Market update - 9 June

The FTSE 100 was up 8.5 points at 5915.3 at 11.04am on Monday. Yet again the strength came from resource stocks, which dominated the leader board as financials fell by the wayside. Vedanta Resources, the Indian mining group, led the way – the stock claimed first place on the benchmark index, gaining 2.66 per cent or 60p to 2318p thanks to strong metals prices. Vedanta was also helped by news from the Standard & Poor’s ratings service, which raised its outlook on the company to positive from negative.

Moving up

Oil companies drew mileage from the price of crude, which remains within striking distance of Friday’s record high of $139 per barrel. Royal Dutch Shell fared the best, gaining 2.29 per cent or 48p to 2145p and claiming second place on the leader board. BP, at third place, was up 12.5p at 593p.25p and Cairn Energy, the India focused oil & gas exploration and production group, was up 45p at 3350p.

Petrofac, the international oil & gas services group, swung to second place on the FSTE 250, up 44p at 682p. Beside the oil price hike, the company was helped by a Buy note from Goldman Sachs.

"We believe Petrofac is very attractively positioned in its core businesses, and that it is 12 months away from a substantial lift in earnings from Energy Developments, a division that we see as undervalued. Petrofac’s Chergui gas development will start production shortly, but we believe it is the Don Southwest and West Don start-ups that will drive rapid EPS growth: we forecast 56% growth in 2009 and 58% in 2009," the broker said, adding:

"In E&C, the company has a record backlog, with a high level of tenders still out, and is well placed to benefit from increasing demand for gas developments in the Middle East. We upgrade Petrofac to Buy from Neutral and add it to our Conviction List."

Informa was ahead, at first place, after bowing to days of market speculation and confirming merger talks with UBM. The stock soared by 11.46 per cent or 44.25p to 430.5p.

Moving down

The strong oil price did no favours to British Airways, which was parked at first place on the FTSE 100 loser board this morning. The stock was down 3.21 per cent or 7.5p at 226p. FTSE 250 listed peer Easyjet was also weak, losing 3.41 per cent or 10.5p to 297p.

The Royal Bank of Scotland was down 1p at 244p despite revealing strong backing for its £12bn rights issue – the company said that 95.1 per cent of shareholders took up the new issue.

The wider banking sector was also weak.

HBOS lost 2.75p to 327.25p after Societe Generale cut its target price for the stock to 340p from 445p.

Alliance & Leicester, which is pegged to enter the FTSE 250 in the upcoming index reshuffle, was also down and lost 1p to 376.25p.

Elsewhere, news from the British Retail Consortium sullied sentiment among retailers.

"[The survey by the] BRC/Nielsen reveals that consumer confidence has plunged over the last year to be at the lowest level since the survey began in 2003. Specifically, the BRC/Nielsen consumer confidence index retreated to 79 from 91 a year ago," said Howard Archer, chief UK and European economist at Global Insight, "The survey makes pretty worrying reading across the board and fuels concern that we are in for an extended period of marked consumer retrenchment. Consumers are more worried about job prospects, personal finances, and personal spending power."

Marks & Spencer was down 8.5p at 370.75p, J Sainsbury lost 9.5p at 334.25p and Home Retail Group, which is among those stocks pegged for a demotion to the FTSE 250, was down 1p at 237.5p.