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Shell and BP lift FTSE to six-month high as Thomas Cook flies

Oil majors buoy FTSE 100 as crude hits 2019 high while 'small-cap' travel group Thomas Cook jumps on takeover reports

Shell and BP lift FTSE to six-month high as Thomas Cook flies

The FTSE 100 has climbed to a six-month high, buoyed by Shell (RDSb) and BP (BP), as the oil price climbed on the US pledge to end all exemptions to Iran sanctions next week.

The UK blue-chip index rose 25 points, or 0.3%, to 7,485, with Shell and BP leading the way, up 2.3% at £25.41 and 2.2% higher at 580.4p respectively. 

The price of Brent crude rose half a cent to a 2019 high of $74.61 as the US placed pressure on oil importers to stop buying from Iran. The world's largest economy said it would put an end to waivers that have allowed Iran's eight biggest buyers to continue importing limited volumes of the country's oil on 1 May.

‘Suddenly we’re back to supply uncertainty being a graver threat than demand uncertainty,’ said Neil Wilson, chief market analyst at Markets.com. ‘This risks a very real prospect of an abrupt spike in prices if there is not enough supply to fill the gap.’

‘Risks seem skewed to the upside for oil and we may see a pop higher still. A return to $80 seems eminently possible now, particularly given the short timeframe allowed for countries to meet the May deadline.’ 

The impact of the US move was also seen on the FTSE 250 index, where oil stocks led the way. Risers included:

  • Premier Oil (PMO) +6.9% at 108.5p;
  • Cairn Energy (CNE) +6% at 175.6p;
  • John Wood Group (WG) +4.6% at 528p;
  • Petrofac (PFC) +4.5% at 488.2p;
  • Tullow Oil (TLW) +3.8% at 251.2p.

The rise in the oil price meanwhile hurt airlines. Easyjet (EZJ) and British Airways owner International Consolidated Airlines Group (ICAG) fell to the bottom of the FTSE 100, down 4% at £11.70 and 3.3% lower at 539p respectively. Wizz Air (WIZZ) was among the FTSE 250 fallers, down 3% at £33.66. 

Fresnillo (FRES) was another major faller on the UK’s main market, slipping 2% to 760p, after BMO downgraded the precious metals miner. 

Among 'small-cap' stocks, Thomas Cook (TCG) surged 17% to 29p, after Sky News reported multiple takeover approaches.

‘The company has endured tough times along with other firms in the travel sector, and in February, Thomas Cook announced it will carry out a strategic review of the airline division, and that was a clear indication the firm was considering an asset disposal,’ said David Madden, market analyst at CMC Markets UK.

‘Since 2018, the stock has dropped in excess of 75%, so the current business model isn’t working, but a spinning off of non-core assets might assist the group.’ 

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