FTSE 100 rose yesterday, boosted by heavyweight BP which won a rare legal battle related to its oil spill in the Gulf of Mexico, but ongoing US government shutdown uncertainty sapped momentum.
Energy firm BP – the UK’s fifth biggest company by market capitalisation – rose 1.1 per cent after it won a legal reprieve in a settlement related to the 2010 Gulf of Mexico oil spill, potentially sparing it billions of dollars of extra costs.
More broadly the FTSE 100 was up 11.54 points at 6,449.04, outperforming all other European peers which were in negative territory.
“The FTSE 100 has underperformed other European indices in the last week such as the CAC and DAX, so there may be some catching up [to do] as there are still a number of companies which are on low price-to-earnings ratios and offer plenty of recovery potential,” said Ronnie Chopra, a strategist at TradeNext.
One such company Chopra mentioned was Aviva, which gained 1.4 per cent after the sale of its US unit fetched $800m (£495m) more than had been expected.
Tesco rebounded two per cent and was one of the most heavily traded stocks after Wednesday’s report of a plunge in profits prompted big falls in that day’s session.
Traders said that an upgrade to the stock by Citi to neutral from sell was helping to counteract downgrades from elsewhere.
“There were very few points of light in Tesco’s results... so why upgrade now? Simply stated, we fail to see much misperception about the company,” analysts at Citi said in a note.
Household goods producer Unilever and UK-based pharmaceuticals giant GlaxoSmithKline, both of which have suffered sharp falls recently, also rallied, rising two per cent and 1.5 per cent respectively.
The broader market, however, remains stuck in a 200-point range since the start of August.
More recently equity markets have been capped by the budget deadlock that has shut parts of the US federal government.
The index has back-tracked since hitting 13-year highs in May and is 5.6 per cent off that level as investors wait for corporate earnings, which are still in downgrade territory, to catch up with the index’s re-rating. The FTSE 100 trades on a 12-month forward price-to-earnings ratio around 13 times, above its 10-year average.