Petrofac Share News (PFC)

(Alliance News) - London's FTSE 100 index at the start of the week was underpinned by oil prices hitting a near three-year high and Rolls-Royce's 11% share price gain.

The FTSE 100 index closed up 11.92 points, or 0.2%, at 7,063.40. The FTSE 250 ended just 0.16 of a point lower at 23,608.63, and the AIM All-Share closed up 1.25 points, or 0.1%, at 1,268.23.

The Cboe UK 100 ended up 0.2% at 702.22, the Cboe UK 250 closed up 0.1% at 21,430.76, and the Cboe Small Companies ended up 1.0% at 15,870.62.

The blue-chip FTSE 100 index was bolstered by rising energy prices at the start of the week, with a barrel of North Sea benchmark Brent oil quoted at USD79.48 at the London equities close on Monday, up sharply from USD77.86 late Friday.

Brent prices have risen 64% since the start of 2021 as the global economy has bounced back from the pandemic, and the commodity is now in touching distance of the USD80-a-barrel mark - a level it has not surpassed in almost three years.

While this came as good news for London's oil majors, with BP closing up 3.5% and Royal Dutch Shell 'A' and 'B' shares up 4.5% and 4.4% respectively, it comes at a difficult time domestically, with a shortage of lorry drivers leading to petrol panic buying.

Multiple reports suggested that UK Prime Minister Boris Johnson on Monday will mull whether to follow that by taking the drastic step of sending in the Army to drive oil tankers as "frenzied buying" added to fuel supply issues caused by a lack of HGV drivers.

Long waits at filling stations saw police called to a scuffle at a north London forecourt as motorists continued their panic buying which was sparked after concerns from BP were leaked to the media that the lorry driver shortage could impact its ability to keep up with fuel deliveries.

The surge in demand led the Petrol Retailers Association to warn that as many as two-thirds of its membership of nearly 5,500 independent outlets were out of fuel on Sunday, with the rest of them "partly dry and running out soon".

Topping the FTSE 100 was Rolls-Royce, rallying 11% after the jet engine maker said its Rolls-Royce North America unit has been selected by the US Air Force to provide the power plant for the Boeing B-52 Stratofortress. The agreement was signed under the Commercial Engine Replacement Program and is worth a potential USD2.6 billion.

It has also sold its ITP Aero subsidiary to a consortium led by Bain Capital for EUR1.7 billion.

CMC Markets chief market analyst Michael Hewson commented: "The last four weeks have seen a remarkable turnaround in fortunes, with the shares up 20% over the past month, as investors become more confident about the company’s prospects. There still remains some way to go, in terms of the share price, but the skies do appear to be starting to clear."

"Airlines have also continued their recent rebound, with the likes of IAG, easyJet, Wizz Air and Ryanair all building on their gains from last week," he continued. "IAG shares are now trading at their highest levels since mid-July, while easyJet shares are at one-month highs."

Despite rising fuel prices, British Airways parent International Consolidated Airlines closed up 6.0%, while easyJet rose 4.2% and Wizz Air 5.4%.

At the top of the FTSE 250 was Cineworld, buoyed ahead of this week's eagerly-awaited James Bond film release.

The film is expected to be Daniel Craig's last appearance as 007. Three previously scheduled premieres – in March and November 2020, and this April – were all cancelled, but will finally go ahead this week.

Cinema operators, studios such as MGM – which owns the 007 movies – and distributor Universal Pictures are among those hoping the blockbuster release will help lure movie-goers back to auditoriums worldwide.

Cineworld shares closed up 12% and smaller cinema peer Everyman Media ended up 9.3%.

Elsewhere in London, Petrofac continued to rally after the UK Serious Fraud Office on Friday said the oilfield services provider pleaded guilty to 7 bribery offences.

The SFO added: "The next hearing will take place on Monday 27 September at Southwark Crown Court, where pleas from the defendant will be entered. Petrofac Ltd has reported its intention to plead guilty, following a plea agreement it has entered into with the Serious Fraud Office."

Shares in Petrofac, also likely riding the wave of higher oil prices, closed up 27% on Friday and gained a further 19% on Monday.

In European equities on Monday, the CAC 40 in Paris ended up 0.2%, while the DAX 40 in Frankfurt ended up 0.3%.

The euro stood at USD1.1698 at the European equities close Monday, slipping from USD1.1710 at the same time on Friday amid uncertainty over the make-up of the next German government.

For a country synonymous with stability after 16 years of Angela Merkel's steady leadership, the coming weeks and months promise to be a rocky ride as both Finance Minister Olaf Scholz's SPD and the conservatives led by Armin Laschet scramble for coalition partners.

Preliminary official results showed that the centre-left Social Democrats narrowly won the vote at 25.7%, while Merkel's centre-right CDU-CSU bloc sunk to a historic low of 24.1%. The Green party placed third at 14.8%, its best result yet but still short of expectations.

Despite mayhem on petrol station forecourts, the pound was on strong footing at the start of the week, trading at USD1.3706 at the London equities close Monday from USD1.3670 at the close on Friday.

Against the yen, the dollar was trading at JPY110.98, higher compared to JPY110.73 late Friday.

Gold was quoted at USD1,752.17 an ounce at the London equities close Monday, firm versus USD1,751.33 at the close on Friday.

Stocks in New York were mixed at the London equities close, with the DJIA up 0.4% but the S&P 500 index down 0.2% and the Nasdaq Composite down 0.6%.

Tuesday's economic calendar has German consumer confidence at 0700 BST and Irish retail sales at 1100 BST. US Federal Reserve Chair Jerome Powell testifies before Congress at 1500 BST.

The UK corporate calendar for Tuesday has full-year results from engineering firm Smiths Group and plumbing and heating products distributor Ferguson, while water firm Pennon and online greeting cards retailer Moonpig put out trading statements.

By Lucy Heming; lucyheming@alliancenews.com

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