LONDON MARKETS: FTSE 100 Rises As Oil Aims For $50 A Barrel
25 May 2016 - 9:51PM
Dow Jones News
By Carla Mozee, MarketWatch
M&S slammed after warning; pound extends gains
Stocks in the U.K. moved higher Wednesday, with energy shares
rising alongside oil prices, but Marks & Spencer Group PLC
shares suffered their worst fall since 2008 in the wake of the
retailer's financial results.
The FTSE 100 claimed a 0.6% rise to 6,257.35, with energy,
mining and financial shares gaining ground. A win Wednesday would
be the benchmark's second in a row, after Tuesday's session closed
up 1.4%
(http://www.marketwatch.com/story/ftse-100-edges-up-as-miners-oil-companies-find-a-higher-toehold-2016-05-24)
to a three-week high.
Investors were keeping tabs on oil prices, as both West Texas
Intermediate oil and Brent crude aimed for $50 a barrel. Oil prices
found support after industry data late Tuesday showed a
bigger-than-expected decline
(http://www.marketwatch.com/story/oil-prices-rally-as-api-data-show-us-crude-supply-down-51-million-barrels-sources-2016-05-24)
in weekly U.S. crude supplies. Later Wednesday, the U.S. Energy
Information Agency will release its own weekly report on oil
stockpiles.
Shares of oil major BP PLC (BP.LN) (BP.LN) climbed 1.2% and
Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) was up 0.8%. Shell during
the trading session said it plans to cut an additional 2,220 jobs
(http://www.marketwatch.com/story/shell-to-cut-an-additional-2200-jobs-in-response-to-low-oil-prices-2016-05-25)
as the company deal with an overall environment of low oil
prices.
But gains for the blue-chip benchmark were capped by a slide in
Marks & Spencer (MKS.LN). The high street retailer's stock
tumbled 8.7%, heading toward its worst session since August 2008,
according to FactSet. M&S warned that its planned investment
into its clothing and home-products business would hurt profit
margins in the near term
(http://www.marketwatch.com/story/marks-spencer-profit-down-19-warns-on-margins-2016-05-25).
"Potential shoppers such as the younger generation still regard
M&S in the same manner as a trip to the dentist, with the
lines, image and experience all in need of radical refreshment,"
said Richard Hunter, head of research at Wilson King Investment
Management, in a note.
"This is something of which the company is acutely aware and
will be continuing to attempt to steer a different course," he
said.
Looking at shares of other apparel retailers, Next PLC (NXT.LN)
was off 1.2% and Burberry PLC (BRBY.LN) slipped 0.6%.
Other movers: Meanwhile, Dixons Carphone PLC shares (DC.LN) were
up 0.4% as the electronics retailer forecast full-year pretax
profit coming in at the top half of its previous guidance
(http://www.marketwatch.com/story/dixons-carphone-sees-fy-profit-at-top-of-guidance-2016-05-25).
Barclays PLC shares (BCS) (BCS) were up 1.2%, brushing aside a
ratings downgrade to hold from buy at Investec. While the stock is
not expensive, "we think its near-term outlook for earnings and
returns remains very challenging indeed," said analyst Ian Gordon
in a note.
Gordon noted U.K. Treasury chief George Osborne's view that a
June 23 British referendum that resulted in keeping the U.K. in the
European Union would "underscore 'lower for longer' interest rates
and to support sterling. Such a potential outcome would not help
Barclays," Gordon said.
Sterling: The pound was trading around a three-week high against
the U.S.dollar, buying $1.4682 compared with $1.4632 late Tuesday.
The pound surged roughly 1% during Tuesday's session after a new
poll
(http://www.marketwatch.com/story/pound-rises-as-poll-shows-brexit-support-waning-2016-05-24)
showed more likely voters wanted the U.K. to stay an EU member.
"The 'Remain' camp looks set to capitalise on the Brexit
warnings issued by the Treasury yesterday, with voters facing a
deluge of conflicting claims exacerbating uncertainty amongst
voters," said Ana Thaker, market economist at PhillipCapital UK, in
a note.
"However, if we see the 'Remain' camp consistently ahead, the
steep rises in sterling that follow these poll results may abate to
a steady rise," she said.
(END) Dow Jones Newswires
May 25, 2016 07:36 ET (11:36 GMT)
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