The FTSE 100 jumped on Monday after a busy weekend of US presidential interventions in the energy markets.
Trump first allowed Putin to export diesel to the US before calling an end to Russian and Ukrainian attacks on each other’s energy infrastructure. Neither side confirmed the energy truce, and attacks reportedly continued.
Oil prices were down, but not to the extent Trump may have liked, with attacks on Saudi airports keeping tensions in the Middle East high.
A cynic may argue that the US President is trying to manipulate energy prices in the run-up to mid-term elections, where voters will be influenced by how much they’re spending at the pump.
Petrol, or ‘gas’ as Americans call it, has increased by around 40% since the start of the Iran/US/Israel conflict and has led to higher borrowing costs in the US.
Although Brent oil prices remained above $100, the FTSE 100 rallied with other major equity indices, perhaps because traders expect further moves by the US President that could bring oil prices down.
‘’Trump’s deal with Putin to import Russian diesel helped ease oil prices slightly, but it has failed to make a significant dent in the cost of crude, given the situation in the Middle East remains so tense,” said Susannah Streeter, Chief Investment Strategist, Wealth Club.
“Brent crude had edged down to $103 a barrel but has begun rising again, lifting back above $104 in early trade on Monday.”
The FTSE 100 was 0.5% higher at 10,605 at the time of writing, with most stocks trading higher.
Financials played a big part in the FTSE 100’s gains as traders bought recent dips in names such as HSBC, Standard Chartered, and Lion Finance Group.
“HSBC, Lloyds and Barclays were among the index’s biggest risers. Banks have faced headwinds in recent weeks as investors feared a steady increase in interest rates could make it too expensive for many businesses and consumers to borrow money, thereby curbing growth opportunities for the sector,” explained Russ Mould, investment director at AJ Bell.
“Should energy-related inflationary pressures not be as intense as previously feared, it could lead to the Bank of England avoiding big interest rate hikes over the coming year. Markets are currently pricing in four quarter point hikes by next July.”
ConvaTec was the FTSE 100’s top riser, jumping 3%. Computacenter was 1.3% higher after Bank of America raised its price target to 6,951p.