Shell and BP serve doublewhammy

Investors in oil giant Shell sent the FTSE 100 tumbling as London’s top index lagged far behind many of its global counterparts.

The oil company’s share price suffered a sharp fall after it announced plans to slash up to $22 billion (£18bn) from the value it gives its assets.

It was seen as an acknowledgement from Shell’s management that the oil in the ground that it has the rights to extract may not be worth as much as previously estimated. The news sent both A and B shares in Shell – both of which are listed on the FTSE 100 – down by nearly 4 per cent.

It dealt a double-whammy to the FTSE by also dragging BP lower, weeks after the company made a similar admission.

At the end of the day, the index had dropped 0.9 per cent, or 56.03 points, to 6,169.74. CMC Markets analyst David Madden commented: “The FTSE 100 is underperforming against its continental counterparts on account of the bearish moves in Royal Dutch Shell and BP.”

The news that the UK’S GDP fell faster than first thought in the first three months of the year and a lockdown in Leicester are also likely to have weighed on the index, added Connor Campbell, at Spreadex.

It contrasted the FTSE against more bullish moves from the continent and across the pond. In New York, the Dow Jones and S&P 500 were trading up by 0.3 per cent and 1 per cent respectively shortly after markets closed in Europe.

The price of oil also likely weighed on Shell and BP, with Brent crude dropping 1.2 per cent to $41.20 per barrel. Meanwhile, the pound traded up about 0.6 per cent against both the dollar and the euro, buying $1.2373 and €1.1003 respectively.

In company news, engineering giant

Smiths Group leapt to the top of the FTSE 100 with an 8.8 per cent gain to 1,412p as it announced plans to cut jobs and costs.

The news that holiday firm On the Beach hit a half-year loss was perhaps not surprising, but shares still ended the day down by 2.5 per cent at 294.5p as the scale of the devastation was revealed.

Easyjet fell by 1 per cent to 680p after union Balpa said the company is considering plans to lay off 700 pilots and close bases at Stansted, Southend and Newcastle airports.