Oil majors curb FTSE losses as crude surges after Saudi attacks

16 September 2019, 17: 00
© Reuters. FILE PHOTO: A financial trader works at his desk at CMC Markets in the City of London, Britain

Britain's blue-chip index dropped on Monday as non-oil stocks took a hit from mounting geopolitical risks and growth concerns after crude prices rose due to the attacks on Saudi Arabian production facilities.

The FTSE 100 (FTSE) slipped 0.6% overall, but a 4% gain in BP (L:BP) and 2% in Shell (L:RDSa) kept a lid on losses.

The FTSE 250 (FTMC) was down 0.7%.

The attacks on Saturday shut about 5% of global supply, triggering the biggest intra-day percentage gain in Brent crude since the Gulf War in 1991.

"It looks like investors assess the situation as having potential to further weigh on a geopolitical landscape already beset by the slowing global economy, Brexit and trade," City Index analyst Ken Odeluga said.

Crude prices retreated after U.S. President Donald Trump approved the use of his country's emergency oil stockpile to ensure stable supply.

Still, losses were seen across the board in all but the energy and utilities sectors. The travel and leisure index (FTUB5700) that also houses airline stocks dropped 1%.

Asia-facing financial shares and miners also weighed on the main index, after data showed that China's slowdown deepened in August with growth in industrial production at its weakest for 17-1/2 years.

The FTSE banking index (FTNMX8350) lost 1.7% and the mining index (FTNMX1770) slid 1.6%.

Meanwhile, the FTSE oil & gas index (FTNMX0530) jumped 2.8% on its best day in seven months. Premier Oil (L:PMO) and Tullow Oil (L:TLW) gained the most on the index.

"Explorers like Premier Oil, Cairn Energy and Tullow Oil were even bigger beneficiaries as they stand to gain the most from supply shortages and disruption to existing channels," Markets.com analyst Neil Wilson said.

In news-related moves, telecoms company BT (L:BT) rose 3.4% to be among the top gainers on the main index after its chief executive bought shares in the company.

Wealth manager St. James's Place (L:SJP) fell 2.7%, with traders citing a report that said the company would likely axe a bonus scheme for its partners.

African diamond miner Petra Diamonds (L:PDL) slipped 5.8% to hit an all-time low after it missed annual profit forecasts, as a Sino-U.S. trade row and protests in Hong Kong dented demand in big Asian markets.

On the Brexit front, the outcome of Prime Minister Boris Johnson's Luxembourg visit pushed the pound lower after heated remarks by Luxembourg's prime minister showed the gap between the British and European Union positions remained far apart.


At home, Britain's top markets watchdog called for EU action to avoid Brexit disruption and said overlapping British and European share trading rules would damage markets "to no good end".