FTSE 100 rallies as Shell flogs US oilfield in $9.5bn deal
Blue chips enjoyed a widespread rally but still failed to break the 7,000 mark after yesterday’s losses as Royal Dutch Shell (RDSB) jumped on plans to sell its Permian Basin assets.
The FTSE 100 clawed back some of Monday’s losses in a widespread rally, adding 0.9%, or 62 points, but it still left the index shy of the 7,000 mark at 6,966, as investors failed to totally shake concerns about the impact of a possible collapse of Chinese property firm Evergrande.
Royal Dutch Shell was an early leader as the oil giant announced the sale of its operation in the Permian Basin, the biggest US oil field, to ConocoPhillips in a $9.5bn (£6.9bn) cash deal. However, gains moderated and it was up 4%, or 58p, at £14.88 at 9am, with peer BP (BP) rising 2% to 309p.
Susannah Streeter, an analyst at Hargreaves Lansdown, said the deal was ‘another sign of shifting sands at Shell as it faces increasing investor pressure to map its future as the net-zero 2050 pledge looms’.
By 9am, British Airways owner International Consolidated Airlines (IAG) was leading as it continued to benefit from news that the White House has decided to ease travel restrictions and those who have received two Covid-19 vaccinations allowed to enter the country.
On a morning when all but a handful of stocks gained, Kingfisher (KGF) suffered a notable fall. The owner of B&Q and Screwfix dropped 4.2%, or 15p, to 352p despite strong interim results that showed the DIY boom started in the pandemic has been maintained. This has prompted the company to launch a £300m share buyback programme and lift its dividend.
The FTSE 250 added 0.7%, or 170 points, to trade at 23,572 with Oxford Instruments (OXIF) jumping to the top of the mid-caps. The maker of precision tools gained 4.6%, or 110p, to change hands at £24.75 after it reported full-year trading will be slightly ahead of expectations after a strong performance so far this year.
Chair of the company Neil Carson said order and revenue growth in the first five months of the year had come from increased demand from both commercial and academic customers.
National Express (NEX) climbed 4.5%, or 10p, to 233p as the transport company has entered talks to acquire rival Stagecoach (SGC) in an all-share deal. The takeover would value the UK’s biggest bus company at around £445m. Stagecoach was trading was up 18.7%, or 12.7p, at 80p.
In investment trust news, Pershing Square (PSH) was one of the biggest climbers on the FTSE 100, up 4.8%, or 125p, to £27.20. The fund, run by activist manager Bill Ackman, gained after the successful stock market debut of Universal Music on the Amsterdam stock exchange, in which Pershing holds a 10% stake. The music label, which boasts the likes of Kanye West and Taylor Swift on its roster, is owned by French media group Vivendi, which spun it out.
Schroder UK Public Private (SUPP) was up 3.5% at 33p after its net asset value (NAV) rose 16.1% in the first half of the year as biotech firm Oxford Nanopore became 25% of the NAV ahead of its initial public offering (IPO). Stifel analyst Iain Scouller said the trust owns 3.7% of Nanopore’s shares with ‘an implied equity value of £2.5bn’. ‘For illustration, if the investment was valued at £4bn on IPO, the trust would see a gain of 6p or 15% on its NAV,’ he said.