Surprise leap for FTSE-100 as BP jumps for a second day
The FTSE-100 Index jumped surprisingly today after BP surged a further 4% following yesterday's strategic review.
After a quiet session yesterday, the Footsie was expected to open down 4 points at 6032, but actually jumped 63.95 at 6099.61 in morning trading.
BP gained strongly yesterday as investors warmed to the newfound realism of the group's dividend cut and welcomed newish chief executive Bernard Looney's aggressive plans to invest more in green energy. Amid increasing amounts of glowing reviews, BP gained for a second session, singlehandedly adding more than nine points to the blue chip index.
Less fortunate was Diageo, which added to yesterday's falls with a further 2% decline today, stripping five points from the index. It reported fairly gloomy numbers affected by covid yesterday which indicated it was not perhaps the defensive consumer goods giant people had hoped for.
Elsewhere, Legal & General stock reacted poorly to a dip in its half year profits despite upbeat commentary from chief executive Nigel Wilson. Payments for protection against sickness spiked in the US thanks to Covid and L&G shares fell 2%.
But that pair aside, it was largely a day for gainers among the biggest stocks, with mining companies making particularly strong showing: Evraz, Polymetal, Fresnillo and Glencore were among the gainers putting on 3% and more.
Traders have been spending much of their time digesting US political news lately amid wrangling between Republicans and Democrats over the coronavirus relief package to help those economically damaged by the pandemic. Markets are hoping for a deal despite House of Representatives speaker Nancy Pelosi warning she does not expect a deal this week.
US-China relations remain in focus as well, after reports that US trade representative Robert Lighthizer is set to meet China's vice president to discuss China's failure to live up to its side of the bargain on the Phase 1 trade deal agreed earlier this year. At issue is China's failure to buy enough US goods, although covid will be blamed by Beijing. Traders expect Microsoft's potential takeover of TikTok's US operations to be discussed as well.
In the US, jobs figures for last month are expected to show a slowdown.
Economy-watchers are waiting this week's big UK announcement which comes on Thursday in the Bank of England's quarterly predictions on the economy. Increasing numbers of economists are predicting the Monetary Policy Committee will rein back from its stated expectation that there will be a V-shaped recovery as unemployment increases and the threat of local lockdowns spreads across the UK. While there is not likely to be any move on interest rates or other monetary policy, traders see this as an opportunity for the Bank to change a stance which many said was overly optimistic in the first place.
A British Chambers of Commerce survey out today showed a third of companies expect to lay off staff despite Chancellor Rishi Sunak's summer statement promising £1000 for companies for every furloughed worker they rehire. Most employers said Sunak's schemes did not go far enough to dissuade them from axing employees.
Meanwhile, the IMF last night warned fresh outbreaks of covid could trigger a new debt crisis among emerging and developing economies relying on oil, tourism or payments back home to families by migrant workers working overseas.
