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FTSE falters near 2016 peak as miners and oil weigh
FTSE 100 closes in the red, having earlier threatened to reach a 2016 peak, with miners and oil stocks weighing as the dollar halted losses.
Update: The FTSE 100 has faltered in its bid to reach a 2016 peak, with oil stocks and miners weighing as the dollar arrested its slide.
The UK blue-chip index closed 11 points, or 0.2%, lower at 6,190, down from 6,234 in the morning's trading as the index had promised to near the 6,242 mark at which it opened the year.
But miners, which had crept into the red in the morning after yesterday's strong gains, extended their losses as the dollar showed signs of firming following yesterday's drop. While the pound was broadly flat against the dollar, the greenback rose against most other major currencies.
A stronger dollar typically huts commodities as they are priced in the US currency.
The sturdy dollar also weighed on the oil price, which fell to $41.47 a barrel, down from a high of $42.50 in early afternoon trading. Shell (RDSb) fell 1.8% to £17.07 while BP (BP) dropped 0.7% to 357p.
Banks drag FTSE higher
(10:14) The FTSE 100 is close to clawing back all the losses made since a turbulent start to the year, with banks helping the index push higher.
The UK blue-chip index rose 19 points, or 0.3%, to 6,220 points, close to the 6,242 mark at which it opened the year.
A recovery in some of the sectors worst hit by the sell-off has been behind the recovery. Miners, which hit 12-year lows in mid-January, have rallied, with the FTSE Mining Index up 44% since the turn of the year. Oil stocks have also bounced off lows, after the price of Brent crude, which fell below $28 in January, has rallied to $41.30.
But the recovery in banks, which led the sell-off in February, has been more muted. They are in the ascendancy today, with Standard Chartered (STAN) up 3.5% at 475.3p, Lloyds (LLOY) rising 1.7% to 70.5p and Royal Bank of Scotland (RBS) rising 1.7% to 234.7p.
Lloyds was helped by a bullish note from analysts at Nomura, who rates the banks one of its top picks, with a 93p price target. They also raised their target price on RBS, from 275p to 280p.
House builder Berkeley (BKGH) was the biggest FTSE 100 faller, down 2.9% at £31.61, as investors reacted to a slowdown in the market for £2 million-plus properties.
'Berkeley expects full-year results to be at the top end of forecasts but criticised the property tax regime which it described as one of the world's highest following changes to stamp duty,' said Russ Mould, investment director at AJ Bell.
'It also warned the government that the surcharge on second homes and buy-to-lets would have a knock-on effect on social mobility and the supply of new homes.'
Among 'small cap' stocks, EnQuest (ENQ) maintained its surge after better-than-expected earnings yesterday and the prospect of tax cuts for North Sea oil producers. Up 13.2% at 21.5p today, the shares have gained 53% over the past two days.
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- Standard Chartered PLC (STAN.L)
- Lloyds Banking Group PLC (LLOY.L)
- Royal Bank of Scotland Group PLC (RBS.L)
- Berkeley Group Holdings PLC (BKGH.L)
- OneSavings Bank PLC (OSBO.L)
- EnQuest PLC (ENQ.L)
- Antofagasta PLC (ANTO.L)
- Randgold Resources Ltd (RRS.L)
- Fresnillo PLC (FRES.L)
- Royal Dutch Shell PLC (RDSb.L)
- BP PLC (BP.L)
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by Gavin Lumsden on Jan 20, 2017 at 17:01