Tuesday, 2nd May: The week starts relatively quiet with nothing major to report back, but the FTSE opened 0.31% higher at 7225, with BP leading the index positively into the start of the new month after a long weekend, as they announced a sharp increase in Q1 profits after overcoming the slump in crude prices. Brent Crude was up 0.11% at $51.505/bbl today. Other big oil companies followed the same trend. In April, Exxon Mobil experienced their best quarter since 2015, Chevron reported a profit of $2.7bn after experiencing a loss in 2016, and Total SA experienced a surge in profits of 77% in Q1.
The UK’s leading index wasn’t the only thing soaring though, as British manufacturing was also recorded at a three year high in April, supporting the running notion of British factories enjoying the benefits of the temporary boost from the weak pound due to Brexit. The boost in manufacturing bodes well for the UK, as we suffer in other areas of growth due to inflation, although it cannot completely offset the consequences of Brexit and inflationary pressures, as it only accounts for approximately 10% of the UK economy.
Towards the end of the day, it was Shire who moved up towards the top of the index, after news surfaced that they managed to more than double revenues in Q1, even though net profit fell, largely due to expenses related to the £24.7bn acquisition of Baxalta in June 2016. Although the acquisition has expanded the groups’ portfolio, it has also been labelled responsible for knocking the groups’ gross margin, as the larger portfolio of products has resulted in higher manufacturing costs of the newly added drugs. Nevertheless, investors seemed impressed by the results, as the share price rose around 2.42% towards the end of the day at £46.47.
The FTSE carried on the positive momentum throughout the day and closed near 0.64% at 7250.