FTSE Flies; RBS Sinks

Friday, 26 February. The FTSE 100 once again got off to a flying start, despite heavy losses from Royal Bank of Scotland. The bank lead the fallers on the index by more than 8% during morning trading on the back of an eighth consecutive year of losses. The bank has posted a £2bn loss and is postponing its dividend payout. A £2.5bn hit in the fourth quarter hurt the 73% taxpayer owned bank – this was for conduct charges, litigation and write downs, including extra provision for PPI mis-selling. RBS slashed its bonus pool by 11% last year and Ross McEwan, the Group Chief Exec, will donate half of his £1m role-based allowance to charity (his total pay packet doubled to £3.8m for 2015 from £1.8m to 2014 – but that’s by the by). The shares fell to 3-year lows, ending the day at the bottom of the blue-chip index, down  -7.1% at 226p.

With one trading day left of February, Brent oil looks to be on course to end the month higher. Talks between Venezuela, Russia, Saudi Arabia and Qatar have been agreed to  take place in a March meeting. The four countries are aiming to get oil producers in the Organisation of the Petroleum Exporting Countries (OPEC), and elsewhere, to freeze production at January levels. At the same time, data yesterday from the US Energy Information Administration (EIA) showed that gasoline inventories fell last week, for the first time since early November, demonstrating that demand for the low price commodity is on the up. Brent oil has surged ahead today, moving north of 8% during European trading. Brent oil is 2% ahead of its February opening price, meaning it is on course for its first monthly gain since August 2015.

In US data, Q4 revisions of GDP have been revised upwards. Economists had estimated the latest revision would signal 0.4% growth, lower than the initial estimate of 0.7%. However, revisions have shown the economy has advanced at a 1.0% seasonally adjusted annual rate. The dollar has gained further strength against an already weakened British pound. The pound is now below $1.39, falling more so during the open of US trading.

At the close European indices were up with the FTSE 100 +1.4%, the CAC 40 +1.7%, and the DAX 2.0%. At the time of writing, the S&P 500 and the Dow Jones are both trading relatively flat.