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The Guardian - UK
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Graeme Wearden (until 2pm) and Nick Fletcher (now)

FTSE 100 closes at record high as oil price rallies – as it happened

London’s financial district, including Tower 42, The Cheesegrater and The Gherkin.
London’s financial district, including Tower 42, The Cheesegrater and The Gherkin. Photograph: Tim Robberts/Getty Images

European markets close higher with FTSE 100 and Dax at new peaks

A surge in the oil price, a boost from China’s $900bn infrastructure plans and a victory for Angela Merkel in a key German state election combined to push markets higher, despite the worries caused by the global cyber attack. But Michael Hewson, chief market analyst at CMC Markets UK, said:

It’s been another day of records for the FTSE100 and the German DAX, as they both put in new record highs, however the glacially slow progress above these new highs is a little worrying, which might suggest some investor nervousness at embarking on aggressive buying at such elevated levels.

The sectors receiving a boost included oil and mining, while computer security stocks were also in demand after the cyber attack. Sophos jumped more than 7% while cybersecurity exchange-traded fund ISE rose more than 3%. The final scores in Europe showed:

  • The FTSE 100 finished up 18.98 points or 0.26% at 7454.37, having earlier reached a new all time peak of 7460
  • Germany’s Dax rose 0.29% to a record close of 12,807.04
  • France’s Cac closed up 0.22% at 5417.40
  • Italy’s FTSE MIB added 0.6% to 21,704.46
  • Spain’s Ibex ended up 0.56% at 10,957.8
  • In Athens, the Greek market slipped 0.86% to 782.32

On Wall Street, the Dow Jones Industrial Average is currently up 80 points or 0.39% while the S&P 500 and Nasdaq Composite have both hit new intra-day highs.

On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.

News from Saudi Arabia and Russia that they favour extending the current oil production cuts until March 2018 is not a game changer but should help stabilise crude prices, according to Capital Economics. Its chief global economist Andrew Kenningham said:

The first point to make is that this has not radically altered the outlook for oil prices. An extension of up to six months had already been widely anticipated, so this is simply a little longer than expected. That may be why oil prices rose by only about 3% today, whereas they rose by around 15% when the cuts were originally agreed at the end of November 2016. Brent crude remains comfortably within the $45 to $60pb range in which it has been trading since last November.

Further ahead, we think the agreement will help to lift Brent crude prices towards our forecast of $60pb by year-end. Even allowing for compliance slipping a bit and US shale production continuing to exceed expectations, these cuts should be enough to rebalance the oil market and bring oil stocks down.

Today’s announcement also reinforces our view that oil prices will be far more stable in the coming years than they have been since 2014. Significant price rises would probably lead to weaker compliance by OPEC and Russia, as well as to higher shale production. Meanwhile, Saudi Arabia, Russia and the other big producers would probably extend their production cuts again if prices were to fall.

As we have argued before, the current range for oil prices of around $45-60 per barrel is probably a “Goldilocks” scenario for the world economy. This is high enough to keep major producers afloat and to justify the recent rebound in investment in the energy sector. However, as it is well below the $100-plus level which appeared to be normal a few years ago, it is also comfortable for consumers. All told, the outlook for oil prices remains consistent with our forecasts for steady global growth and low inflation.

The FTSE 100 is still heading for a record closing high, although it is currently off the day’s best levels, but with a raft of UK economic data due this week, the question is whether the index can maintain its good run. Connor Campbell, financial analyst at Spreadex, sayd:

The index hasn’t quite been able to climb back to the 7460 all-time intraday high it hit soon after the bell; however, it is still lurking around the 7450 mark, keeping it on track to close at a new record peak. That’s mainly thanks to its buoyant commodity sector; Brent Crude’s 2.5% surge – with Putin throwing his backing behind the continuation of an oil-output cap – has obviously lifted the oil stocks, while the miners were pleased with the announcement of a $900 billion infrastructure spend in China.

It is going to be interested to see if the FTSE can hold onto that growth tomorrow. The latest inflation figure is released on Tuesday morning and, with analysts expecting the reading to climb from 2.3% to 2.6% month-on-month, the pound could be in for a bit of a boost. Since Brexit that has tended to mean bad news for the UK index, though it is worth noting that cable has managed to keep its head above $1.29 without troubling the FTSE’s record-breaking rise.

More positive news from the US housing market.

The National Association of Homebuilders’ index has climbed to 70 in April, compared to the 68 level reached in March and expected to be repeated last month.

Updated

Wall Street opens higher

US markets are also benefiting from the rise in oil prices, with investors shrugging off the worldwide cyber attack which began on Friday.

The Dow Jones Industrial Average is currently 62 points or 0.3% higher, while the S&P 500 and Nasdaq Composite both opened more than 0.1% better, with the latter at a new record high.

Moody's keeps stable outlook on Greek banks

Back with Greece, and credit rating agency Moody’s has kept its stable outlook on the country’s banks, citing the improved prospects for profitability.

But it warned that problem loans remained high and were a severe challenge for Greek banks, although they should start declining from around 45% of gross loans at the end of 2016 over the next 12 to 18 months.

Moody’s added that it expected Greek banks to remain marginally profitable in 20179-2018, although the operating environment would remain challenging. Much depends on the government’s ability to get funding from its creditors in a timely manner, said the agency.

Updated

Lunchtime round-up: FTSE heads towards new closing high

Time for a recap...

Britain’s stock market is on track for a new record closing high, after hitting its highest ever level in early trading.

Having romped up to 7460 points shortly after 8am, the FTSE 100 has dropped back a little. It’s currently nine points higher at 7444, above last Friday’s record close.

The rally is being driven by mining companies, which dominate the leaderboard today.

Investors are anticipating higher demand for commodities as China presses on with its “Belt and Road’ strategy to build new infrastructure and transport links in Asia and beyond.

The top risers and fallers on the FTSE 100 today
The top risers and fallers on the FTSE 100 today Photograph: Thomson Reuters

The oil price continues to climb too, after Russia and Saudi Arabia announced they both supported extending a current agreement to curb crude output.

Brent crude is now up 3% today, at $52.41 per barrel, after Vladimir Putin said this would help to stabilise prices.

Chris Beauchamp of IG says that bullish traders were in the driving seat this morning, but also warns that a correction could be coming....

A new record high for the FTSE 100 this morning was driven in no small part by oil firms, which have been boosted by further talk among oil ministers that more production cuts will be necessary. What should worry FTSE bulls is that the index is exhibiting similar characteristics to the S&P 500 – namely that the rally is being powered by smaller and smaller numbers of rising stocks each day; this doesn’t mean a correction is around the corner, but it does raise the prospect of a reckoning that could be ugly.

It’s worth noting that only 40 members of the FTSE 100 have risen today, while 60 have fallen....

In Europe, optimism has been slightly dented by the news that Greece has been draged back into recession:

And in the last few moments, Emmanuel Macron has named centre-right politician Eduard Philippe as his prime minister. Here’s some instant reaction from Guardian colleagues....

And other experts:

Newsflash from America: The factory sector of New York state has weakened this month, adding to a recent run of disappointing US data.

The Empire State manufacturing index has dropped to minus 1, from 5.2 in April, dashing hopes of a rise to 7.0.

It’s the first negative reading since last October, and therefore the weakest report since Donald Trump won the US presidential election.

Companies in and around New York reported a drop in new orders, and a decline in employment growth too.

Updated

The US stock market is tipped to rise slightly when trading begins, in 80 minutes.

Tui company branding.

Holiday firm TUI has bucked today’s trend, by falling 4% to the bottom of the FTSE 100 leaderboard.

Traders dumped TUI stock after the company reported subdued demand for holidays to Turkey and North Africa. Instead, tourists are plumping for Spain and Canaries, Greece, Cyprus, Cape Verde and Caribbean, apparently.

TUI insisted that summer trading is “in line with our expectations”, with UK demand holding up despite the Brexit vote.

But while revenues rose 4% in the last quarter, to nearly €3.1bn, pretax losses (on an EBITA basis) rose to €182.4m, from €138.1m a year ago.

TUI also warned that the fall in the pound is driving up its costs, even though it hedged itself against the worst of the damage:

Sterling remaining at rates significantly lower than those seen prior to last year’s UK Brexit referendum.

In line with TUI’s hedging policy, the UK Source Market had already hedged a significant proportion of its foreign currency requirements ahead of the Brexit referendum, however on the unhedged portion this results in higher costs which will impact the UK business in the second half of the year.

JP Morgan’s army of City workers needn’t pack their bags quite yet. But it does appear that the Wall Street bank is committed to moving jobs to Ireland, thanks to Brexit.

JP Morgan announced this morning it has bought a new office block at Dublin’s Capital Dock development. The site will hold 1,000 workers, which is twice its current workforce in the Irish capital.

The company has previously said it will move jobs out of London, if (as seems likely) the UK loses its ‘passporting rights’ to within the EU.

Here’s the full story:

Putin backs oil supply curbs

Russian President Vladimir Putin gestures while speaking to the media after the Belt and Road Forum in Beijing.
Russian President Vladimir Putin gestures while speaking to the media after the Belt and Road Forum in Beijing. Photograph: Alexander Zemlianichenko/AP

Newsflash: Russian president Vladimir Putin has confirmed that Moscow is keen to extend the current deal to curb oil production by an extra nine months.

Speaking in China, where he’s been learning about the Silk Road plan, Putin told reporter that a longer production freeze, to March 2018, would ensure stable prices.

Putin said:

“I have met with the heads of the companies ... and we support the proposal.

In a wide-ranging discussion, Putin also denied that Russia was behind the WannnaCry cybercrime attack, called for a return to dialogue with North Korea, and insisted that Russia was right to miss the Eurovision Song Contest. Ukraine, he claimed, wasn’t up to the job of hosting it.....

Via Fidelity, here’s a chart showing how Britain’s stock market has performed under every prime minister since Ted Heath:

How London's stock market has fared since the 1970s
Sourced from Data Stream. Cumulative total returns of the MSCI UK index in GBP. Photograph: Fidelity

It’s no surprise that Margaret Thatcher delivered the biggest gains. Her sheer longevity (11 years) is one obvious factor. Stocks also rallied after the Big Bang of 1986 which revolutionised the City and shook up share trading.

You might expect Tony Blair to be closer to Thatcher, given he governed for over a decade. However, the market fell sharply in 2000 when the dot-com bubble burst, and took years to recover those losses.

Jim Callaghan gave investors the best annualised returns, at over 23% per year from 1976-1979. But that was also a time of rollicking inflation....

Gordon Brown’s tenure, from 2007-2010, was the worst time to own shares. But that’s due to the financial crisis which brought down Northern Rock and HBOS, and forced Royal Bank of Scotland into a taxpayer rescue too. No wonder investors suffered.

But we shouldn’t blithely assume that the Tories have some magic touch for the stock market, as Tom Stevenson, investment director for personal investing at Fidelity International, explains:

“While on the face of it the Conservatives appear to have delivered more impressive stock market returns than Labour in recent years, the economic and market environment has a far more important bearing on the performance of the stock market than who the current occupant of Number 10 is.

“For example, while UK stocks rose by over 500 per cent under Margaret Thatcher (which some have credited to her decision to deregulate the financial markets), stocks across the globe enjoyed similar returns. Similarly, while the markets produced a negative return under Gordon Brown, this was a reflection of the financial crisis rather than Labour party policy.

Updated

A person using a petrol pump.

The oil price is continuing to climb, helping to keep the FTSE 100 at record highs.

The prospect of Opec extending its production curbs, combined with optimism over China’s Silk Road plans, have pushed Brent crude up by 2.5% to $52.10 per barrel.

That’s good news for BP, whose shares are now up 1.3%.

But it’s potentially bad news for companies and individuals, as it implies that petrol prices on the forecourt will go up. This would intensify the looming wage squeeze in the UK, with inflation already expected to rise faster than earnings this year...

Updated

Greece back in recession as GDP shrinks again

Bad news from Greece... the country’s economy has suffered another contraction.

Greek GDP shrank by 0.1% in the first three months of this year, following a 1.2% plunge in October-December. That puts Greece back into recession, in a reminder of its fragile economic state after years of austerity and political upheaval.

Later this week, MPs will vote on further spending cuts and tax reforms in return for another tranche of loans.

Updated

Chinese president Xi’s ambitious infrastructure plans are driving shares higher around the globe, says Kathleen Brooks, research director at City Index.

As mentioned earlier, China has been proudly outlining its plans for new land and sea connections with the rest of the world. It aims to spend hundreds of billions of dollars improving ports, roads and rail links in Europe and Africa, to spruce up old trade routes and create new ones.

Brooks says:

The big news over the weekend was a Chinese government summit that announced the new “Silk Road” project, which aims to forge peace, inclusiveness and free trade across the world. China has pledged $124bn in infrastructure spending to bring this into action, and markets are cheering Chinese largesse, with Brent crude rising $1 on the back of this news at the start of the week.

China’s spending pledge has underpinned risk sentiment more generally this morning, with European equities opening higher and US futures pointing to a stronger open on Wall Street.

More details here:

The FTSE 100 is being boosted by Saudi Arabia and Russia’s commitment to extending their current deal on oil output curbs, says Connor Campbell of SpreadEx:

The FTSE is (oil) barrelling towards a fresh all-time high this Monday, ignoring both the ‘WannaCry’ ransomware attack of last Friday, and a selection of weak Chinese data that saw industrial production drop from 7.6% to 6.5% month-on-month.

Rising 25 points to lurk just above 7450, the UK index is already at a new peak – now it just needs to stay there. The main thrust of the FTSE’s growth is coming from the commodity sector, itself led by Brent Crude’s recovery. The black stuff surged 2% after the bell – and now sits just under $52 per barrel – having been lifted by reports that both Saudi Arabia and Russia are willing to support an extension of the current output-capping agreement.

A programer shows a sample of a ransomware cyberattack on a laptop in Taipei, Taiwan.

Traders have been rushing to buy shares in cybersecurity companies following the WannaCry ransomware outbreak that struck Britain’s NHS on Friday, and companies and users across the globe.

Shares in Sophos, which sells antivirus, encryption and network security products, have jumped 7% to an all-time high.

Other security firms are also in demand, as Reuters reports:

Cybersecurity stocks and tracker products rose at the European open on Monday after a global “ransomware” attack disrupted car factories, hospitals, shops and schools around the world.

A London-listed cybersecurity exchange-traded fund ISE whose holdings include software provider Cisco Systems and cybersecurity firms Fireeye and Symantec rose 0.9 percent at the open.

Our liveblog is tracking the latest developments:

Updated

Update: The FTSE 100 has nudged a new all-time intraday high of 7460 points.

That puts the index of top UK -listed companies firmly on track for a new closing high at 4.30pm as well.

Smaller companies are also in demand this morning; The FTSE small cap index has also hit an all-time high this morning.

Anyone who bought British shares the day after the EU referendum is sitting on a very large profit.

Today’s rally means the FTSE 100 has now gained 20% since the close of play on June 24th, when closed at 6138 points.

Anyone who had the nerve to buy shares then, after a day of wild losses, has done pretty well.

This chart from the FT shows how the Footsie rapidly shook off its initial panic over the Brexit vote, and has risen steadily since.

However... the FTSE 100’s rise is partly due to the slump in sterling after the referendum. This has pumped up the value of money earned abroad by multinationals listed in London, and also made UK companies more attractive to foreign predators.

Updated

Anything Britain can do....

Germany’s stock market is also on a tear this morning, hitting its own all-time high.

The DAX index of top German companies has gained almost 0.5% this morning, extending its recent rally.

German shares have been in demand in recent weeks, as fears of a populist surge in Europe have faded. The amount of money flowing into European equities hit a record high last week, on relief that Emmanuel Macron had won the French presidency.

European stock markets this morning
European stock markets this morning Photograph: Thomson Reuters

Chinese President Xi Jinping and Russian President Vladimir Putin posing for a family photo during the Belt and Road Forum today.
Chinese President Xi Jinping and Russian President Vladimir Putin posing for a family photo during the Belt and Road Forum today. Photograph: Pool/Getty Images

China’s ambitious economic plans appear to be driving the London stock market to today’s record high.

Over the weekend, Chinese president Xi Jinping launched a summit to promote the “‘Belt and Road’ -- a $900bn infrastructure mega-project.

Xi’s vision is a global construction spree covering 65 countries, from Asia to the Americas via Africa and Europe. And that is likely to drive up consumption of iron ore, copper, nickel -- which is why mining stocks are in demand this morning.

Mike van Dulken of Accendo Markets says:

Metals prices are advancing, helped by optimism about China’s “one Belt, one Road” program.

FTSE 100 hits new alltime high

Boom! The FTSE 100 has hit a new all-time record high at the start of trading in London.

Britain’s blue-chip index has gained 23 points to 7458, as energy producers and natural resource stocks rally.

The rally pushes the FTSE 100 over its previous all-time intraday high of 7447, which it hit on the 17th March this year.

The FTSE 100 over the last five years
The FTSE 100 over the last five years Photograph: Thomson Reuters

Mining giants like Glencore, BHP Billiton, and Antofagasta are all dominating the risers.

Royal Dutch Shell is also in demand, following the rise in the oil price.

The top risers on the FTSE 100 today
The top risers on the FTSE 100 today Photograph: Thomson Reuters

Reaction to follow!

Updated

This chart from Bloomberg shows how the oil price jumped this morning, following the Saudi-Russia announcement:

Oil jumps as Saudi and Russia back supply curbs

The oil price has jumped this morning, after Saudi Arabia and Russia signalled their support for a new deal to cut production levels.

Brent crude - oil sourced from the North Sea - has jumped by 1.5% to $51.62 per barrel. US crude oil is also gaining.

The move came after Saudi Energy Minister Khalid al-Falih and Russian energy minister Alexander Novak announced that they believe a current deal to cut crude supplies should be extended until the end of March 2018.

In a statement, they said:

“We’ve come to conclusion that the agreement needs to be extended.

“The two ministers agreed to do whatever it takes to achieve the desired goal of stabilizing the market and reducing commercial oil inventories to their 5-year average level.”

This raises the chances that Opec’s current supply cut deal, which runs out in June, should be extended.

The agenda: Will FTSE 100 hit a new record high today?

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

After hitting a record closing high on Friday, Britain’s FTSE 100 may hit a new all-time peak when trading begins today.

Markets in Asia have already rallied, as traders shake off the shock of the WannaCry malware attack and a smaller-than-expected rise in US retail sales on Friday.

MSCI’s broadest index of Asia-Pacific shares outside Japan has hit its highest level since June 2015, up 0.3%. Emerging markets have also posted gains.

Reuters reports that:

Resilient Asian stocks edged up to a two-year high on Monday, shaking off threats from by a ransomware attack that locked some 200,000 computers in more than 150 countries at the weekend, a missile test by North Korea, and weak U.S. data.

European financial markets are expected to open higher, helped by optimism over Europe’s economy.

Speculation that oil producers might extend their supply curbs could also push the market higher. So the FTSE 100, which close at 7435 on Friday night, could make a run at the all-time intraday high of 7447 set in March.

The news that Angela Merkel has won a key state election overnight could also please investors.

Merkel’s CDU party beat the Social Democrats in North Rhine-Westphalia by a comfortable margin, suggesting she’s on track to win another term as German chancellor this autumn.

CMC Markets analyst Michael Hewson says:

The German Chancellor who only decided to run again for a historic fourth term quite late on in the German elections later this year will be feeling quite happy having seen off her rivals at the SPD, and the challenge of their new leader Martin Schulz in state elections at the weekend, in North Rhine-Westphalia.

There’s not much in the economic diary, apart from Greek GDP for the first quarter of 2017 at 10am BST.

In the City, holiday firm TUI is reporting its half-year results.

We’ll be tracking all the news through the day...

Updated

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