The FTSE 100 opened in the red, before finding strength from resource stocks in afternoon trade. Overnight Asian trade also stood in the green, buoyed by a strengthening oil trade which gathered momentum as the day progressed. Strength in oil was not seen at this level ($49.43/bbl) since the start of November 2015, provoked by news of supply disruption in Nigeria and a change in opinion at Goldman Sachs.
Suppliers have been disrupted from Nigeria due to several acts of sabotage. Stock of oil shifted from being almost at a point of global storage saturation point to being in deficit much earlier than expected, a spokesman from the investment bank said, bucking the ‘bearish’ outlook it has had so very recently.
Natural beneficiaries of the rally in oil were miners/energy majors. One energy company not feeling the heat was Drax, as it sunk more than 7.5% intraday. This was after Bernstein issued a ‘downgrade’ recommendation on the stock, at the same time as Morgan Stanley advised investors to stick with ‘defensive stocks’ citing that markets are likely to be cagey for the foreseeable future.
HSBC announced a raft of job cuts, however, little investor discontent was evident on the announcement as the stock was marginally lower at -0.38%. The bank announced it will move more than 840 IT and back office jobs out of the UK into India and other low-cost geographies, as part of previously announced cost-cutting plans.
At the close European indices were mixed with the FTSE 100 +0.21%, with the CAC 40 -0.18%, and the DAX 30 +0.92%.