FTSE 100 preview: Weaker oil to pressure blue-chip index

on Apr 20, 2016

The UK benchmark index looks set to open in the red this morning, pressured by a pullback in oil. On the corporate front, London- and Sydney-listed BHP Billiton (LON:BLT) has followed peer Rio Tinto (LON:RIO) in slashing its iron ore output guidance.

IG’s opening calls suggest that Britain’s blue-chip index will start the day 29 points lower at 6,377. Investor sentiment is likely to be subdued this morning with oil prices reversing yesterday’s gains amid news that Kuwaiti oil workers had ended a three-day strike, and pressuring Asian shares this morning.
“In the near term we are going to see more downward pressure than upward,” IHS analyst Victor Shum, told Reuters. In the US, stocks closed mixed last night, with investors weighing the latest oil price movements as well as a string of corporate reports.

At home, the FTSE 100 gained 51.83 points to close 0.82 percent higher at 6,405.35, having hit a new 2016 peak of 6,418.25 earlier in the session. Miners led the index higher, with Anglo American (LON:AAL) posting the biggest gains in percentage terms, adding 8.49 percent to close at 752.50p.
Today’s macroeconomic agenda includes the UK unemployment rate for February and the UK claimant count for March both scheduled to be released at 09:30 BST.
On the corporate front, BHP Billiton posted its operational review for the nine months ended March 31, 2016, revealing that it had trimmed its iron ore guidance partly on account of adverse weather. ARM Holdings (LON:ARM) is the other blue-chip company due to update investors on its recent performance this morning. The results will come after the group’s shares came under pressure earlier this week amid concerns that Apple – one of the UK chip maker’s biggest customers – will continue with its reduced iPhone production.

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