Despite an attempted recovery towards the latter part of Tuesday’s session the FTSE 100 is lower once more today with the benchmark languishing not far from its lowest level since April.
It’s been a bad couple of weeks for the leading UK stock index which has fallen by more than 5% since the August bank holiday weekend. The pound is little changed on the day and while yesterday saw the currency sensitive to the latest Brexit-related comments, the overall outlook remains slightly more positive for sterling as it looks to gain traction back above the $1.30 level.
SSE swoons on profit warning
One of the stocks that is weighing on the blue-chip index this morning is SSE (LON:SSE) with shares in the energy provider falling by as much as 9% after the firm warned of a 50% drop in profits for the first half of the year. Britain’s second largest energy supplier has said that it expects profits of around £190m for the 6 months to September, which represents a fall of roughly a half compared to the same period last year. The hot summer and higher gas prices are being blamed on the fall in profitability while a price cap proposed by Ofgem just last week on the default tariffs offered by energy providers will likely have an adverse impact for the firm’s bottom line going forward. The announcement has also caused shares in rival companies Centrica (LON:CNA) and National Grid (LON:NG) to come under pressure, with declines of 3.2% and 1.6% respectively enough to see them reside at the bottom of the FTSE leaderboard.
Oil price rises back near 2018 peak
Several fundamental factors are contriving to push the price of crude oil higher with a decline in US inventories, concerns surrounding Iranian supply as sanctions draw nearer and the imminent landfall of Hurricane Florence on the East Coast of America all playing a role.
Brent crude futures have climbed for four straight sessions and the front-month contract is back near the $80 a barrel market and within striking distance of the 2018 peak. This afternoon sees the release of the monthly OPEC report before the more widely viewed Energy Information Administration (EIA) inventory numbers and should either provide further positive news for the oil price then we could well get a substantial push higher.
Brent has been in a $10 range from $70.50-80.50 for the past 5 months but a break out to the upside would see the technicals lend support to the current fundamental backdrop and may well result in a sharp rally to the upside.