London stocks shine as sterling falls; oil hits new three-year high

The London stock exchange was the standout performer in Europe
AFP

New York (AFP) – London stocks outperformed their peers on Wednesday, buoyed by weakness in the pound after British inflation dived to a one-year low, while oil prices jumped to a fresh three-year high. 

Other equity markets had a mostly lackluster day, traders reported, as investors were happy to take a step back from near-constant recent worries about global trade and tensions over Syria.

“UK stocks jumped off the back of a weaker British pound but nothing really captured the imagination of European investors,” said Jasper Lawler, head of research at LCG.

In the US, both the S&P 500 and Nasdaq rose slightly, but the Dow finished lower.

Sterling’s downturn marked a sharp reversal from the currency’s post-Brexit vote highs seen early in the week and followed much weaker than expected inflation data for March.

Annual British inflation slowed unexpectedly to 2.5 percent in March from 2.7 percent in February, prompting market talk that the case for early Bank of England interest rate rises may be starting to fall apart.

The news divided opinion about the chances of a rate hike in May, which had previously been considered a near-certainty, and about policy for the rest of the year.

But sterling’s drop was a boon for stocks, as the weaker currency enhances the earnings of multi-nationals trading on the FTSE.

Currency movements also played a big role in Japan, with the Nikkei rising 1.4 percent as the yen retreated.

Equity markets in Frankfurt finished little changed, while Paris rose 0.5 percent.

Oil prices finished at their highest level since late 2014 following a surprise fall in weekly US oil stocks. Petroleum prices also were lifted by expectations that major producers will confirm an agreement to limit output at a meeting in Saudi Arabia later this week. 

Among individual companies, IBM slumped 7.5 percent, pushing the Dow into negative territory, after it projected full-year earnings of “at least $13.80” a share, which was below many analysts’ expectations.

Airline shares surged after better-than-expected results from United Continental, which advanced 4.8 percent. Southwest Airlines gained 2.9 percent as investigators probed an emergency landing on a flight Tuesday that led to a fatality.

– Key figures around 2100 GMT – 

New York – Dow: DOWN 0.2 percent  at 24,748.97 (close)

New York – S&P 500: UP 0.1 percent at 2,708.64 (close)

New York – Nasdaq: UP 0.2 percent at 7,295.24 (close)

London – FTSE 100: UP 1.3 percent at 7,317.34 (close) 

Frankfurt – DAX 30: UP less than 0.1 percent at 12,590.83 (close)

Paris – CAC 40: UP 0.5 percent at 5,380.17 (close)

EURO STOXX 50: UP 0.4 percent at 3,492.63 (close)

Tokyo – Nikkei 225: UP 1.4 percent at 22,158.20 (close)

Hong Kong – Hang Seng: UP 0.7 percent at 30,284.25 (close)

Shanghai – Composite: UP 0.8 percent at 3,091.40 (close)

Euro/dollar: UP at $1.2379 from $1.2370 at 2100 GMT

Dollar/yen: UP at 107.23 yen from 107.00

Pound/dollar: DOWN at $1.4205 from $1.4288

Oil – Brent North Sea: UP $1.90 at $73.48 per barrel

Oil – West Texas Intermediate: UP $1.95 at $68.47 per barrel

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