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The FTSE 100 got off to a solid start with oil helping to grease the wheels of the index.
The decision by producers’ cartel OPEC+ to pause further output hikes at the start of next year, amid concerns about a glut of supply, helped give oil prices a lift and, in turn, boosted UK market heavyweights BP and Shell.
Prudential was among the top FTSE 100 risers as it continued to ride the wave of goodwill engendered by a strong set of third-quarter numbers last week. Precious metals miner Fresnillo shares ticked higher as gold prices stabilised after their recent sell-off.
Elsewhere in the mining sector, there was pressure on share prices on signs of slowing Chinese economic growth and weaker factory activity across Asia as US tariffs take their toll. Vodafone was the top faller on the FTSE 100 after investment bank UBS downgraded its recommendation on the stock to ‘sell’, citing several competitive risks.
Earnings from Berkshire Hathaway were notable for the new record cash levels reported of $382 billion as Warren Buffett continued to offload stocks ahead of stepping down as CEO at the end of this year. With the company also failing to engage in any share buybacks, it suggests a cautious view on the outlook for equities.
Later this week attention turns to the Bank of England’s interest rate decision and an unusual level of uncertainty about the outcome on Thursday, with some observers expecting a cut even if the markets are pricing in an unchanged rate.
Ryanair
Ryanair is flying high with its second quarter performance. Passenger numbers have increased, customers have paid more for tickets on average, and its planes are fuller. Together, these factors have put a rocket under profits.
Comparative figures are going to become harder to beat as its financial year goes on, which explains some sense of caution from Ryanair in its commentary. However, the company should still be satisfied as it has reached the half-year mark from a position of strength.
Chief executive Michael O’Leary is never one to miss an opportunity to have a pop at someone or something, and true to form he has a few things to say this time round.
The European Commission is on the receiving end of fierce criticism about a lack of reform in the sector. Parts of Europe continue to suffer from air traffic control strikes, which cause endless chaos to passengers and disruption to earnings for airline operators. It’s understandable that Ryanair and its peers want a resolution, or at least some form of protection.
Ryanair is also one of several airline operators with an eagle eye on taxes and costs. It is no longer putting up with unfavourable tax systems, preferring to switch flights and routes to less punitive locations. As a low-cost operator, every penny matters, and Ryanair has made it perfectly clear that it has no qualms in relocating to regions and airports that offer incentives to support growth.
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...
