By Dave Morris
U.K. stock indexes traded solidly higher Tuesday, in post-Easter action, as investors in the commodity-heavy index got the first chance to react to a surge in crude-oil prices, as the U.S. ratcheted up pressure on Iranian crude output. Markets were closed for Easter Monday.
How are markets performing?
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.71% was trading 0.4% higher to 7,492.48, in afternoon trade. After falling 0.2% in Thursday’s trading, the index was at its highest level since Oct. 5, according to FactSet data.
The U.K. pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0994% strengthened against the buck and the euro, to change hands at $1.3006, while the euro bought £0.8652, down 0.3% against sterling.
What’s moving the markets?
The commodity-heavy FTSE 100 got a lift after the U.S. on Monday said it would cease to allow countries from importing Iranian oil, deciding not to renew waivers, set to terminate May 2, which were granted to countries including China, India and Turkey. The tightened restrictions could remove over 1 million barrels of Iranian supplies from the market a day, significantly pushing up prices, as the White House dials up pressure on Tehran following the implementation of sanctions in November.
Neil Wilson, chief markets analyst at Markets.com, says: “Suddenly we’re back to supply uncertainty being a graver threat than demand uncertainty. This risks a very real prospect of an abrupt spike in prices if there is not enough supply to fill the gap…$74, but a return to $80 seems eminently possible now, particularly given the short time frame allowed for countries to meet the May deadline,” he said referring to Brent oil, the international benchmark.
June Brent crude , the global benchmark, was up 32 cents, or 0.4%, at $74.36 a barrel. Brent gained 0.6% last week, its fourth consecutive weekly rise. West Texas Intermediate crude for June the international benchmark, added 49 cents, or 0.7%, to $66.03 a barrel.
Meanwhile, on the Brexit front, The Telegraph reported that U.K. Prime Minister Theresa May is facing fresh challenges to her leadership, amid the government’s stumbling attempts to extricate itself from Europe’s trading bloc in an orderly fashion.
Which stocks are active?
As oil prices climbed, shares of Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA +3.06% , were up 1.7%, and BP PLC’s stock gained 2.2%, with shares of Tullow Oil PLC /zigman2/quotes/205079109/delayed UK:TLW +2.10% climbing 4.2%.
Conversely, shares of oil-dependent companies fell, including EasyJet PLC’s stock /zigman2/quotes/202825892/delayed UK:EZJ +3.84% declined by 4.3%, and British Airways-parent International Consolidated Airlines Group SA /zigman2/quotes/208070069/delayed UK:IAG +4.71% saw its shares drop 2.9%.
Barclays PLC /zigman2/quotes/208409333/delayed UK:BARC +2.38% was stung by a report in the FT that the U.K. bank would cut bonuses for its investment bankers, sending the bank’s shares down 1.8%. The move was seen as part of a broader cost-cutting drive as an assault by activist investor Edward Bramson was expected to reach fever pitch at the bank’s annual meeting on May 2.