Yahoo Finance Trending tickers: BP | SHELL | HSBC | IAG
BP (BP.L)
Shares in BP surged 4.15% in early London trade on Monday as investors weighed up the impact of top oil producers reducing crude supplies by around 1.16 million barrels per day from May until the end of the year.
As a result of the announcement by OPEC+ members, Brent crude (BZ=F) and West Texas Intermediate (CL=F) prices also surged on Monday, gaining over 5%, further supporting BP’s share price.
“The world needed a spike in oil prices like a hole in the head. Just as one of the pinch points in the global economy had started to ease, Saudi Arabia and its counterparts in OPEC have unveiled a surprise output cut,” Danni Hewson, head of financial analysis at AJ Bell, said.
“The decision by the oil producers’ cartel, unusually taken outside of any officially scheduled meeting, represents a flexing of its muscles and potentially a pre-emptive move as it anticipates a drop-off in crude demand relating to the collapse of SVB and ensuing banking crisis.”
Read more: FTSE 100 rises as oil stocks surge on Saudi cuts
Hewson also noted that rising oil prices could lead to higher energy and transportation costs.
“The heavy exposure of the FTSE 100 (^FTSE) to energy and resources stocks is looking like an attribute again as index heavyweights BP and Shell help lift the index. It is telling that the more domestic focused and diversified FTSE 250 (^FTMC) is down a smidge on Monday,” he said.
SHELL (SHEL.L)
Shares in Shell also jumped on Monday following the OPEC+ crude production cut announcement.
Shell stock was up 4.03%, making the oil major one of the top FTSE 100 risers, along with BP.
Richard Hunter, head of markets at Interactive Investor, said: “Markets in the UK opened the new quarter on the front foot, with the spike in the oil price boosting the shares of BP and Shell, in turn adding several points to the FTSE100 given the size of the index’s exposure to the oil and gas sector.
“Indeed, there was a more general feel of a measured return to a risk-on approach, with some strength also seen in the miners and the more recently beleaguered banking stocks.”
HSBC (HSBA.L)
Shares in HSBC rose 2.09% to make the bank one of the FTSE’s top risers on Monday.
It comes after Credit Suisse (CS) highlighted a target price of 580p ($7.13) for HSBC stock, giving it a potential upside boost of 5.51% from its current price, in a research report on Friday.
Barclays also recently lifted its target price on HSBC shares from 780p to 840p and gave the company a “buy” rating.
Shares in Barclays (BARC.L), Lloyds (LLOY.L) and NatWest (NWG.L) were also up after the UK government said it was extending a trading plan to help sell down the taxpayers' stake in NatWest.
Victoria Scholar, head of investment at Interactive Investor, said: “The British government is extending its trading plan to sell the remaining 41.5% stake in NatWest by two years until 11 August 2025.
Read more: UK manufacturing output returns to decline in March
“In last month’s budget, the government confirmed it aims to fully privatise the lender, which was bailed out during the global financial crisis, by 2026. RBS was rebranded NatWest in 2020 as the bank tried to distance itself from previous scandals as well as its near-collapse in 2008.”
Scholar further noted how the recent banking sector turmoil has sent shares in NatWest down by more than 10% over the past month.
“This complicates the picture for the government which is trying to offload its stake at a time when investors are feeling nervous towards the sector. If the banking sector crisis fades over the coming weeks, we could see opportunistic buyers return to the market, picking up shares in NatWest and others at a discounted price.
“However if further cracks in the system are revealed, banks could come under renewed selling pressure.”
IAG (IAG.L)
International Airlines Group (IAG) shares dropped by 1.95% on Monday, despite the group, which owns British Airways, Aer Lingus, and Iberia, seeing its shares rise by 60% over the last six months.
The price drop also comes after analysts at Deutsche Bank (DBK.DE) and Barclays recently upgraded their ratings for IAG from “neutral” to “buy”.
However, IAG’s recent deal to buy Air Europa could be playing on the minds of investors.
According to Iberian finance publication Finanzas, the debt IAG will face after the merger could rise to €2.8m (£2.5m, $2.95m).
However, the group has insisted the acquisition will allow it to improve its position in the Latin American market and expand into Asia, while allowing its Madrid hub to compete with other major airports in Europe.
Watch: OPEC's surprise production cut made with caution — analyst
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