25th Nov 2013 10:44
LONDON (Alliance News) - UK stock indices are firmly higher Monday. With a very light data calendar, the market is focused on the weekend's political developments. The sharp drop in the price of oil is providing the main equity sector driver.
By mid-morning Monday the FTSE 100 is up 0.3% at 6,693.20, the FTSE 250 is up 0.7% at 15,292.80 and the AIM All-Share is up 0.3% at 819.81.
The weekend deal reached in Geneva between western powers and Iran will lift at least USD7 billion in economic sanctions in return for restrictions on the country's nuclear capabilities.
The price of Brent oil, which was trading at about a 6-week high on Friday, dropped sharply on announcement of the deal, to a low of USD108.03 per barrel. CMC Chief Market Analyst Michael Hewson said markets are factoring in a potential lower geopolitical risk premium following the deal.
The only falling FTSE 350 sector is Oil & Gas Producers, down 0.6% on the back of the lower Brent price. Within the sector, FTSE 250 listed Essar Energy leads the falls, down 6.3% after announcing a widening of pretax losses as increased sales could not offset depreciation in the Indian rupee and increased costs. FTSE 100 listed Tullow Oil is amongst the biggest blue chip fallers, down 1.2%.
The Travel & Leisure sector, which stands to benefit from cheaper oil prices, is up 1.7%, with almost every constituent stock in positive territory. International Consolidated Airlines, up 3.2%, and Thomas Cook, also up 3.2%, are amongst biggest gainers. As well as gaining from the lower oil price, Thomas Cook has been upgraded by Numis securities to Add from Hold, ahead of the group's preliminary results due on Thursday. Easyjet shares have climbed 1.9% in early trade, boosted by a rating upgrade from Jefferies, to Buy from Hold.
Data from the British Bankers' Association has shown that UK mortgage approvals fell slightly to 42,800 in October from 43,000 in September, considerably missing economist expectations of 45,200. The unexpectedly low reading on the UK housing market will be a surprise given the boost expected from stage two of the government's Help to Buy scheme. The Nationwide house price index that had been expected to be released Monday has been rescheduled for release on Friday morning at 0700 GMT.
The European Central Bank is prepared to cut interest rates further and impose a negative deposit rate, ECB Governing Council member Ardo Hansson told Bloomberg News on Monday. Hansson's comments come after the euro dropped sharply last week on an earlier Bloomberg News report of a negative deposit rate, only to regain strength later in the week when ECB President Mario Draghi reassured the market that current conditions do not warrant such a move.
The euro is a little lower against the dollar, currently quoted at USD1.3510. The pound is also a little lower against the green back, currently trading at USD1.6195.
Major European markets are pushing higher on the reduced Middle Eastern tensions. The CAC40 is up 0.4% and the DAX is up 0.8%.
There is nothing in the macro calendar scheduled for release until after the US markets open, with US futures currently indicating a positive start and more potential record highs. US pending home sales data is out at 1500 GMT, followed at 1530 GMT by the Dallas Fed Manufacturing Business Index.
By Jon Darby; [email protected]; @jondarby100
Copyright © 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
Tullow OilInternational AirlinesThomas CookeasyJet