Oil majors are among today’s UK share prices to watch, helping the benchmark FTSE 100 index start July on the front foot, with crude prices getting a boost from a supply cut plan. Broader market sentiment has also been upbeat this Monday, with investors digesting the trade war truce between US President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit.
Oil majors in demand on Monday
Royal Dutch Shell (LON:RDSA) and BP (LON:BP) are among today’s most notable risers amid the OPEC meeting.
“OPEC+ is expected to carry on with its low production regime at least until the first quarter of 2020 to cope with a slower global demand and rising US shale production,” said Ipek Ozkardeskaya, at London Capital Group, as quoted by Proactive Investors. “The two biggest producers, Saudi Arabia and Russia agreed on further cuts at the G20 meeting on Saturday and OPEC Secretary-General Mohammad Barkindo said that a longer horizon would give a stronger certainty to the market and that most of the forecasts are ‘shifting toward 2020’.” Both BP and Shell’s shares have added more than two percent in early afternoon trade, compared with about a 1.2-percent gain in the benchmark FTSE 100 index.
In individual UK share prices to watch, Sainsbury (LON:SBRY) is underperforming the market in the run-up to its first-quarter update on Wednesday. Goldman Sachs lifted its stance, while trimming its valuation on the shares on Friday, with Proactive Investors quoting the broker as commenting while they continued “to expect both grocery and non-food earnings to be pressured, and sit below consensus EBIT and EPS for FY20-22E, the stock has materially underperformed peers”. Sainsbury’s share price is up about 0.4 percent in early afternoon trade, having traded in the red earlier in the session.
Elsewhere in the FTSE 100 index WPP (LON:WPP) is marginally outperforming the broader market rally as it announced that it had sold its interest in sports, entertainment and communications group Chime for £54.4 million and potential additional amounts. The ad giant said that the move was in line with its strategy to focus on its main areas of business and simplify its operations through the disposal of non-core assets. WPP’s shares have gained about 1.8 percent so far this Monday.
British Airways and Iberia parent International Consolidated Airlines Group (LON:IAG) meanwhile is flying lower, pressured by the rise in crude prices which spells higher costs for airlines, as well as a downgrade at Bernstein from ‘outperform’ to ‘market perform’. Proactive Investors quoted the analysts as commenting that they were ‘increasingly cautious’ on the EU airline space in recent months.
The broker elaborated that developments pointed towards the risk of a weakening environment for European corporate air travel demand which it sees as significant because a slowdown in corporate demand can spill over into other traffic segments. IAG’s shares are down by about 1.4 percent so far today.
In smaller UK share prices to watch, Merlin Entertainments (LON:MERL) has been little changed in today’s session following Friday’s surge as the company agreed a £4.8-billion takeover offer from a consortium backed by the founding family of the Lego Group. The shares are up by about 0.08 percent, as compared with about a 0.9-percent gain in the mid-cap FTSE 250 index.
Broader market sentiment remains upbeat after President Donald Trump offered concessions to China’s Xi Jinping at the G20 summit, including holding off slapping new tariffs on goods and relaxing restrictions on Huawei. Analysts, however, have been cautious on the development.
“In the big picture, it doesn’t change anything,” Andrew Milligan, head of global strategy at Aberdeen Standard Investments, told Reuters, adding that the G20 meeting “was never likely to solve the whole problem, but it’s a useful stepping stone”.
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UK share prices to watch tomorrow
While corporate reports are in short supply tomorrow, housebuilders will be among Tuesday’s UK share prices to watch on the back of the construction purchasing managers’ index for June, set to be announced at 09:30 BST. IG reports that the index is expected to have climbed to 48.6, from 49.7, while remaining in contraction territory.
In company updates, property management group HML Holdings (LON:HMLH) and manufacturer Solid State (LON:SLD) are due to release finals, while property investment and development business St Modwen Properties (LON:SMP) is scheduled to post interims.
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