Big oil powers FTSE 100 to record high; Debenhams drops

A rally in oil majors pushed the UK’s top share index to an all-time high on Thursday, though elsewhere retailers were under pressure after a profit warning from Debenhams. 

Britain's FTSE 100 .FTSE index was up 0.2 percent at 7,686.95 points by 0948 GMT, while mid caps .FTMC rose 0.1 percent. 

A rally in cyclical sectors such as financials and energy added around 20 points to the index, with BP (BP.L) and Shell (RDSa.L) rising 1 percent and 0.8 percent respectively.

The UK’s oil and gas index .FTNMX0530 was up 0.8 percent at its highest level since May 2008.
The British oil majors aped a move higher in oil prices, which were spurred to their highest level since mid-2015 on the back of tensions in producer Iran. [O/R]

A supportive research note from Barclays also helped the energy sector, in which analysts said they expected European integrated oil and refining companies to be cash flow positive after dividends in the fourth quarter, thanks to a higher oil price.

Cyclicals tug Britain's FTSE lower

The UK’s top share index fell back to a two-month low on Wednesday, hurt by renewed weakness in mining stocks and financials, while M&A activity was also in focus. 

Britain’s blue chip FTSE 100 index was down 0.1 percent at 7,317.63 points by 1001 GMT, outperforming a negative European market slightly on the back of a weaker pound. 

Financials took nearly 9 points off the index, with shares in HSBC, Lloyds and Barclays up to 0.8 percent lower.

Some analysts attributed the falls to profit-taking as the year-end approaches. The FTSE 100 has gained around 2.3 percent so far in 2017.

Shares in Intu Properties leapt more than 19 percent and were on track for their biggest one-day gain on record.

Shares in property peers British Land Company and Land Securities also rose 1.6 percent and 1.1 percent respectively.Among other standout movers shares in Saga dropped 24.8 percent on the back of a profit warning.

FTSE rebounds from two-month low as banks rally

The UK’s top share index rose from a two-month low on Monday, joining in a broader rally among risk assets sparked by progress in U.S. tax reforms, which lifted shares in British banking stocks. 

The blue chip FTSE 100 .FTSE index was up 0.8 percent at 7,358.81 points by 0935 GMT, in line with a broadly positive continental European market. 

Financials were the biggest boost to gains, adding around 20 points to the index as shares in HSBC (HSBA.L), Barclays (BARC.L) and Lloyds (LLOY.L) all rose between 1 percent to 3 percent.

 Banks are seen as the biggest beneficiaries of a cut in the corporate tax rate in the United States, and their shares also tend to see the biggest reactions when investors buy into risky assets.

Last week strength in sterling on the back of optimism over Brexit talks weighed on the FTSE 100, which ended the week with a 1.5 percent loss. The index fell to a two-month low as its predominantly dollar-earning constituents were hit by a rise in the currency. 

On Monday, the pound was subdued ahead of the Brexit summit, which in turn supported the FTSE 100. Shares in heavyweight overseas earners British American Tobacco (BATS.L) and Diageo (DGE.L) advanced 0.4 percent and 0.7 percent respectively.

Sovereign investors raise property holdings, wary of UK on Brexit

Sovereign investors are raising their property exposure at the expense of low-yielding bonds in an attempt to boost returns, but Brexit is seen as a significant negative for all UK investments, a study by asset manager Invesco showed.

The annual report, published on Monday and based on interviews with 97 sovereign wealth funds, state pension funds and central banks with assets in excess of $12 trillion, found sovereign investors underperformed their target returns by 2 percentage points on average over the past year.

What Invesco defines as "investment sovereigns", which have long time horizons and higher return targets, fell short by 3.7 percentage points, and "development sovereigns", which encourage domestic growth, underperformed by 3.1 percentage points.

Governments are also paying less into the funds -- on average, the equivalent of 5 percent of assets under management in 2017, down from 8 percent in 2015. This is forcing investors to seek out higher yielding assets such as high grade office and commercial real estate.

Over two-thirds of sovereigns were overweight global real estate in 2016 and 46 percent expect to be overweight again this year. Safe-haven markets such as North America and Western Europe were preferred.

Exposure to home market real estate is also growing, particularly amongst Western and Asian sovereign investors, due to the depth of the local markets. Home markets are seen as more familiar and accessible.

New property investments are mainly funded out of fixed income holdings, with 48 percent of respondents citing this.

The focus on real estate is partly driven by the fact that accessing other illiquid assets, such as infrastructure and private equity, remains difficult.

Deploying money into infrastructure is now expected to take four years, up from 3.5 years in 2016's survey. Real estate is unchanged at two years.

Euro steady below three-week high, focus on French election

The euro inched higher in early European trade on Friday but remained almost a cent off this week’s highs as investors battened down the hatches for results of the first round of a tightly-fought French presidential election.

Traders said an upbeat flash purchasing manager survey from France, added to polls showing centrist Emmanuel Macron still in pole position ahead of Sunday's voting had again been enough to settle nerves after a dip late on Thursday.

There was no obvious reaction to the shooting of a French policeman in central Paris overnight, an attack claimed by Islamic State, the euro climbing around 0.2 percent by 0834 GMT to $1.0734.

Options markets EURVOL= suggest investors remain worried about strong results for far right candidate Marie Le Pen and/or hard left challenger Jean-Luc Melenchon that would point to the risk of another major political shock for Europe in two weeks time.

In line with the run-in to the U.S. election and Brexit referendum last year, most investors looked to have moved to minimize their exposure going into the vote.

Other major currency pairs were also stuck in tight ranges, the dollar easing just 0.1 percent against the yen and less than that against sterling.

All eyes in UK markets were on the morning release of UK retail sales numbers, likely to provide further evidence of a weakening of the consumer demand that has propped up economic growth since the Brexit vote last June.

The pound surged 4 cents on Tuesday after Prime Minister Theresa May shocked the country by calling an early general election for June 8.