London market: BP leads gains in stocks
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.UK STOCKS could rise this week on renewed optimism for corporate earnings growth. British Petroleum is seen leading the gains after its takeover of Amoco. After a welter of indifferent earnings, which caused a 12 per cent slide in the benchmark index over the last 20 days, future earnings reports may be set to improve.
"If we come through this difficult environment, we'll be in a period of steady growth with low inflation," said Robert Talbut, head of UK equities at Royal & Sun Alliance. The outlook for earnings has improved, with the pound falling against international currencies, interest rates on hold and buoyant consumer demand driving sales. The FT-SE 100 index rose 55.5 points on Friday to 5455, although the index dropped 3.97 per cent on the week.
Financial stocks could gain. Declines in the past few days by the leading retail banks on concern about bad debts in Asia are figured into prices. Lloyds TSB and Barclays, along with HSBC Holdings and Standard Chartered, which both rely on Asia for about half their profits, could all claw back some recent losses.
"We would focus on the financials," said Mr Talbut. "They look extremely good value and the theme of industry consolidation has not gone away."
On Tuesday BP announced plans to buy Amoco for $53bn (pounds 32bn), which has raised speculation of more link-ups in an industry not previously considered as one where mergers and acquisitions were set to take place. This week oil traders will be watching developments in Saudi Arabia, the world's biggest oil exporter, which announced cuts in volume of crude oil available for collection by customers. That could boost the price of oil, which has languished near 10-year lows for weeks.
"If you could get a stabilisation in the oil price BP would be worth going for," said Mr Talbut. Still, "the oil price can still scupper anything the companies can do themselves." He said independent oil explorers Lasmo and Enterprise Oil could be bid targets.
Gilts are expected to be little changed as a slew of economic reports leave intact expectations that interest rates have peaked but will not be cut soon. "Though we have a stream of economic data this week, we don't expect any of it to be spectacularly weak," said Philip Shaw, chief economist at Investec."Gilts will probably stay at these levels."
Reports are expected to show inflation slowing in July but still above the Government's 2.5 per cent target. Only a modest rebound in July retail sales is forecast.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments