FTSE 100 crosses 6000: Rally in BP, Shell, and Rolls Royce share prices

 

 Summary

  • The FTSE 100 index jumped by 31 points on Thursday 8 October 2020 and traded at an even higher level the next day
  • The pick-up was fueled by heavy weights of the index

 

Rolls Royce (LON: RR.), British Petroleum (LON: BP.), and Royal Dutch Shell (LON: RDSA) pushed the FTSE 100, the premium index of the London Stock Exchange, to touch a value of 5,978 on 8 October 2020, up by 0.5 per cent from the previous day’s close. The FTSE 100 price kept moving up the next day as well and touched a peak of 6029.92 points on 9 October at 1.43 PM, up by 0.86 per cent from the previous day’s close. This was the highest value attained since 18 September 2020.

At a macro level, the main reasons that boosted up the investor sentiments were renewed hopes of a favourable Brexit deal between the UK and the European Union, hopes regarding the approval of a US stimulus package, and rise in the pound sterling value (GBP/USD: 1.2973), up by 0.3 cents.

Let us take a closer look at the top performers who turned the FTSE 100 green.

Rolls-Royce Holdings plc (LON: RR.) – The company shares closed at a value of GBX 195.35 points on 8 October, up 24.70 per cent from the previous day’s close of GBX 156.65. The company shares have been rallying up after Friday, 2 October 2020 (GBX 113.60), which was a seventeen-year low figure, after having consistently dropped in value beginning 24 August 2020 (GBX 261.50).   

The Friday’s sharp fall had come about as a result of Rolls Royce announcing fresh plans to raise money through a rights issue.

The RR. Stock was trading at a high of GBX 227.00 on 9 October 2020 at 1.44 PM, up by 16.20 per cent from its previous day’s close. The stock’s 52-week low / high range was recorded to be GBX 113.60 and GBX 779.60 respectively. The instrument’s market cap was worth £3,772.20 million.

Oil prices were increasing that resulted in strengthening of BP and Shell’s share prices too. Brent crude rose from $41.99 on 7 October to $43.44 on 8 October 2020 for each barrel sold.

The global oil and gas company British Petroleum plc (LON: BP.) stock moved up by 3.2 per cent to close at 222.65p at the day’s closure on 8 October.

The company stock was trading at a value of GBX 225.80 on 9 October 2020 at 1.50 PM, further up by 2.24 per cent from its previous day’s close. The instrument’s market cap was worth £44,758.85 million at that time. The YTD return was recorded at a negative value of 54.07 per cent.

Oil major Royal Dutch Shell plc’s (LON: RDSA) stock shot up by 3.3 per cent to reach a value of 1,001.4p on 8 October.

The RDSA stock was trading at a value of GBX 1,030.20 on 9 October 2020 at 1.54 PM, rising by 3.48 per cent from its previous day’s close. The stock’s 52-week low / high range was recorded to be GBX 928.00 and GBX 2,342.50 respectively. The YTD (year to date) return was recorded at a negative value of 55.88 per cent.

However, market experts believe that crude oil prices are not likely to rise above $45 a barrel at least until the end of 2020 due to an oversupply in the market and continued low demand for crude.

Nonetheless, experts added that oil prices are not expected to crash once again with the advent of a second Covid-19 wave like they did earlier in April 2020, when the pandemic had broken out across the world.

Property and mining stocks (Land Securities plc - LON: LAND, British Land plc - LON: BLND, Anglo American plc - LON: AAL) have also bounced back during the past two days, adding fuel to the FTSE 100 index.

Since the index has been rising consistently for the past 3 days, few market experts are optimistic that FTSE 100 would continue to rise for some more time in the near future. On the contrary, some experts point out that the investors are overtly bullish and as the end of October approaches, when the government’s furlough scheme gets withdrawn and the nation gets flooded with the news of a massive rise in unemployment, the markets might fall again. Another set of local lockdowns could also weigh down the footsie as the PM announcement regarding the same is expected within a few days.

News about a fall in the UK’s GDP (gross domestic product) came in on 9 October but did not seem to pull down the FTSE 100 index, at least during the initial part of the day. The nation’ economy grew by merely 2.2 per cent in August against a 6.4 per cent rise in the output observed in July 2020. The stock market appeared to have absorbed the growth dampener as it did not come as a surprise. With a lot of restrictions and rising corona cases, beginning August 2020, such a scenario was already predicted by most economic analysts.     

 

 

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