London close: FTSE gains as oil stocks rally on Iran sanctions
London equity markets ended in the green on Tuesday, with energy shares pacing the advance as oil prices rallied after the US decided not to renew its Iran sanctions waivers for a spate of crude oil importers, including China and India.
The FTSE 100 closed up 0.9% at 7,523.07, breaching through the 7,500 level for the first time since October, while the pound was down 0.3% against the dollar at a two-month low of 1.2940 and 0.1% firmer versus the euro at 1.1566, with cross-party Brexit talks resuming as MPs returned to Westminster after the Easter break. Investors were also mulling over reports of growing pressure from the Conservative Party for May to resign.
Meanwhile, oil prices were at 2019 highs, with Brent crude up 0.5% at $74.41 a barrel and West Texas Intermediate 1.2% higher at $66.36.
Neil Wilson, chief market analyst at Markets.com, said: "Oil markets are jumpy again with the White House calling the end to waivers on Iran sanctions from May 1st. Suddenly, we’re back to supply uncertainty being a graver threat than demand uncertainty. This risks a very real prospect of an abrupt spike in prices if there is not enough supply to fill the gap.
"It is no guarantee that Saudi Arabia can simply open the taps, moreover having made that mistake last year ahead of the sanctions being imposed, the country will seek clear evidence that it needs to raise output before doing so. Risks seem skewed to the upside for oil and we may see a pop higher still. Brent was last just below $74, but a return to $80 seems eminently possible now, particularly given the short time frame allowed for countries to meet the May deadline."
BP and Royal Dutch Shell racked up healthy gains, ending up 2.6% and 2.3%, respectively, while Cairn Energy, Wood Group and Premier Oil also gushed higher. However, airlines EasyJet, IAG and Wizz Air were under the cosh amid the prospect of higher fuel costs.
Pest control company Rentokil was on the front foot, with traders pointing to a comment from Citi, which said the stock's inclusion in China's MSCI main index from May could prove a tailwind for the shares.
Builders' merchant Travis Perkins was boosted by a double-upgrade to 'buy' at Bank of America Merrill Lynch, which pointed to upside from an improving volume backdrop, asset disposals and a new chief executive.
Outside the FTSE 350, shares in Thomas Cook surged following a media report that the travel company has been approached by several parties about a possible takeover of the business as a whole or its tour operating unit.
Barclays lost ground ahead of its first-quarter results later in the week and following a Financial Times report that the bank will cut bonuses for its investment bankers amid pressure from activist investor Edward Bramson.
BT was weaker following reports that the accounting scandal at its Italian business may have UK roots, while Funding Circle slumped following a Sunday Times article suggesting that the company could struggle to recover the heady levels of its float last year, with losses ramping up to more than £50m last year and raft of challenges ahead.
Market Movers
FTSE 100 (UKX) 7,523.07 0.85%
FTSE 250 (MCX) 19,894.12 0.29%
techMARK (TASX) 3,574.99 0.62%
FTSE 100 - Risers
NMC Health (NMC) 2,610.00p 3.65%
Hikma Pharmaceuticals (HIK) 1,711.00p 3.23%
Pearson (PSON) 867.20p 2.82%
Auto Trader Group (AUTO) 566.00p 2.61%
BP (BP.) 582.50p 2.61%
Rentokil Initial (RTO) 384.10p 2.45%
Royal Dutch Shell 'B' (RDSB) 2,541.50p 2.31%
Spirax-Sarco Engineering (SPX) 8,215.00p 2.30%
Royal Dutch Shell 'A' (RDSA) 2,523.00p 2.29%
Reckitt Benckiser Group (RB.) 5,942.00p 2.24%
FTSE 100 - Fallers
easyJet (EZJ) 1,170.00p -4.02%
International Consolidated Airlines Group SA (CDI) (IAG) 538.20p -3.41%
Antofagasta (ANTO) 974.80p -3.39%
Fresnillo (FRES) 760.00p -2.36%
Barclays (BARC) 166.58p -1.66%
Aviva (AV.) 425.60p -1.39%
Johnson Matthey (JMAT) 3,389.00p -1.37%
Burberry Group (BRBY) 1,987.00p -1.34%
CRH (CRH) 2,585.00p -1.34%
BT Group (BT.A) 226.90p -1.28%
FTSE 250 - Risers
Cairn Energy (CNE) 174.50p 5.31%
Wood Group (John) (WG.) 530.40p 5.03%
Premier Oil (PMO) 106.20p 4.63%
Petrofac Ltd. (PFC) 485.50p 3.87%
Indivior (INDV) 42.56p 3.80%
Tullow Oil (TLW) 250.00p 3.31%
Hays (HAS) 152.60p 3.11%
Law Debenture Corp. (LWDB) 616.00p 3.01%
Games Workshop Group (GAW) 4,010.00p 2.98%
Hunting (HTG) 656.00p 2.82%
FTSE 250 - Fallers
Funding Circle Holdings (FCH) 303.50p -6.90%
Acacia Mining (ACA) 154.00p -5.17%
Intu Properties (INTU) 97.16p -4.46%
Ferrexpo (FXPO) 275.20p -3.98%
Mitchells & Butlers (MAB) 257.50p -3.56%
Kaz Minerals (KAZ) 705.40p -3.37%
Ashmore Group (ASHM) 465.80p -3.00%
Wizz Air Holdings (WIZZ) 3,365.00p -2.97%
Kier Group (KIE) 347.40p -2.85%
Vivo Energy (VVO) 124.00p -2.36%