U.K. stocks inched higher on Wednesday, slightly rebounding from the prior day’s selloff as energy companies tracked a rally in oil prices and shot higher.
What markets are doing
The FTSE 100 index UKX, +0.48% was up 0.1% at 7,638.76, but darting in and out of negative territory. On Tuesday, the index dropped 1.3% to mark its lowest close since May 8 and its sharpest decline since mid-March, according to FactSet data.
The pound GBPUSD, +0.2339% bought $1.3295, up from $1.3253 on Tuesday in New York.
What’s driving the market
Investors appeared to be searching for a catalyst to drive equities firmly one way or another, after Tuesday’s rout on Italian political jitters.
U.K. stocks had suffered alongside other global equity markets as a political crisis in Italy revived concerns about the stability of the eurozone. A March election in Italy left two antiestablishment parties — the 5 Star Movement and League — in place to enter government in coalition. But the country’s president effectively blocked the euroskeptic parties from taking power and appointed Carlo Cottarelli as prime minister, asking him to form a government.
If Cottarelli, an International Monetary Fund veteran, cannot set up a government, that would leave Italy’s president with the choice of bringing in a caretaker cabinet or calling early elections, potentially as early as July.
Read: What’s the latest in Italy’s political drama?
Back in the U.K., oil companies helped the FTSE 100 stay out of negative territory. Shares of heavyweight BP PLC BP., +2.06% BP, +2.72% and Royal Dutch Shell PLC RDSB, +2.15% RDS.B, +3.12% rose 1.5% and 1.1%, respectively on the back of rising oil prices CLN8, +2.43% .
What strategists are saying
“The FTSE 100 is in recovery mode, clawing back some of yesterday’s losses on the combined support of slightly stronger USD (flattering global FTSE names) and oil prices retreating from week’s lows (always a boon to Energy shares),” said Artjom Hatsaturjants, research analyst at Accendo Markets, in a note.
“Signs of progress on [North Korea-U.S.] summit added optimism, but continuing Italian cabinet crisis (with spillover effect on European financial system) and reignited U.S.-China trade tensions limited the upside potential,” he added.
Stock movers
Royal Bank of Scotland Group PLC RBS, -1.61% fell 1.6% after the lender said Chief Financial Officer Ewen Stevenson has resigned to “take up an opportunity elsewhere.” That news arrived a few hours before RBS kicked off its annual general meeting in Edinburgh. Shares of the lender on Tuesday fell 3.4% following a Sky News report that the U.K. government is preparing to sell a multibillion-pound stake in RBS.
J Sainsbury PLC SBRY, +1.05% and Wm. Morrison Supermarkets PLC MRW, +1.14% rose 0.6% and 0.7%, respectively, after data from Kantar showed sales at all U.K. grocers rose in the 12 weeks ended May 20. Sales got a boost from the Royal Wedding, a major soccer tournament and good weather during a May Bank Holiday. But Tesco PLC TSCO, -0.45% TSCDY, +0.21% shares were off 0.3%.
Fresnillo PLC FRES, -0.04% rose 1.1% after the miner said it remains on track to meet its 2018 production target.