Rolls-Royce soars on Spanish deal | oil price, crypto rally
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5pm: Rolls-Royce brightens FTSE 100
Shares in the British aero-engine maker Rolls-Royce closed 11% cent higher top hit their highest since March last year after selling its Spanish business for €1.7bn.
The proposed deal, together with winning a contract with the US air force (see below), has boosted confidence in its hopes for recovery from the pandemic.
The company helped the FTSE 100 stay in positive territory. After a bright start the index fell back to close just 11.92 points ahead at 7,063.40.
Shares in AIM-quoted Beeks Financial Cloud, the Glasgow-based financial markets software firm, rocketed 18.5p or 10.85% to 189p on the back of a positive results statement.
12.05pm: No plans to send in army
Ministers are not making any immediate plans to call on the army to drive petrol tankers to ensure forecourts receive supplies of fuel, said the Environment Secretary George Eustice.
9.15am: No panic in markets
Russ Mould, investment director at AJ Bell, says there were plenty of factors to trouble investors as the new trading week kicked off, “yet there certainly isn’t panic in the air”.
He noted that Evergrande’s problems have not gone away, inflation remains problematic for many companies and is hurting profit margins, and Germany’s elections failed to produce a clear winner which means short-term uncertainty until a coalition can be agreed. Nonetheless, investors remain committed to seeking more opportunities in the markets.
“European stocks did their best to press ahead, but Asia was more volatile. The FTSE 100 advanced 0.5% to 7,087, with oil producers and banks leading the way.
“The Brent Crude oil price continued to rally, rising 1.2% to $79.03 a barrel on supply concerns and putting it back at levels not seen since October 2018. That helped put Royal Dutch Shell’s share price at its highest level since March 2020, although it is still some way off its levels seen pre-Covid.
“Many investors, including big asset managers, will be kicking themselves that they shunned oil stocks as part of a global shift towards more ESG-friendly companies. Despite the transition to renewable energy around the world, it is clear oil is still needed in today’s world.
“Elsewhere, Rolls-Royce continues to bounce back. Having already seen a pick-up in its share price in recent weeks thanks to more restrictions being lifted on air travel which should benefit its plane engine maintenance operations, its shares have now hit an 18-month high after a new contract win.
“It has a struck a deal with the US Air Force which means its F-130 engine will power the B-52 for the next 30 years.”
8.15am: London higher
London’s blue chips opened the new week on a positive note. The FTSE 100 was up 46.2 points at 7,097.69.
7.15am: Arnold Clark
Car dealer Arnold Clark saw turnover fall by 14.9% to £3.8 billion in 2020 although profits improved significantly to £156.6m – up a third from 2019 – helped by online sales and service departments remaining open.
7am: Beeks dividend change
Beeks Financial Cloud Group, the Glasgow-based cloud computing and connectivity provider for financial markets, intends putting dividends on hold as it diverts cash into the business.
Underlying profit before tax increased 13% to £1.61m (2020: £1.43m) on a 24% rise in revenues to £11.62m (2020: £9.36m).
2am: Crypto rebounds
Cryptocurrencies rebounded after a sell-off driven by a crackdown on dealing in the currencies in China.
This morning Bitcoin was up about 1% in Asia trade at $43,719, having fallen to just below $41,000 following Friday’s announcement of a blanket ban on crypto mining and transactions in China.
Rival token ether rose 2% to $3,136 and has recouped its Friday losses.
The world’s cryptocurrencies lost about $188 billion in market value within just three hours of China’s announcement.
Asian shares began the week cautiously as a jump in oil prices to three-year highs could inflame inflation fears.
Brent crude added 62 cents to $78.71 a barrel, while US crude rose 71 cents to $74.69.
Japan’s Nikkei 225 gained 0.4% on hopes for further fiscal stimulus once a new prime minister is chosen.
The fate of China Evergrande Group remained a major unknown after the property giant missed a payment on offshore bonds last week, with further payment due this week.
The euro was steady at $1.1719 as investors pondered the implications of a German government led by the centre-left Social Democrats after a narrow victory in Sunday’s election.
The Social Democrats claimed a “clear mandate” to lead a government for the first time since 2005, ending 16 years of conservative-led rule under Angela Merkel.
“The likelihood of a political shift to the left suggests Germany’s fiscal stance could become less of a drag on the economy over the next few years than is currently projected,” said analysts at CBA in a note. “This would ultimately benefit the euro.”