Interactive Investor

Banks and oil stocks in demand as FTSE 100 nears record

With mining and oil giants powering the FTSE 100 index towards a record high, our City writer takes a look at some of the other blue-chip shares doing well today.

2nd April 2024 13:42

by Graeme Evans from interactive investor

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Barclays (LSE:BARC), HSBC Holdings (LSE:HSBA) and JD Sports Fashion (LSE:JD.) supported the strong rally by heavyweight miners and oil stocks today as the FTSE 100 index opened the new quarter within sight of a record high.

London’s top flight touched 8,015 at one point, a level that compares with the intraday peak of 8,047 set in February 2023 and the closing bell high of 8,012 seen on the same day.

The FTSE 100, which rose by more than 4% in March, later settled back to reach lunchtime 16.79 points higher at 7,969.41.

Risk appetite was given a boost by robust manufacturing figures in China and elsewhere as Anglo American (LSE:AAL) jumped 78.7p to its best level since December at 2,030.5p and Glencore (LSE:GLEN) by 13.05p to 448.35p.

A record gold price helped precious metals miner Fresnillo (LSE:FRES) to rally by 33.1p to 503p as the best-performing FTSE 100 stock, while the sight of Brent crude at a five-month peak above $88 a barrel lifted BP (LSE:BP.) by 13.2p to 508.9p and Shell (LSE:SHEL) by 871p to 2706p.

The tentative signs that activity levels are picking up in China’s economy also ensured the Hang Seng index rose by 2.4% and helped several of London’s Asia-focused stocks to gain ground.

They included HSBC, which put on 5.6p to 624.6p after the lender also confirmed that the sale of its Canada operations to RBC had been completed in time for inclusion in first-quarter results.

The estimated gain on the sale of $4.9 billion means that HSBC shareholders can expect a June special dividend of 21 US cents a share. Chief executive Noel Quinn added: “Completing this deal is another important milestone in HSBC's transformation, and it will provide capital that will enable us to grow our core businesses and reward our shareholders for their loyalty.”

HSBC was joined on the risers board by Barclays, which improved 2p to 185.2p after analysts at Jefferies gave a big lift to their price target in response to the new three-year plan of boss C.S. Venkatakrishnan.

His headline projections included a return on equity target of more than 12% in 2026, which compared with the City consensus before the presentation of 9.7%.

Jefferies said that achieving this will depend on Barclays delivering £5 billion of revenues growth through to 2026, with more than half of this coming from the investment bank.

Based on estimates that Barclays can return £11.1 billion of capital via buybacks and dividends over the next three years, the bank increased its price target to 330p from 220p previously.

Among other lenders, Lloyds Banking Group (LSE:LLOY) cheered 0.4p to 52.1p and NatWest Group (LSE:NWG) by 2p to 267.5p.

Away from the banking and commodity sectors, JD Sports Fashion (LSE:JD.) continued its recovery on the back of a reassuring trading update posted before the Easter weekend.

The retailer’s shares followed Thursday’s 16% surge by adding another 2.5p to 137p, assisted by UBS highlighting a potential 30% further upside to a target price of 178p.

The bank said its 20-year analysis of industry share prices shows that JD Sports has historically outperformed the market in the build up to major sporting events.

The potential tailwind for a positive surprise in sales and profits is aided by this summer’s UEFA European Championships and the Olympic Games both taking place in Europe.

The bank said: “Despite last week's share price move, the valuation is still close to the bottom of its 10 year range and creating an attractive buying opportunity given improving near-term trends and a better-than-encouraging medium-term growth outlook.”

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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