London close: Benchmark higher as oil prices, US jobless claims surge
London’s benchmark managed to close just above the waterline on Thursday, as investors digested a fresh record rise in the number of jobless claims stateside, as BP and Shell made the most of firmer oil prices.
The FTSE 100 ended the session up 0.47% at 5,480.22, while the FTSE 250 slipped 0.76% to 14,436.80.
Sterling was stronger against both of its major trading pairs, last rising 0.16% on the dollar to $1.2391, and strengthening 0.99% against the euro to €1.1396.
Oil prices were on the rise after US President Donald Trump said he was expecting Saudi Arabia and Russia to reach a deal soon to end the ongoing price war.
Brent crude was last up 14.87% at $29.05, having briefly breached the $30 per barrel mark earlier in the afternoon, while West Texas Intermediate was 17.64% firmer at $24.66.
“A surge in oil prices is the main event of the morning, as the beleaguered commodity stages a rally on hopes that some form of accord between Saudi Arabia and Russia might bring the ongoing supply battle to a close,” said IG analyst Chris Beauchamp.
“But this is only half the problem - abundant supply has come at a time of anaemic demand, and cutting back even modestly on output still leaves the world awash with oil that it doesn’t need, want or have space for.
“Only a sizable rebound in demand, and soon, could help provide a more durable solution, and that is not likely to develop in the near future, with lockdowns being extended in Europe and no sign that the rate of infection in the US has yet stabilised.”
Across the Atlantic, US jobless claims surged even further last week as businesses rushed to shutter activity, surpassing even the most downbeat estimates.
According to the Department of Labor, for the week ending 28 March, the number of initial jobless claims soared by 6.648 million, following an upwardly revised jump of 3.307 million during the prior week.
It was the largest weekly increase ever, breaking the record set just seven days earlier.
The median forecast from the consensus was for a rise of 3.375m, although some economists, such as those at Pantheon Macroeconomics, had been anticipating a gain of 5.5m.
Ian Shepherdson, chief economist at Pantheon, said the data pointed to a leap in the US rate of unemployment to 13-16% in just one month come April's nonfarm payrolls report, as between 16 million to 20 million would be laid off between the March and April survey weeks for that report.
He also quipped that the situation could have been avoided.
“The US could have followed the lead of several major European countries and offered job retention programs, paying most of people’s salaries, but preferred instead to increase and extend unemployment benefits.
“The result will be even greater dislocation for both people and businesses, some of which could have been avoided, and probably at a relatively small incremental cost.”
In equity markets, Shell rose 9.41% and BP was ahead 5.89% as oil prices advanced, while Premier Oil added 17.61%, Cairn Energy improved 14.96% and Wood Group grew 15.38%.
Hikma Pharmaceuticals was boosted 5.83% by an upgrade to ‘overweight’ at JPMorgan.
Segro was 1.17% higher after warning on earnings but saying it will still pay a dividend for 2019, while self-storage company Safestore pushed 5.29% higher after saying it will pay out its final dividend as its stores remain open despite the virus outbreak.
On the downside, shares of cruise operator Carnival sank 22.34% after it had raised $6.25bn (£5bn) to stay afloat during the coronavirus crisis but paid a high price for the funds.
British Airways parent IAG reversed earlier gains to close down 1.19%, following a BBC report that BA is placing 36,000 staff on furlough after demand collapsed due to the coronavirus pandemic.
British Gas owner Centrica fell 8.6% as it cancelled its dividend and cut capex by £200m to mitigate the impact of the coronavirus pandemic.
Recruiter Hays slid 13.35% after warning on profits, cancelling its dividend and announcing a £200m equity raising, while sector peer PageGroup suffered even heavier losses of 16.82%.
Fresh foods provider Bakkavor was under pressure by 19.27% after it withdrew its 2020 guidance and scrapped its final dividend due to the pandemic.
FTSE 100 - Risers
Royal Dutch Shell 'B' (RDSB) 1,479.60p 9.41%
Royal Dutch Shell 'A' (RDSA) 1,541.60p 8.47%
M&G (MNG) 117.00p 7.34%
Glencore (GLEN) 126.88p 6.48%
BP (BP.) 353.35p 5.89%
Hikma Pharmaceuticals (HIK) 2,178.00p 5.83%
WPP (WPP) 516.00p 4.60%
DCC (DCC) 4,953.00p 4.01%
Legal & General Group (LGEN) 177.55p 3.50%
BHP Group (BHP) 1,252.40p 3.44%
FTSE 100 - Fallers
Carnival (CCL) 600.80p -22.88%
Rolls-Royce Holdings (RR.) 278.30p -8.75%
Informa (INF) 374.90p -8.31%
Centrica (CNA) 34.22p -7.79%
Standard Life Aberdeen (SLA) 193.60p -7.59%
Meggitt (MGGT) 228.60p -6.92%
easyJet (EZJ) 497.20p -5.40%
Aveva Group (AVV) 3,216.00p -5.33%
Compass Group (CPG) 1,100.00p -5.25%
Melrose Industries (MRO) 73.98p -5.15%
FTSE 250 - Risers
Premier Oil (PMO) 18.50p 17.61%
Cairn Energy (CNE) 88.35p 15.41%
Wood Group (John) (WG.) 170.55p 14.81%
Petrofac Ltd. (PFC) 213.90p 11.46%
Energean Oil & Gas (ENOG) 632.00p 10.68%
Sabre Insurance Group (SBRE) 307.50p 8.85%
Virgin Money UK (VMUK) 58.96p 8.74%
Weir Group (WEIR) 789.60p 8.37%
Airtel Africa (AAF) 39.00p 8.03%
Pantheon International (PIN) 1,868.00p 7.36%
FTSE 250 - Fallers
Bakkavor Group (BAKK) 82.00p -16.84%
Pagegroup (PAGE) 298.60p -16.82%
Aston Martin Lagonda Global Holdings (AML) 90.35p -13.87%
Hays (HAS) 94.80p -13.35%
GVC Holdings (GVC) 452.50p -12.81%
National Express Group (NEX) 177.90p -12.79%
IP Group (IPO) 43.15p -10.20%
Capita (CPI) 25.93p -9.27%
Future (FUTR) 794.00p -8.31%
Equiniti Group (EQN) 165.80p -7.99%