Rise in oil price fuels FTSE-100 recovery

THE FTSE-100 Index ended a volatile week on a positive note helped by a bounce-back in the oil price, though the last session of August rounded off the top-flight’s worst month for more than three years.

It finished 55.9 points higher on the day at 6247.9, meaning after all the sharp ups and downs of recent sessions the index was about 60 points ahead for the week.

But the closing level ahead of the Bank Holiday weekend was more than 400 points lower than at the end of July, a 6.7 per cent fall that is the worst for a calendar month since May 2012.

Global markets have been shaken by fears of a slowdown in the Chinese economy – worries that dragged the FTSE 100 lower for ten sessions in a row, culminating in a 4.7 per cent drop on Monday. But sentiment has improved following an interest rate cut in China and upgraded second quarter growth in the US.

China’s Shanghai Composite Index rose again overnight and the price of a barrel of Brent crude has now picked up.

After tumbling to a near six-anda-half-year low of less than $43

earlier this week, it climbed close to $50 in the latest session. This helped Royal Dutch shell rise 47p, to 1706.5p while exploration firm BG, with which it is to merge, added 32.8p to reach 994.6p. BP added 9.3p to 360.5p. But the oil price rise weighed on travel firm

TUI, which fell three per cent, or 33p, to 1156p, with easyjet down 22p to 1683p and British Airways owner international airlines

Group off 7p to 539p. While the FTSE 100 rose, there was a mixed picture in Europe with Germany’s Dax a little lower and France’s Cac 40 ahead.

In New York, the Dow Jones Industrial Average slipped into the red as figures showed a dip in US consumer confidence and comments from Federal Reserve vice chairman Stanley Fischer reawakened fears of a September interest rate hike. Meanwhile offi- cial figures in the UK confirmed that growth accelerated to 0.7 per cent in the second quarter

Net trade made the biggest contribution, of one percentage point, as exports rose 3.9 per cent and import growth slowed, according to the Office for National Statistics. The pound was lower against the US dollar at just under 1.54 while it added a cent against the euro to a little below 1.38.

In the FTSE 250 Index, paving firm Marshalls rose nearly six per cent after reporting a 48 per cent rise in half-year pre-tax profits to £20.8 million. The West Yorkshire-based firm said if positive market conditions continued, fullyear trading was likely to be above original expectations. Shares rose 18.5p to 335p.

The biggest FTSE 100 risers were Inmarsat, up 45.5p to 981p, BG up 32.8p to 994.6p and Royal Dutch Shell up 47p to 1706.5p. The biggest fallers were TUI, down 33p to 1156p, St James’s Place down 16.5p to 915.5p and easy Jet down 22p to 1683p. WALL Street ended a tumultuous week with a flat close yesterday as investors shrugged off concerns that a September rate rise was more likely than some investors expected.

Shares traded lower earlier in the session after Fed Vice Chairman Stanley Fischer told CNBC the Fed had not yet decided whether to raise interest rates in September. However, the market largely recovered in the final moments of trade.

After several volatile sessions that at one point pushed the S&P 500 to its lowest level since October 2014, the three major US indices ended the week with gains.

Many on Wall Street have been hoping the recent global market turbulence and worries about China’s economy would lead the Fed to hold off raising rates. This expectation was reinforced on Wednesday by comments from New York Fed President William Dudley.

However, following Fischer’s comments yesterday, overnight indexed swap rates implied traders now see a 35 per cent chance the Fed would raise rates in September, up from 22 per cent earlier in the week.

The S&P remains down more than five per cent from when the market began to sell off on August 18. The turmoil has prompted several strategists to cut their end-of-year forecasts for indexes.

Credit Suisse, for example, cut its year-end target for the S&P 500 to 2,100 from 2,200 on Friday.

Half of the 10 major sectors rose, with the energy index jumping two per cent as oil added to gains.