Economy Oil stocks keep FTSE steady as SSE hit by profit warning

Oil stocks keep FTSE steady as SSE hit by profit warning

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Oil stocks keep FTSE steady as SSE hit by profit warning

 Oil majors gained on stronger crude prices on Wednesday, helping to steady Britain’s top share index, while a profit warning hit energy provider SSE.

The FTSE 100 was flat by 0909 GMT, having hit its lowest point in five months in the previous session.

The internationally exposed index has lost ground in recent weeks as the pound strengthened on the back of growing optimism over a Brexit deal and worries over trade and emerging markets kept investors wary.

However, sterling fell on Wednesday on reports of a potential challenge to Prime Minister Theresa May.

The oil and materials sectors provided the biggest lift to the FTSE, adding a combined 20 points to the index.

Shares in BP and Shell both rose more than 1 percent, as looming sanctions against Iran raised expectations of tightening supply, helping lift crude prices.

SSE tumbled 8.8 percent to its lowest level since February 2011 after it warned that profit for the first six months of the year would halve due to the impact of dry, still and warm weather and persistently high gas prices.

“It is very rare to see a profit warning from a utility company as they are meant to have fairly predictable income streams… Ultimately it is a good reminder that even seemingly defensive companies still have operational and regulatory risks,” said Russ Mould, investment director at AJ Bell.

The SSE warning weighed on other utilities.

Tobacco companies were in focus after a Bloomberg report, citing a Food and Drug Administration document, said that British American Tobacco (BAT) had not produced adequate data to show its Camel smokeless tobacco pouches are a less risky alternative to cigarettes.

BAT shares fell 1.2 percent to a three-year low.

“I think this news at (the) moment has only a limited impact on the stock as it is probably considered as a minor setback especially as no decision has been made (whether) the company is allowed to advertise the product as a healthier alternative to smoking cigarettes,” Markus Huber, a trader at City of London Markets, said.

BAT rival Imperial Brands declined 1 percent.

Among mid-caps, furniture retailer Dunelm Group reported flat annual profits after taking an 8.9 million pound charge in its efforts to complete integration of loss-making internet business Worldstores. Its shares rose 5.8 percent.

“With forecasts held, stable trading, an acceleration in store openings to 10 stores for the year ahead, a reasonable showing from the new CEO may well yield some positive momentum in the share price,” said Peel Hunt analysts.

Construction company Galliford Try rose 4.1 percent after its full-year pretax profit jumped 145 percent. It also confirmed its group 2021 strategic targets.

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