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Rising oil price fuels inflation worries


5pm: Oil up as inflation worries persist

BP Clair Ridge

Soaring oil prices fuelled inflation worries, though the FTSE 100 was spared some pain as a weaker pound provided some cushioning for the internationally-exposed index which dipped 35.3 points to close at 7,028.10.

Brent oil traded above $80 a barrel on Tuesday, settling at $79 at the close of London’s equity market. Nonetheless, oil majors climbed. Royal Dutch Shell ‘A’ and ‘B’ shares ended up 2.8% and 2.3% respectively, while BP closed up 1.6%.

OPEC said it expects oil demand to rise between now and 2045, and remain the dominant source of energy despite warnings that it must fall to combat climate change.

“Energy and oil demand have picked up significantly in 2021, after the massive drop in 2020, and continued expansion is forecast for the longer-term,” OPEC chief Mohammad Barkindo said in the group’s World Oil Outlook.

Commenting on the dip in equity markets, Danni Hewson, AJ Bell financial analyst, said: “The thing about rising inflation and supply pressures is that eventually all that talk, all the numbers actually make a real-life impact with the consumer. 

“Anyone who’s tried to fill up over the last couple of days, anyone who’s had the letter telling them their energy supplier has gone belly up will have brushed up against the reality of the UK’s recovery journey and investors are smart enough to know this is just the beginning.

“There will be winners, just look at the share price of BP and Royal Dutch Shell today and consider Unilever’s gains, its brands are tried and trusted and consumers making tough choices are more likely to pay the extra for familiar staples they can’t live without and ditch the nice to haves instead.”

Sage fell 4.5% after Goldman Sachs cut the accounting software firm to Sell from Neutral.

In the FTSE 250, Moonpig fell 5.6% despite upping its full-year outlook.

Go-Ahead shares plunged 25% after the UK government said it had seized control of the Southeastern rail franchise in which the travel firm is a joint operator and was found to have not declared more than £25 million of historic taxpayer funding.

Go-Ahead said it had repaid the money referred to in the government’s statement and that it would provide a “detailed update on further liabilities in its full-year results”.

9.30am: Blue chips step back

The FTSE 100 reversed recent gains to trade 41 points lower at 7,022.80.

7.30am: More claimants join Clydesdale action

Hundreds more claims have been added to a long-running legal action by campaigners who allege that business customers of Clydesdale Bank unnecessarily paid millions of pounds in fees and interest.

Full story here

7am: AG Barr dividend

Irn-Bru Commonwealth

Soft drinks firm AG Barr is re-introducing dividends and has announced a special payout to shareholders following a number of one-off cash inflows outside normal trading.

Full story here

7am: easyJet rights issue

easyJet said it had received acceptances from shareholders for 93% of the new shares it sold as part of a £1.2 billion rights issue aimed at funding its recovery from the pandemic.

Chief Executive Johan Lundgren said: “The success of this capital raise, thanks to great support from investors, will enable easyJet to strengthen its balance sheet and accelerate its post-COVID 19 recovery plan.”

7am: DeepMatter collaboration

DeepMatter, the Glasgow-based international digital chemistry data company, has signed a contract with Dr Reddy’s Laboratories, based in Hyderabad, India, for its DigitalGlassware platform.

This collaboration is part of DeepMatter’s ongoing strategy to provide its platform to the major global contract research organisations to accelerate the discovery of new drugs.

7am: Moonpig update

Greetings cards company Moonpig said trading in the year to date has been strong and it is raising its guidance for group revenue in FY22 to be between £270m and £285m.

Global markets

London’s blue chip index was expected to rise by about six points, according to spread-betting platforms, having gained 12 points yesterday to close at 7,063.4.

Wall Street had a mixed session with a 0.41% gain for the Dow Jones whil the Nasdaq and S&P 500 closed down 0.45% and 0.1%.

Asian shares mainly drifted lower Tuesday as investors continued to fret over China Evergrande Group’s unsolved debt crisis.

Australia’s benchmark S&P/ASX200 index was down nearly 1%, while Japan’s Nikkei was off 0.6%.

Hong Kong’s Hang Seng Index gained 0.44%.

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