Markets close lower as China lockdown hit oil prices

Market report

London’s markets tipped into the red in the closing minutes of Monday trading, as fresh pandemic measures in Shanghai pressed down on originally optimistic traders.

BP and Shell helped drag the FTSE down in the afternoon following a plunge in oil prices.

The price of oil dived amid fears that lockdowns in China could hamper short-term demand, offsetting supply risks driven by the Russian invasion of Ukraine.

Brent crude dropped by 5.95% to 113.47 US dollars per barrel when the London markets closed.

The FTSE ended the day down 10.21 points, or 0.14%, at 7,473.14 points.

AJ Bell’s Russ Mould said: “The two-day restrictions imposed in Shanghai are evidence that the pandemic is not yet over and inevitably, given the implications for global growth, have put oil prices under pressure.

“It was no surprise to see Asian stocks slump on the move as the region’s dominant economy is once again threatened by the sceptre of Covid-19.’’

Across the Channel, the other major markets were in a more robust shape, although their gains were pared back during the session.

The French Cac was up 0.9% and the German Dax had increased 0.22% by the end of the session.

On Wall Street, the Dow Jones fell on the opening bell as president Joe Biden committed more funding for Ukraine to fend off the Russian invasion.

Meanwhile, sterling edged higher despite Bank of England governor Andrew Bailey warning that UK households could face a “historic shock’’ beyond that felt in the 1970s.

The pound increased by 0.03% against the dollar to 1.308, and rose 0.01% against the euro to 1.192.

In company news, Rolls-royce hit the foot of the

FTSE as it fell back from a bounce on Friday driven by takeover speculation.

Shares shot by almost 20% on Friday but dropped sharply during the latest session as analysts poured cold water on the possibility of a takeover of the aircraft-engine manufacturer.

Rolls-royce finished 11.76p lower at 98.38p as analysts said the Government’s golden share could hamper a deal.

Barclays also closed in the red as the bank revealed it is set to lose £450 million after admitting it sold more products to investors than it was allowed to.

Under US banking rules, the company was allowed to sell over a three-year period 20.8 billion dollars (£15.8 billion) worth of structured notes that track equities and exchange traded notes that track commodity prices and offer debt-related trades.