LONDON MARKET MIDDAY: BP, Shell and gold miners up on rising tensions

(Alliance News) - The FTSE 100 went into Thursday afternoon higher, shaking off the threat of slower interest rate worries in the UK and US, as ratcheting geopolitical tensions lifted oil prices and shares in BP and Shell.

The FTSE 100 index added 25.97 points, 0.3%, at 8,111.04. The FTSE 250 lost 45.77 points, 0.2%, at 20,198.99, and the AIM All-Share rose 2.00 points, 0.3%, at 724.34.

The Cboe UK 100 was up 0.3% at 815.30, the Cboe UK 250 was down 0.2% at 17,701.10, and the Cboe Small Companies lost 0.5% at 15,558.70.

The CAC 40 in Paris fell 0.3%, but the DAX 40 in Frankfurt added 0.3%.

Ukraine accused Russia of launching an intercontinental ballistic missile attack at Ukraine for the first time on Thursday but without a nuclear warhead in a new escalation of the conflict.

Ukraine said the missile had targeted the central city of Dnipro, while the Kremlin said it was doing everything possible to avoid a nuclear conflict but did not confirm it had deployed the weapon.

British media meanwhile reported on Wednesday that Kyiv had launched UK-supplied Storm Shadow missiles at targets in Russia after being given the green light from London.

The defence ministry in Moscow said its air defence systems had downed two Storm Shadows, without saying whether they were downed on Russian territory or in occupied Ukraine.

Oil rose and gold also shone amid the worries of a conflict escalation.

Brent oil was quoted at USD73.89 a barrel early Thursday afternoon, up from USD73.20 at the time of the London equities close on Wednesday. Gold rose to USD2,671.51 an ounce from USD2,648.58, benefitting from safe haven trade amid global tensions.

Shell and BP tracked Brent higher, with the oil majors climbing 1.0% and 1.1%.

Endeavour Mining and Hochschild added 2.2% and 1.5%, tracking bullion higher.

The pound was quoted at USD1.2635 early on Thursday afternoon in London, flat from USD1.2634 at the time of the European equities close on Wednesday. The euro stood at USD1.0518, up from USD1.0515. Against the yen, the dollar was trading at JPY154.52, fading from JPY155.36.

"Market participants are now pricing in a nearly 50% probability that the Fed will maintain rates in December, a significant shift from prior expectations of a rate cut," FlowCommunity analyst Ruben Ferreira commented.

The US Federal Reserve should be careful not to cut rates "too quickly" and risk reigniting stubborn inflation, a senior bank official said Wednesday.

Fed Governor Michelle Bowman told a conference in Florida: "With the US economy remaining strong, moving the policy rate down too quickly, in my view, would carry the risk of stoking demand unnecessarily and potentially reigniting inflationary pressures."

While the next Fed decision looks set to be on a knife-edge, the Bank of England is largely expected to stand pat.

Analysts at UBS commented: "The mixed labour market and inflation data since the last meeting have likely reinforced the bank's gradual approach to easing. Our call remains for the Monetary Policy Committee pausing in December and resuming cuts in February 2025 (the first policy meeting next year). Overall, we continue to expect cumulative rate cuts of 150bp next year with 25bp cuts each in Feb, May, Aug, Sep, Nov and Dec, to 3.25% by end-25."

Back among London shares, JD Sports tumbled 14%. It predicted annual profit will be at the lower end of guidance, as a decent start to its third-quarter was hampered by a "volatile" October.

Its pretax profit before adjusting items guidance range stands at GBP955 million to GBP1.04 billion.

"JD Sports' goal of scoring GBP1 billion in annual profits has been kicked down the road for the second year in a row," AJ Bell Dan Coatsworth said.

"Some may view this GBP1 billion figure as merely symbolic, but breaching this barrier is no mean feat and demonstrates a retailer has a lasting place in consumers' affections and the scale to win in a competitive marketplace."

On the up, Jet2 climbed 6.2%. The airline and package holiday operator said revenue in the half-year to September 30 rose 15% to GBP5.09 billion from GBP4.41 billion 12 months earlier. Pretax profit jumped 20% to GBP791.4 million from GBP660.5 million.

Excluding foreign exchange revaluation, pretax profit was 16% higher at GBP772.4 million from GBP664.6 million.

"With a material amount of the winter 2024/25 season still to sell, we are currently on track to deliver group profit before FX revaluation and taxation for the year ending 31 March 2025 ahead of market expectations," Jet2 added, putting consensus at GBP541 million.

AJ Bell analyst Russ Mould commented: "A week in the sun remains non-negotiable for many UK households according to Jet2 and that argument was lent credence by its record first-half results and upgraded full-year guidance."

US stocks are called to open mixed. The Dow Jones Industrial Average is called up 0.1%, the S&P 500 flat and the Nasdaq Composite down 0.2%.

Still to come, the global economic calendar has US weekly jobless claims numbers at 1330 GMT and a flash eurozone consumer confidence reading at 1500 GMT.

By Eric Cunha, Alliance News news editor

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