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LONDON BRIEFING: Oil Prices Up 10% After Attacks On Saudi Facilities

(Alliance News) - Oil prices saw a record surge Monday after attacks on two Saudi facilities ...

Alliance News 16 September, 2019 | 7:57AM
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(Alliance News) - Oil prices saw a record surge Monday after attacks on two Saudi facilities slashed output in the world's top producer by half, fuelling fresh geopolitical fears as US President Donald Trump blamed Iran and raised the possibility of a military strike on the country.

Brent futures surged USD12 a barrel in the first few minutes of business – the most in dollar terms since they were launched in 1988 and representing a jump of nearly 20% – while West Texas International jumped more than USD8 a barrel, or 15%.

Both contracts later pared the gains but were both still more than 10% up on Monday from late Friday.

The attack by Tehran-backed Huthi rebels in neighbouring Yemen, where a Saudi-led coalition is bogged down in a five-year war, hit two sites owned by state-run giant Aramco and effectively shut down six percent of the global oil supply.

Trump said Sunday the US was "locked and loaded" to respond to the attack, while Secretary of State Mike Pompeo said: "The US will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression."

Tehran denies the accusations but the news revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.

"Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning," said Jeffrey Halley, senior market analyst at OANDA.

Trump authorised the release of US supplies from its Strategic Petroleum Reserve, while Aramco said more than half of the five million barrels of production lost will be restored by tomorrow.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called down 0.3% at 7,348.50

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Hang Seng: down 1.2% at 27,037.02

Nikkei 225: Tokyo market closed for holiday.

DJIA: closed up 37.07 points, 0.1%, at 27,219.52

S&P 500: closed down 0.1% at 3,007.39

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GBP: flat at USD1.2462 (USD1.2455)

EUR: flat at USD1.1070 (USD1.1078)

Gold: up at USD1,505.07 per ounce (USD1,496.00)

Oil (Brent): up 9.9% at USD66.27 a barrel (USD60.32)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Monday's Key Economic Events still to come

Japan Respect for the Aged Day. Financial markets closed.

1100 BST Ireland goods exports and imports

0830 EDT US Empire State Manufacturing Survey

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Boris Johnson has said he believes "passionately" that a new Brexit deal can be struck with Brussels as he prepares to hold his first face-to-face talks as UK prime minister with Jean-Claude Juncker. Johnson will travel to Luxembourg on Monday where he will warn the European Commission president he will reject any offer to delay Britain's departure. Writing in the Daily Telegraph, Johnson said he was working "flat out" to reach an agreement but reiterated that he would take the UK out of the bloc even if a deal cannot be reached at the European Council summit next month. Johnson also will hold talks with Luxembourg Prime Minister Xavier Bettel and the EU's chief negotiator, Michel Barnier, on Monday.

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The price of new properties on the UK market fell in September, as normally eager buyers hesitate due uncertainty caused by the looming Brexit deadline, according to Rightmove. The Rightmove Monthly House Price index revealed that the price of newly marketed property fell by an average of 0.2% in September from a year before. The number of sales agreed dropped by 5.5% from a year before, compared to an increase of 6.1% in August, as all regions saw declines. The number of newly marketed properties was down by 7.8% in September compared to the same period a year before, with all regions down. In particular, London saw a drop of more than 20% in new properties coming to market, as some owners wait for a clear Brexit outcome.

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BROKER RATING CHANGES

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CREDIT SUISSE RAISES NEXT TO 'NEUTRAL' ('UNDERPERFORM'); TARGET 6000 (5000) PENCE

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GOLDMAN RESUMES CINEWORLD GROUP WITH 'BUY' - TARGET 315 PENCE

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GOLDMAN RAISES HAMMERSON TO 'BUY' ('NEUTRAL') - TARGET 303 (288) PENCE

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JEFFERIES CUTS GO-AHEAD GROUP TO 'HOLD' ('BUY') - TARGET 2160 (2290) PENCE

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COMPANIES - FTSE 100

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Direct Line Insurance Group appointed former Royal London deputy chief executive officer Tim Harris as its chief financial officer. Harris will join Direct Line on October 1. He was deputy CEO and finance director of Royal London until July 12 and also has worked at insurer Aviva PLC and accountants PricewaterhouseCoopers.

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Hong Kong Exchanges & Clearing will try to appeal directly to shareholders after London Stock Exchange Group rejected its bid, the Financial Times reported. HKEX has organised a round of meetings with shareholders and regulators in an effort to persuade the LSEG board to soften its stance, according to the FT. LSEG has turned down the GBP29.6 billion bid over what it sees as "fundamental flaws", including possible issues with regulation and a belief that the amount offered was too low, calling it "substantially short of an appropriate valuation".

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COMPANIES - FTSE 250

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Man Group said Chair Ian Livingston is to step down from the role on December 31, and will be replaced by Non-Executive Director John Cryan. Cryan was previously CEO of German lender Deutsche Bank from July 2016 to April 2018.

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COMPANIES - OTHER MAIN MARKET AND AIM

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Spire Healthcare said it delivered a good first-half performance with "clear signs" that its strategic and operational initiatives are bearing fruit. For the half-year ended June 30, revenue was up 3.4% to GBP491.6 million from GBP475.6 million last year, and the company swung to a pretax profit of GBP9.6 million from a loss GBP2.2 million a year before. Spire declared an interim dividend of 1.3 pence, unchanged from last year.

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Low-cost housebuilder MJ Gleeson said it delivered another strong performance and was on track to meet its objectives. For the financial year ended June 30, revenue rose 27% to GBP249.9 million from GBP196.7 million in financial 2018, and pretax profit was up 11% to GBP41.2 million from GBP37.0 million last year. MJ Gleeson declared a total dividend of 34.5p, up from 32.0p last year. "Despite the uncertainties caused by Brexit, demand for our homes continues to be extremely strong. Gleeson Homes is well on track to deliver its milestone target of doubling annual completions to 2,000 units by 2022," said Chair Dermot Gleeson.

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Ryanair Holdings passengers were left unable to check in ahead of their flights due to a "systems outage" which caused delays at airports across Europe. Twitter users complained of "chaos" at Stansted Airport on Saturday morning, with many struggling to find their booking details online. The budget airline confirmed that the outage resulted in disruption to airport check-ins and boarding.

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COMPANIES - INTERNATIONAL

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The United Auto Workers union called a nationwide strike against General Motors on Sunday, with some 46,000 members set to walk off the job beginning at midnight amid an impasse in contract talks. The decision, which the Wall Street Journal described as the first major stoppage at GM in more than a decade, came a day after the manufacturer's four-year contract with workers expired without an agreement on a replacement. Local union leaders met in Detroit "and opted to strike at midnight on Sunday", the UAW said on its Twitter account. "UAW officials said the two sides remained far apart in the contract negotiations, with disagreements on wages, health care benefits, the status of temporary workers and job security.

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Volkswagen has agreed to pay up to AUD127 million, about USD87.3 million, to settle multiple class action suits brought by Australian motorists over a diesel emissions cheating scandal, the parties' lawyers said Monday. The German car giant, which owns brands ranging from luxury Audi to lower-end Skoda, said in 2015 that 11 million diesel engines globally were affected. Owners of about 100,000 Australian cars will be able to seek compensation from Volkswagen under the terms of the in-principle agreement, which the automaker has agreed to without admitting liability and must still be approved by the Federal Court.

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OxyContin maker Purdue Pharma, the company at the centre of thousands of lawsuits accusing it of fuelling the opioid crisis in the US, says it has filed for bankruptcy protection. Purdue Pharma, which is owned by the billionaire Sackler family, released a statement late Sunday outlining a tentative settlement to resolve the over 2,000 lawsuits coming from local and state officials across more than 20 states in the US. Under the proposed deal, the company has filed for reorganization under Chapter 11 of the US Bankruptcy Code. "This unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public," said Chair Steve Miller.

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Monday's Shareholder Meetings

Cobham (re acquisition by AI Convoy Bidco)

BCA Marketplace

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By Tom Waite; thomaslwaite@alliancenews.com

London Briefing is available to subscribers as an email newsletter. Contact info@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Cineworld Group PLC 221.50 GBX 0.32 -
Hammerson PLC 306.70 GBX 2.20 -
Go-Ahead Group (The) PLC 2,098.00 GBX 0.87 -

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