BP was the top-performer on the blue-chip FTSE 100 index, surging 5.6 per cent after the company announced forecast-beating profits, a dividend hike and plans to sell assets.
Notably bucking the market’s rise was Lloyds banking group. It fell two per cent after the bank announced a further £750m pound charge in the third quarter for the mis-selling of payment protection insurance.
BP’s results urged some investors to bet on upbeat results from other major energy firms this week, including Royal Dutch Shell, Total and Statoil.
“We are overweight on the energy sector as we believe that the companies have got more potential to surprise on the upside at this point in the cycle,” Robert Parkes, equity strategist at HSBC Securities, said.
“Earnings momentum for the sector has been better than the wider market, oil prices have stabilised, concerns of a hard landing in China have been fading and the sector is exposed to the slowly improving global economy.”
The UK oil and gas index, the best-performing sector, recorded its biggest daily gain in nearly a year, rising 2.4 per cent to a three-month high.
It helped push the FTSE 100 up 48.91 points, or 0.7 per cent, to end at 6,774.73, after hitting 6,777.16 in intraday trade, its highest since May.
BP alone added 18.7 points to the FTSE.
“BP results show that the confidence in the company is back after a massive oil leak disaster some years ago,” said Tom Robertson, senior trader at Accendo Markets.
“However, I am cautiously optimistic on the stock market as its near-term direction could be dictated by earnings results.”
A third of the way through the reporting season, 53 per cent of companies have either met or beaten earnings expectations, roughly in line with the previous three quarters. But looking purely at revenue, 67 per cent of companies have missed expectations, according to StarMine data.
Investors will keep a close eye on the Federal Reserve’s two-day meeting for hints about when the US central bank could start trimming its massive stimulus programme, which has helped stocks to set multi-year highs.