Market update: IAG shares propelled lower despite fuselage profits

It’s a familiar story in markets on Friday. Stocks continue to live and die by the price of oil. Russia joining OPEC producing countries for a meeting in March has lifted chances of coordinated action to limit global oil supplies, a day after the Saudi oil minister said there would be no output cut.

It’s a familiar story in markets on Friday. Stocks continue to live and die by the price of oil. Russia joining OPEC producing countries for a meeting in March has lifted chances of coordinated action to limit global oil supplies, a day after the Saudi oil minister said there would be no output cut.

The jump in the price of oil catalysed a rise across the commodities space making mining shares the top beneficiary on the FTSE 100 with copper prices up over 1%. 

A big slump in shares of RBS was a big fly in the ointment of another positive performance for financial shares. RBS reported a £2bn net loss and delayed the resumption of a dividend payout. There appears to be some rotation out of RBS into Lloyds as the banks head in different directions on dividends.

IAG shares slipped to near the bottom of the FTSE 100 despite reporting a 64% rise in annual pre-tax profits, near the top end of analyst estimates. Chief executive Willie Walsh’s warning that a strong dollar offsets some the gains from the low oil price took the edge of the results, especially with oil prices rising today. Clearly a low oil price and resulting lower fuel costs has been the single biggest factor in IAGs as well as the other European airline’s success over the past year so there a some jitters over a possible base in the oil price.

The British pound has avoided a 30yr low against the dollar, moving back above 1.40 as George Osborne pushes for G20 leaders to warn against Brexit. The rise in the pound comes despite a fall in UK consumer confidence according to GfK.

US markets look set for a stronger open ahead of the release of second revision for fourth quarter GDP.

USA pre-opening levels

S&P 500: 17 points higher at 1,968

Dow Jones: 124 points higher at 16,821

 

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