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London open: Stocks rise as investors mull OPEC deal
Stocks in London rose in early trade as investors mulled over news that OPEC ministers have agreed a deal to cut production for the first time since 2008.
At 0820 BST, the FTSE 100 was up 1% to 6,920.19.
At the OPEC meeting in Algiers, ministers agreed to cut production to between 32.5m and 33m barrels a day, down from August output levels of 33.2m barrels, with further details of the agreement due to be discussed at the next meeting on 30 November.
Oil prices initially surged on the news, but by Thursday morning they were a touch lower and it appeared some scepticism had begun to creep in about the deal.
West Texas Intermediate was down 0.2% to $46.98 a barrel and Brent crude was off 0.4% at $48.48.
Analysts Mike van Dulken and Henry Croft at Accendo Markets said: “On the face of it, a step in the right direction from OPEC, with Saudi Arabia importantly ceding ground. However, digging down it’s merely an intention to agree something concrete further down the line. Details on who will cut and by how much are distinctly lacking and only likely to surface end-November. Plenty of work still to do and enough time for a supposed ‘deal’ to be scuppered.
“Forgive our scepticism but a 250K to 750K barrels per day production cut is at most a 2% cut that leaves OPEC output close to its current record highs of 33m/day. And with non-OPEC still pumping strong, very little has thus been done to counter the global supply glut. Unless of course we can be sure that even more cuts (OPEC & Non-OPEC) are in the pipeline to rebalance an oversupplied market.”
In corporate news, tobacco maker Imperial Brands rose after saying it is on track to meet full-year expectations at constant currency and exchange rates as it reported growth from its US acquisitions.
Plastic product design and engineering company RPC Group was on the front foot after it said it expects revenues and adjusted operating profit to be significantly ahead of the previous year.
Science and engineering group QinetiQ nudged higher after maintaining its expectations for the year.
On the downside, outsourcer Capita tumbled as it warned that full-year profits will be some way short of current forecasts after its third quarter was hit by a slowdown in some areas, one-off costs and recent hesitation among clients.
Leisure operator Merlin Entertainments pushed lower after it reported growth in revenue in the year to date but highlighted still-challenging trading.
On the data front, UK money supply, net consumer credit and mortgage approvals are at 0930 BST. In the US, the third release of second-quarter GDP, initial jobless claims and wholesale inventories are at 1330 BST. Pending home sales are at 1500 BST.
