LONDON MARKETS: FTSE 100 Ends Sharply Higher, Led By Shell's Jump
By Sara Sjolin and Victor Reklaitis, MarketWatch
Ocado surges after Casino deal
U.K. stocks on Tuesday closed higher for the first time in four sessions, led north by a rise for Royal Dutch Shell PLC after the oil giant said it'll scrap its scrip dividend and buy back $25 billion in shares.
Bank stocks finished mixed even after the Bank of England gave the U.K. banking sector a clean bill of health in its stress tests.
What the markets are doing: The FTSE 100 index jumped 1% to end at 7,460.65, after closing with a third straight loss (http://www.marketwatch.com/story/ftse-100-steps-higher-but-miners-slip-on-china-worries-2017-11-27) on Monday. The blue-chip gauge nabbed its highest finish since Nov. 9.
The pound (http://www.marketwatch.com/story/dollar-rises-as-traders-wait-to-see-if-feds-powell-will-give-hawkish-hints-2017-11-28) climbed to $1.3235, down from $1.3319 late Monday in New York.
What is driving the market: Corporate news was in focus, with Royal Dutch Shell (RDSB.LN) (RDSB.LN) one of the headline acts. The energy heavyweight said it would be canceling its scrip-dividend program (http://www.marketwatch.com/story/shell-plans-25-bln-buyback-to-ax-scrip-dividend-2017-11-28)--dividends paid in shares in lieu of cash payments--from the fourth quarter of 2017. It also plans to buy back $25 billion worth of shares between 2017 and 2020.
Shell raised its outlook for annual organic free cash flow to between $25 billion and $30 billion by 2020. The company's stock climbed 3%, making it the biggest gainer in the FTSE 100.
Oil companies have benefited from a jump in crude prices , which has come partly because the Organization of the Petroleum Exporting Countries and a group of non-cartel countries have agreed to collectively cut production. The output accord is widely expected to be extended when the oil producers gather for a highly anticipated meeting in Vienna on Thursday.
See:OPEC oil ministers will face this dilemma when they meet to extend production cuts (http://www.marketwatch.com/story/opec-oil-ministers-will-face-this-dilemma-when-they-meet-to-extend-production-cuts-2017-11-17)
BOE stress tests: Banks were in the limelight after the BOE said Britain's biggest banks can handle a "disorderly" Brexit. Its stress tests also found the lenders could withstand a severe recession with a collapse in housing prices, doubling of unemployment and a plunge in the pound.
The BOE concluded that none of the U.K.'s big banks need to raise extra cash to boost their capital buffers, making it the first time since 2014 that all seven major lenders have cleared the health check (https://www.wsj.com/articles/u-k-s-biggest-banks-could-handle-a-disorderly-brexit-1511854256).
The banking sector, however, traded mixed after the results were out. Barclays PLC (BCS) (BCS) fell 0.1%, and Lloyds Banking Group PLC (LLOY.LN)(LLOY.LN) slipped 1%. But Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) rose 1.4%, and Standard Chartered PLC (STAN.LN) picked up 1.1%.
HSBC Holdings PLC (HSBA.LN) (HSBA.LN) climbed 1.3%. Nationwide and Santander UK, which are not FTSE 100 components, were also stress tested.
Other stock movers: Shares of Unilever PLC (ULVR.LN) (ULVR.LN) added 2.2% after the consumer-goods giant backed its 2017 guidance.
BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) lost 0.9% after the mining major said it's targeting more cost cuts in Australia (http://www.marketwatch.com/story/bhp-billiton-looks-to-cut-more-costs-in-australia-2017-11-27).
Outside the FTSE 100, Ocado Group PLC (OCDO.LN) surged 21% after Casino Guichard-Perrachon SA (CO.FR) said it signed a deal with Ocado to develop an online shopping platform in France (http://www.marketwatch.com/story/casino-signs-deal-with-ocado-for-online-selling-2017-11-28).
"This is a transformative deal for Ocado as not only will it expose the firm to a large chunk of the French market, it could also be the launchpad for many more international partnerships," said Neil Wilson, senior market analyst at ETX Capital, in a note.
FTSE 100 reshuffle: First-time entrants Just Eat PLC (JE.LN), DS Smith PLC (SMDS.LN) and Halma PLC (HLMA.LN) are expected to join the FTSE 100 (http://www.marketwatch.com/story/just-eat-among-companies-seen-as-joining-ftse-100-2017-11-27) next month in a quarterly reshuffle, alongside returner John Wood Group PLC (WG.LN). They are expected to replace Mediclinic International PLC (MDC.LN), ConvaTec Group PLC (CTEC.LN), Merlin Entertainments PLC (MERL.LN) and Babcock International Group PLC (BAB.LN) at close of business on Dec. 15.
(END) Dow Jones Newswires
November 28, 2017 12:29 ET (17:29 GMT)Copyright (c) 2017 Dow Jones & Company, Inc.