London close: Oil market rally pushes FTSE 100 towards record high
London's top-flight index pushed closer to its record highs after US President Donald Trump's decided to pull out of the Iran nuclear deal, which served to propel crude oil futures to their loftiest level since 2014.
Oil prices gained on the back of the announcement, sending Brent crude futures for next month delivery 2.817% higher to $77.02 on the ICE, which in turn served to push shares of Royal Dutch Shell up by 3.38% and those of BP by 3.92%.
Gains for 'Big Oil' boosted the FTSE 100, which finished up by 1.28% at 7,662.52, while the pound was just 0.08% higher against the US dollar at 1.35594.
"In contrast to yesterday the FTSE 100 has soared today, boosted by the energy firms on expectations that higher oil prices will result from the Iran deal. It may not be quite as clear-cut as that, at least not in the short term, since oil's remarkable run has now reached the stage where it is being talked about outside of financial markets," said IG's Chris Beauchamp.
"This is usually a sign that the rally has at least peaked for the time being. Even if the Iranians do find themselves cut off from the global oil market, soaring production elsewhere means that there will be plenty of others willing to step into the breach."
As an aside, the FTSE 100's previous record closing level had been reached on 12 January, at 7,778.64.
To take note of as well, going into the Monetary Policy Committee meeting and quarterly Inflation Report the next day, traders had left Sterling sitting just atop its 200-day moving average on its cross against the US dollar.
Trump said on Tuesday that the nuclear agreement was a "horrible, one-sided deal that should never, ever have been made" and that rather than protecting the US and its allies, it placed "very weak limits on the regime's nuclear activity".
European powers, meanwhile, reiterated their commitment to the 2015 agreement, while Iranian President Hassan Rouhani said that for now, he considers the deal to be intact.
Although Trump had been widely expected to announce the withdrawal, analysts said the threat that he would also penalise anyone who helps Iran is likely to have a lasting impact on markets.
No major UK data were released on Wednesday, with the week's highlights - the Bank of England rate announcement and manufacturing and industrial production figures for March - scheduled for Thursday.
In corporate news, Imperial Brands rallied as it said sales volumes continued to outperform the industry and doled out a 10% increase in its interim dividend of 56.87p, but posted a 7% drop in profits.
Vodafone gained ground as it agreed to acquire Liberty Global's operations in Germany, the Czech Republic, Hungary and Romania for an enterprise value of €18.4bn.
OneSavings Bank rose as it said the first-quarter loan book grew 5% and reiterated its guidance for the year.
Troubled doorstep lender Provident Financial racked up strong gains as it hailed a solid start to the year and said it was on track to deliver 2018 results in line with its plans, while engineer Renishaw surged after posting a 12% jump in revenue for the first three quarters of the year.
On the downside, luxury fashion brand Burberry was under the cosh after Groupe Bruxelles Lambert, the holding company of Belgian billionaire Albert Frere, sold its entire 6.6% stake in the group.
FTSE 250 bakery chain Greggs tumbled as it struck a cautious note and said underlying profits for the year are likely to be flat year-on-year, with trading in March and April hit by weaker market conditions.
Compass Group slumped as its first-half results missed expectations and it revealed a big drop in margins in Europe, while security group G4S was in the red as it said first-quarter organic revenue fell 2%, but that it expects growth to accelerate in the second half of the year.
TUI was on the back foot despite posting a narrowing of its second-quarter loss and maintaining its full-year guidance.
JD Wetherspoon slipped despite reporting a slowdown in sales growth in the 13 weeks to 19 April.
Builders' merchant Grafton Group lost ground after saying it experienced a positive star to the year in January and February, but that March was weaker due to the bad weather.
Market Movers
FTSE 100 (UKX) 7,662.52 1.28%
FTSE 250 (MCX) 20,681.95 0.42%
techMARK (TASX) 3,491.10 0.63%
FTSE 100 - Risers
Imperial Brands (IMB) 2,780.00p 6.17%
BP (BP.) 572.00p 3.92%
Evraz (EVR) 507.80p 3.51%
BHP Billiton (BLT) 1,631.80p 3.49%
Royal Dutch Shell 'B' (RDSB) 2,722.00p 3.38%
Royal Dutch Shell 'A' (RDSA) 2,633.50p 3.25%
British American Tobacco (BATS) 3,909.00p 2.63%
Rio Tinto (RIO) 4,127.00p 2.56%
Paddy Power Betfair (PPB) 7,045.00p 2.10%
Glencore (GLEN) 366.85p 2.10%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,770.00p -6.08%
Compass Group (CPG) 1,508.00p -4.77%
Rolls-Royce Holdings (RR.) 830.00p -1.54%
G4S (GFS) 257.00p -1.49%
TUI AG Reg Shs (DI) (TUI) 1,727.50p -1.45%
Shire Plc (SHP) 3,978.00p -1.40%
NMC Health (NMC) 3,518.00p -1.29%
RSA Insurance Group (RSA) 635.40p -1.12%
Informa (INF) 755.80p -0.92%
Old Mutual (OML) 255.00p -0.86%
FTSE 250 - Risers
Renishaw (RSW) 5,440.00p 14.48%
Provident Financial (PFG) 695.60p 8.35%
On The Beach Group (OTB) 650.00p 6.56%
Hill & Smith Holdings (HILS) 1,450.00p 5.07%
Drax Group (DRX) 332.20p 4.93%
RHI Magnesita N.V. (DI) (RHIM) 5,215.00p 4.51%
Wood Group (John) (WG.) 597.00p 4.44%
Bakkavor Group (BAKK) 190.00p 4.40%
Tullow Oil (TLW) 235.00p 4.31%
TBC Bank Group (TBCG) 1,742.00p 3.80%
FTSE 250 - Fallers
Greggs (GRG) 1,075.00p -15.15%
Virgin Money Holdings (UK) (VM.) 332.00p -3.29%
SIG (SHI) 140.80p -2.70%
ZPG Plc (ZPG) 374.20p -2.55%
Purecircle Limited (DI) (PURE) 384.50p -2.53%
Sanne Group (SNN) 612.00p -2.39%
Ted Baker (TED) 2,688.00p -2.39%
Grafton Group Units (GFTU) 781.50p -2.25%
Dechra Pharmaceuticals (DPH) 2,760.00p -1.78%
Beazley (BEZ) 608.00p -1.78%