The FTSE 100 was set to finish the week on a high as the index rallied into the close ahead of the Easter break. Higher oil majors again provided a boost to the index in what was a broad rally with cyclical sectors leading the charge.

The FTSE 100 was 0.9% higher at the time of writing while the German Dax added 0.3%. US stocks were flat to slightly down after a softer session overnight.

The concerns about the health of US economy evident in US stocks were shaken off in Europe where the focus was on oil prices and the relative value of cyclical names after the recent sell off.

Many European equity exchanges will be closed tomorrow when March’s Non-Farm Payrolls will be released. The US has recorded strong job creation so far in 2023 – but there are worries this will start to slow and shows signs of a contractionary environment.

“The market will look to the March number and also any revisions to January and February to take the temperature of the US economy. Upward revisions usually indicate strength, downward revisions can be suggestive of a weakening or loss of economic momentum,” said Danni Hewson, head of financial analysis at AJ Bell.

A disappointing set of US manufacturing data yesterday led to a softer session for US stocks overnight. US manufacturing PMI data for the month of March declined demonstrating a slow down in US economic activity.

“Following a weak readout for US manufacturing earlier in the week the US Services PMI index fell from 51.2 in March from 55.1 in February and well below consensus forecasts of 54.5. There’s further signs too of a weakening US labour market  with private sector hiring rising by just 145,000 in March, down from 261,000 in February and below the estimate for 210,000,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

Many economists are now predicting a US recession, the timing of which varies dramatically.

FTSE 100 strength

Notwithstanding concerns about the US economy, UK and European shares were upbeat and showed a rare disregard for happenings across the pond.

This may be down to lower volumes ahead of the holidays. Nonetheless, there were plenty of reasons for cheer across FTSE 100 stocks.

Shell shares gained after providing a positive insight into Q1 activities. Shell shares were 2% higher on strength in their LNG business and hopes of strong cash generation.

Admiral Group, BT and Unite Group were among the top risers as they continued recent rallies.

UK banks Lloyds, Barclays and Natwest built on their recoveries from the recent banking crisis. Barclays was trading above 150p while Lloyds looked set to attack 50p.

Shell doesn’t leave their investors in the dark for long and this morning issued an insight into performance for Q1 ahead of Q1 results set for release 4th May.

The main takeaways from the update were higher LNG volumes and earnings, and the front loading of taxes. LNG production is expected to rise to between 930 – 970 kboe/d in Q1, an increase on Q4’s 917 kboe/d.

Operating expenditure is expected to be lower across their oil and gas business which bodes well for cash generation in the first quarter 2023.

Shell shares were 2% higher at the time of writing.

“In its usual teaser ahead of quarterly results Shell is flagging a big loss – but there is a reason investors are brushing this news off,” said Danni Hewson, head of financial analysis at AJ Bell.

“The anticipated loss is a quirk of accounting – reflecting one-off tax charges which could well be the result of booking the impact of future windfall taxes upfront. Based on the performance of the company’s other business units you would still expect Shell to be generating plenty of cash to fund its dividend.

“Volumes in its liquefied natural gas business are expected to be higher and its oil products division is also performing well.

“A recent spike in oil prices on OPEC production cuts should be giving Shell a boost, although not one which will be reflected in these results.”