producers and services providers climbed higher.
Crude futures prices slipped after the US Energy Information Administration indicated overnight that , US oil output is continuing to flow freely, calculating that production will hit a record 8.4m barrels per day next month.
"Crude bears expect OPEC-member and top crude exporter Saudi Arabia to reduce shipments of light crude oil to Asia next month as part of the effort to tighten markets," said market analyst Dean Popplewell at Oanda. "Because of the cuts, crude bulls expect Brent to average +$73 per barrel and WTI to average +$66 by year end.
"Nevertheless, standing against the supply cuts is U.S crude output, which has soared by more than +2M bpd in 2018 to a record +11.9M bpd due to a booming shale oil production, which the EIA yesterday announced that it expects to keep rising."
Banks were mostly in the green, led by Lloyds, which rose more than 5% on the back of its full year results.
While Lloyds profits came in slightly short of expectations due to higher remediation costs, a 5% dividend hike and a £1.75bn share buyback was at the upper range of expectations.
"Before the financial crisis intervened Lloyds had a reputation as a solid income stock, and it appears the current management are committed to regaining this mantle," said Russ Mould, investment director at AJ Bell. " A good job too as capital gains from holding the shares have been thin on the ground."
He cautioned that there are clear reasons for not getting carried away, with net interest margin expected to be flat at best in the year ahead and Lloyds’ domestic focus leaving it "particularly sensitive to the eventual outcome from a Brexit process which is still mired in uncertainty".
The food retail sector was mixed after the Competition & Markets Authority hinted that it was minded to block the merger between Sainsbury’s and Asda, warning it could result in higher prices and reduced ranges in hundreds of local areas. The competition watchdog suggested possible remedies including selling off one of the Sainsbury's or Asda brands, divesting large chunks of stores or prohibition of the merger.
Sainsbury's shares tanked around 16% despite the immediate response in a joint statement with Asda that they "fundamentally disagree" with the provisional findings and would challenge them.
Neil Wilson, chief market analyst at Markets.com, said investors were accepting that this deal is dead in the water. "Sainsbury’s may continue to make its case but the barriers to clearance now seem too high to clear, and even if something could wash with the CMA it would not be acceptable to Asda/Sainsbury’s."
Morrisons, which was seen as a possible beneficiary from any enforced store sell-offs, was in the red, but Tesco, which could lose its crown if the deal goes through, was higher.
Tesco was "sitting pretty" said analysts at Jefferies, even though they see the best possible outcome by the CMA's 30 April deadline would be for a merger to be allowed with very extensive remedies.
"In our view the consequent reduction in scale players from four to three, and concurring curtailment of SBRY/ASDA's gross synergies, would be accretive to TSCO's investor attractions. But the likely scenario depicted by the CMA's initial findings is also encouraging."
Top performing sectors so far today
Oil Equipment, Services & Distribution 10,770.21 +3.89%
Banks 3,862.71 +1.68%
Industrial Transportation 2,309.71 +1.31%
Tobacco 34,012.52 +1.29%
General Retailers 2,201.39 +1.21%
Bottom performing sectors so far today
Food & Drug Retailers 3,774.03 -2.46%
Technology Hardware & Equipment 1,157.84 -1.08%
Household Goods & Home Construction 16,038.72 -0.89%
Leisure Goods 7,844.18 -0.79%
Real Estate Investment Trusts 2,852.33 -0.79%
Market Movers
FTSE 100 (UKX) 7,197.62 0.26%
FTSE 250 (MCX) 19,094.33 0.13%
techMARK (TASX) 3,536.03 0.27%
FTSE 100 - Risers
Wood Group (John) (WG.) 538.00p 4.87%
Lloyds Banking Group (LLOY) 61.18p 4.81%
easyJet (EZJ) 1,323.50p 4.17%
GVC Holdings (GVC) 639.50p 3.98%
Kingfisher (KGF) 237.90p 3.80%
Fresnillo (FRES) 1,018.50p 3.59%
Micro Focus International (MCRO) 1,849.50p 2.07%
Standard Life Aberdeen (SLA) 235.50p 1.93%
Paddy Power Betfair (PPB) 6,160.00p 1.90%
Next (NXT) 4,940.00p 1.63%
FTSE 100 - Fallers
Sainsbury (J) (SBRY) 243.95p -15.27%
Morrison (Wm) Supermarkets (MRW) 225.80p -5.92%
Hikma Pharmaceuticals (HIK) 1,675.00p -2.33%
London Stock Exchange Group (LSE) 4,527.00p -1.65%
British Land Company (BLND) 573.80p -1.65%
Reckitt Benckiser Group (RB.) 6,058.00p -1.50%
Land Securities Group (LAND) 871.00p -1.18%
Burberry Group (BRBY) 1,938.50p -1.07%
BAE Systems (BA.) 506.40p -1.02%
SEGRO (SGRO) 640.60p -0.99%
FTSE 250 - Risers
Plus500 Ltd (DI) (PLUS) 767.50p 6.60%
Superdry (SDRY) 535.50p 5.10%
Acacia Mining (ACA) 234.80p 4.36%
Centamin (DI) (CEY) 132.87p 4.17%
Mediclinic International (MDC) 321.30p 3.44%
William Hill (WMH) 179.75p 3.30%
Convatec Group (CTEC) 124.55p 2.76%
Spectris (SXS) 2,679.00p 2.72%
Sanne Group (SNN) 531.00p 2.51%
Daejan Holdings (DJAN) 5,990.00p 2.22%
FTSE 250 - Fallers
Intu Properties (INTU) 108.10p -8.51%
FDM Group (Holdings) (FDM) 812.00p -3.91%
Premier Oil (PMO) 73.53p -2.93%
Hammerson (HMSO) 366.30p -2.86%
Funding Circle Holdings (FCH) 335.80p -2.67%
Dechra Pharmaceuticals (DPH) 2,476.00p -2.44%
Apax Global Alpha Limited (APAX) 141.00p -2.42%
Halfords Group (HFD) 235.92p -2.35%
Cranswick (CWK) 2,479.95p -2.29%
Games Workshop Group (GAW) 3,101.60p -2.16%