Shell and BP boost FTSE as oil price continues to climb

The FTSE 100 rose on Wednesday, driven by gains among resources stocks as commodity price inflation shows little sign of levelling off.

The FTSE 100 rose on Wednesday, led by Royal Dutch Shell (RDSA) and BP (BP) after an oil price jump.

The blue-chip index rose 37 points, or 0.5%, to 7,303, against the backdrop of a broader rebound in European markets after Covid-19 concerns led to a difficult trading session yesterday.

Shell advanced 1.6% to £16.65, while BP firmed 2.1% to 346p.

Despite the US announcing the release of oil supplies from strategic reserves yesterday, as US president Joe Biden seeks to cap rising petrol prices, Brent Crude was up about 0.5% on the day to $82.69 per barrel, following a 3.3% rise on Tuesday.

‘Oil prices continued to be under the spotlight as a US-led release of oil from strategic reserves failed to dampen commodity price inflation,’ said Russ Mould, an analyst at AJ Bell.

‘The move might suggest that governments are prepared to release more reserves, which could send a message to the oil market that extra supplies could be available at the click of a finger. This could cap any large increases in the oil price temporarily.’

Bookmakers were poor performers, with Entain (ENT) slipping 2% to £18.48 and Flutter Entertainment (FLTR) trading down 1.7% to £108.50.

Travel stocks were also broadly weak as renewed lockdown measures creep across Europe, with British Airways owner International Consolidated Airlines (IAG) weakening 1.4% to 149p.

The mid-cap FTSE 250 index inched 9 points higher to 23,231, with commodity stocks in the driving seat. Wood Group (WG) rose 2.3% to 212p, while Hochschild Mining (HOC) staged something of a rebound after being hit by uncertainty over its key Peruvian operations. The group’s shares gained 4.1% to trade at 119p.

LXI brings in the rent

LXI Reit (LXI ), the highly-rated inflation-linked, long-lease property trust, lurched 5.2%, or 7.6p, higher to 155p after reporting a 9% half-year investment return that leaves the shares standing on a 16% premium to their new net asset value of 134p. 

Liberum analyst Conor Finn commented: ‘LXI has continued its strong operational performance, which remained resilient even during the toughest months of the pandemic. Rent collection has now recovered back to 100% for Q4 and the board has reaffirmed the increased dividend target of 6p for FY 2022, which is expected to be fully covered from received rental income.’  

BMO Real Estate (BREI ) was also in favour, rallying 5.5%, or 4.6p, to 88.6p from a 24% discount. The Peter Lowe managed trust is up over 43% this year. 

Utilico Emerging Markets (UEM ) firmed 1p, or 0.5%, to 213p after appointing two deputies to assist fund manager Charles Jillings. Half-year results showed an 11% investment return in the six months to 30 September beat the 1% fall in the MSCI Emerging Markets index. 

Foresight Sustainable Forestry (FSF) fell 3.7p to 96.3p on its first day of trading after raising £130m to invest in UK forestry. 

Hansa Investment Company (HAN , HANA ) slipped 2.2% to 213p from a wide 36% discount after the Salomon family-backed defensive global trust reported a total 8.8% investment return for the six months to 30 September, just behind the MSCI AC World index 8.9% return. 

Nippon Active Value (NAVF ) softened 1%, or 1.5p, to 139p from a 2% premium after the £145m Japan activist raised £14m in a share placing at 139.7p. 

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