Thursday, 28 January: GBP strengthened against both the euro on the pound in day trade as UK GDP figures came in slightly below estimates, but data showed an acceleration of growth in the final three months of 0.5%, driven by the UK’s services sector. Oil traders were busy today as rhetoric from the Russian energy minister Alexander Novak signalled that Saudi Arabia had proposed to cut oil output by up to 5% from each country, along with the proposal of a meeting between OPEC and non-OPEC countries on oil production levels. This prompted an oil rally that briefly surged above $35/barrel mid afternoon, after showing signs of strength going into the London open. This bullish oil sentiment drove oil stocks in the FTSE 100 higher, before the index settled into the close down 0.97%.
Stocks to benefit included Royal Dutch Shell(+2.19%), BG Group(+2.05%), and mid-caps Tullow(+7.20%) and John Wood(+3.73%). Royal Dutch Shell and BG Group were the beneficiaries of optimistic investors, as RDS shareholders voted yes to a takeover of BG group, with BG Group shareholders due to vote tomorrow.
First Group traded 11.2% down after a bearish trading statement spooked investors. The FTSE 250 operator said revenues in the third quarter to November end were down 9.5% on a constant currency basis, after sales were hit by the number of First Student operating days this year. This was attributed to the timing of the school calendar, and changes to its rail franchise portfolio. Trading across its divisions was hit by market trends, with First Bus revenue down after wet weather and flooding impaired services in the Christmas period and First rail was hit by a drop in demand in the wake of the Paris terror attacks.
At the close European indices were down with the FTSE 100 -0.98%, the CAC 40 -1.33%, and the DAX 30 -2.44%.