London’s FTSE-100 is starting Thursday’s session with a meaningful bounce after Opec members reached an agreement to cut production at yesterday’s informal meeting in Algeria.
By all accounts this caught the market off-guard and the cut is relatively modest, but oil prices have bounded higher as a result. No surprise then that Royal Dutch Shell and BP are finding their way towards the top of the table, with Shell – the largest constituent on the FTSE-100 – adding in excess of 5%, equating to well over 25 index points.
The wider natural resources sector is being pulled higher off the back of this oil news too, but it’s not all plain sailing this morning – Merlin is cautioning of tough trading conditions and the overhang of last year’s rollercoaster crash at Alton Towers, knocking around 5% off its shares this morning, whilst Capita is the real laggard. Shares in the outsourcer are off as much as 20% after it issued a profit warning, citing client uncertainty in the wake of the Brexit referendum as a key driver in the shortfall.
We have the August UK borrowing data due for release this morning, which again will offer some insight into consumer behaviour post-referendum. Further analysis of the implications of the oil production cuts will also be in focus, most notably whether at these levels marginal supply can be increased from other sources. The FTSE-100 has retaken the 6,900 level but it’s still a bit of a jump to get to fresh highs for the year.
