Oil advances on Saudi-Russian supply cuts while Merkel claims victory in North Rhine-Westphalia

Significant news from Saudi Arabia and Russia this morning: the top two oil producers have agreed oil output cuts until March 2018.

The news saw crude prices rising more than 1.5% higher earlier in Asia. Brent crude climbed to $51.60 per barrel (6.55am). Surging US production from fracking has added to oil glut anxiety. Between them Saudi Arabia and Russia control 20% of global oil supplies.

Sterling this morning is at 1.29255 up 0.3% with the euro at 1.09375 against the dollar, up 0.13%. 

• UK FTSE 100 7,435.39 +0.66
• Dow 20,896.61 -0.11%
• S&P 500 2,390.90 -0.15%
• Nasdaq 6,121.23 +0.09%
• DAX 30 12,770.41 +0.47%
• CAC 40 5,405.42 +0.41%
• Gold 1,230.90 +0.26%
• Oil WTI 48.61 +1.59%

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Angela Merkel boosted

In Europe, Angela Merkel’s party has emerged victorious from a key election in North Rhine-Westphalia, Germany's most populous state. This win will bolster Merkel's support ahead of impending summits, likely strengthening her hand with President Trump.

Little economic news today though that changes tomorrow with new EU balance of trade figures plus US industrial production numbers.

Let’s start with a six-month update from Hanover-based travel operator TUI. There’s an underlying loss of €177.7m compared to €126m this time last year.

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Overall guidance though from TUI remains unchanged with a “good” H1 overall and Summer 2017 trading in line with expectations. “We therefore reiterate our guidance of at least 10% growth in underlying EBITA in 2016/17.”

Little 'Brexit effect'

Despite the backdrop of Brexit and a much weaker sterling, demand for TUI holidays remains “resilient” with “the percentage of the programme sold in line with prior year”, claims TUI. TUI shares at 1,178.78p have climbed 2.32% YTD.

Moving onto a half-year briefing from technical products and services supplier Diploma. Revenue and adjusted operating profit are both up 21%, part-helped by currency tailwinds.

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Adjusted profit before tax increases 22% to £37.1m while adjusted earnings per share climbs 23% to 23.9p. The interim dividend is up by 13% to 7.0p per share.

"The Group,” says chief exec Bruce Thompson, “has delivered strong underlying growth in the first half of the year, further boosted by the favourable foreign exchange impact from the substantial depreciation in UK sterling.”

Revenues increase for Victrex

Finally, interim half-year numbers for polymer solutions maker Victrex. Group revenues climb 12% to £130.9m while profit before tax is up 5% to £50.1m. Earnings per share climb 2% to 45.5p. The dividend is up 4% to 12.30p.

Solid strength from its core business offset much lower year-on-year volumes in Consumer Electronics says Victrex with Automotive, Electronics (ex-Consumer) and Value Added Resellers performing well. Medical, it says, remains muted.

“Whilst we delivered a strong first half performance and the Group continues to be highly cash generative, we note,” says Victrex, “that there is potential for variability in the scale of Consumer Electronics volumes during the second half, with visibility remaining low.”