FTSE 100 gains on oil stocks boost; Deliveroo sinks to record low

Victrex jumps on strong results

  

UK's FTSE 100 rose on Monday, with broad-based gains led by oil stocks following a jump in crude prices, while shares in Deliveroo sank to a record low on concerns about a European Union ruling on gig workers.

The commodity-heavy FTSE 100 index gained 0.9%. Oil majors BP and Royal Dutch Shell added almost 2% each as crude prices jumped after Saudi Arabia raised official selling prices for all crude grades. 

Gains were seen across most sectors, as sentiment steadied after a volatile start to December that was dominated by fears around the new coronavirus variant Omicron and an increasingly hawkish outlook by the U.S. Federal Reserve.

A health official in South Africa said early observations of children sick with COVID-19 in the country that has been driven by the Omicron variant shows mild infections. 

"Today is a kind of double bullish whammy," said Stuart Cole, head macro economist at Equiti Capital. "You've got stocks that are cheap to buy and you've got a reason to buy them in that as some of the fear that was around last week seems to have been taken away."

Deliveroo plunged 6.5% to hit a record low earlier in the session. European peers Just Eat Takeaway and Delivery Hero also fell about 5% each on fears of the European Commission's proposal concerning employment rights and the status of gig economy workers hitting profitability of these companies.

"It is essentially a move to try and do away with the 'gig' economy and ensure all employees everywhere are captured by employment legislation. This obviously raises costs and impacts on both profitability and flexibility," said Cole.

Investors are awaiting a speech by Bank of England Deputy Governor Ben Broadbent at 1130 GMT. Markets are pricing in only a 33% chance of a December rate hike after BoE policymaker Michael Saunders' speech on Friday, down from about 75% before news broke of the new variant. 

The domestically focussed mid-cap index advanced 0.7%, with chemicals company Victrex PLC  adding 3.4% after reporting a 46% rise in its pre-tax profit. 

Chemicals firm Synthomer Plc SYNTS.L declined 8.4% after a downgrade and price target cut by Morgan Stanley.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Subhranshu Sahu and Uttaresh.V) ((BansariMayur.Kamdar@thomsonreuters.com;))


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