Sliding oil stocks hit FTSE as crude takes a tumble
THE London stock market went into reverse as a fall in commodity prices hit oil stocks and miners while surging inflation fuelled fears of recession.
On another difficult day for investors, the FTSE 100 was dragged down 0.9pc, or 62.83 points, to 7089.22 while the FTSE 250 shed 0.3pc, or 57.83 points, to close at 18,891.22.
Heavyweight oil stocks were on the slide after the price of Brent crude fell 4pc, though it remained almost 40pc higher than its level at the start of the year.
It came as the US moved to tighten its grip on spiralling energy costs, with President Joe Biden expected to urge states to slash fuel taxes to ease the burden on drivers.
But Hargreaves Lansdown analyst Susannah Streeter said the petrol- pumps price frenzy is unlikely to fade any time soon.
‘The surging oil price is a major culprit of the painful rises companies and consumers are having to deal with right now so the retreat of oil will be welcomed,’ she said. ‘However supply concerns are set to conspire to keep it elevated given that intense fighting continues in Ukraine, and there little end in sight to this war.’
Shell shares slid 3.5pc, or 75p, to 2076p while BP was off 3.1pc, or 12.05p, at 383.3p.
Miners fell as the prices of copper tumbled to their lowest level for more than a year over recession fears and China’s efforts to curb Covid-19 cases.
Aluminium, zinc, nickel, lead and tin were also on the slide.
‘The industrial metals are most certainly caught in the crosshairs, with China still on the slow path to recovery and then the added worries about the overall global outlook,’ said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
As a result, blue- chip miner Glencore slid 6.9pc, or 33.25p, to 449.35p, Antofagasta fell 6.4pc, or 85.5p, to 1244p, Rio T into shed 4.4pc, or 231p, to 5019p and Anglo American dipped by 5pc, or 167p, to 3207p.
Markets’ mood was not helped by signs the cost of living crisis could continue to spiral. Official figures showed UK inflation hit 9.1pc – its highest in 40 years – as anxiety over recession mounts.
And with concerns about the health of the global economy also rising, the losses in London were echoed in Europe where the main benchmark in France, the CAC, was dragged down 0.8pc while the Dax slid 1.1pc in Germany.
On Wall Street, the Dow Jones Industrial A verage rose 0.02pc while the S&P 500 climbed 0.1pc and the tech-heavy Nasdaq was up 0.2pc.
Back in London, housebuilder Berkeley Group was among the blue- chip fallers despite annual profits rising 6.4pc to £551.5m.
While it brushed off fears of a slump in prices in London due to a lack of homes, official figures showed house prices across the UK increased by 12.4pc in the year to April to a record £281,000. It fell 3.1pc, or 116p, to 3676p.
But AJ Bell investment director Russ Mould said: ‘An increase to profit forecasts for the next three years and strong hints of even greater cash returns to shareholders are failing to move shares in high-end housebuilder Berkeley.
‘Investors are focusing instead on rising interest rates, falling consumer confidence and fears of a recession, especially as acquisitions, dividends and buybacks are whittling down the FTSE 100 firm’s net cash pile.’
In the FTSE 250, tech firm Micro Focus tumbled 16.2pc, or 58p, to 299.5p after it warned revenues were ‘marginally behind’ target partly due to suspending its operations in Russia. Revenues fell 6.8pc to £1.1bn in the six months to the end of April.