London close: Stocks close lower as oil price rout continues
London stocks finished well into the red at the close on Tuesday, after oil prices slid into negative territory, with energy and mining issues under the cosh.
The FTSE 100 ended the session down 2.96% at 5,641.03, and the FTSE 250 was 2.68% weaker at 15,399.25.
Sterling was sharply weaker against both of its major trading pairs, falling 1.43% against the dollar to last trade at $1.2264, and losing 1.33% on the euro to €1.13.
The losses for equities came after oil prices in the US fell overnight to below zero for the first time in history, as demand was hit by the Covid-19 coronavirus pandemic.
West Texas Intermediate slumped to as low as -$40 a barrel, compared to $50 before the virus outbreak, meaning producers were now paying buyers to take oil off their hands as there was nowhere to put it.
“Oil’s rout continues to command all the attention in global markets, as investors move on from the Covid-19 crisis to the complete breakdown of normality in one of the world economy’s most vital components,” said IG’s Chris Beauchamp.
“While the May contract is now banished to the history books, it looks like the June contract is going the same way, falling below $20 and then taking out $19 and $18 in short order for WTI, while Brent crude has met the same fate.
“We are witnessing markets finally play catch-up to the reality on the ground in the oil market - huge oversupply and non-existent demand have combined with nearly-full storage facilities to drive complete dislocation in the crude oil market.”
Beauchamp said that was being felt in stock markets too, which could not long remain indifferent to the chaos.
“But as risk appetite vanishes, the carnage has spread beyond oil stocks, hitting mining shares, banks and indeed almost every other sector on the FTSE 100.
“Having decided they could weather the coronavirus crisis, equities now have to reckon with an entirely different problem.”
Brent crude futures were last down 31.06% at $19.51 per barrel, while West Texas Intermediate was 55.13% weaker at $13.17.
On home shores, investors were mulling the latest jobs figures from the Office for National Statistics, which showed the ILO unemployment rate ticked up to 4.0% in the three months to February from 3.9% and versus consensus of 3.9%.
The number of people employed increased by 172,000, coming in better than expectations for a 108,000 rise, while average earnings growth fell to 2.8% from 3.1%, compared to consensus expectations of 3.0%.
Spreadex analyst Connor Campbell said the most important figure was the claimant count change for March as it was the "only true Covid-19 number of the trio".
"Fearing a similar situation to that in the US, analysts had forecast a 170,000 person increase in unemployment claims; instead it arrived at a pretty standard 12.1k.
“Of course, that likely means the ugly number will instead be delayed until April’s reading.
“Nevertheless, the FTSE and pound were left off in this regard, if only for now.”
In equity markets, Shell was down 4.24% and BP fell 3.03% as oil prices collapsed, with Premier Oil losing 13.45% and Wood Group 6.75% weaker.
BHP retreated 6.44% as it warned global steel production excluding China could fall by double digits in percentage terms as the Covid-19 pandemic forced shutdowns.
The world's biggest miner reported a 6.3% rise in third-quarter iron ore production and maintained its iron ore forecast despite global economic disruption caused by the outbreak.
Miners were weaker generally, with Glencore down 6.58%, Antofagasta off 8.19% and Anglo American falling 5.45%, while Russian steelmaker Evraz declined 11.24%.
Croda turned negative in the final minutes of the session, closing 0.43% lower, having earlier been boosted by an upgrade to ‘buy’ from ‘hold’ at Liberum.
On the upside, Admiral managed gains of 2.64% after saying it would give a £25 refund for each vehicle insured with the company as of 20 April in recognition of the fact that most people are not using their cars much if at all because of the lockdown.
Halma was 1.05% firmer after saying adjusted pre-tax profit for the year ended 31 March should be in line with the guidance given last month.
Market Movers
FTSE 100 (UKX) 5,641.03 -2.96%
FTSE 250 (MCX) 15,399.25 -2.68%
techMARK (TASX) 3,464.83 -1.93%
FTSE 100 - Risers
Sainsbury (J) (SBRY) 201.50p 3.07%
Admiral Group (ADM) 2,253.00p 2.64%
Fresnillo (FRES) 720.00p 2.53%
Phoenix Group Holdings (PHNX) 564.80p 1.99%
International Consolidated Airlines Group SA (CDI) (IAG) 228.90p 1.42%
Hikma Pharmaceuticals (HIK) 2,335.00p 1.30%
Morrison (Wm) Supermarkets (MRW) 186.75p 1.14%
Halma (HLMA) 2,113.00p 1.05%
Ocado Group (OCDO) 1,600.50p 0.79%
AstraZeneca (AZN) 8,150.00p 0.37%
FTSE 100 - Fallers
Evraz (EVR) 233.80p -11.24%
Ashtead Group (AHT) 1,675.50p -8.87%
Antofagasta (ANTO) 730.80p -8.19%
3i Group (III) 716.00p -7.28%
Intermediate Capital Group (ICP) 923.50p -7.05%
Informa (INF) 426.30p -6.76%
Glencore (GLEN) 133.58p -6.63%
BHP Group (BHP) 1,226.00p -6.44%
Legal & General Group (LGEN) 194.15p -6.31%
Pearson (PSON) 462.70p -6.18%
FTSE 250 - Risers
Cranswick (CWK) 3,778.00p 3.22%
Hyve Group (HYVE) 23.50p 2.40%
Gamesys Group (GYS) 778.00p 2.37%
Centamin (DI) (CEY) 141.35p 2.13%
Sabre Insurance Group (SBRE) 284.00p 1.79%
Big Yellow Group (BYG) 1,010.00p 1.71%
Babcock International Group (BAB) 401.30p 1.52%
Elementis (ELM) 63.70p 1.35%
PPHE Hotel Group Ltd (PPH) 1,225.00p 1.24%
Petropavlovsk (POG) 24.40p 1.04%
FTSE 250 - Fallers
Premier Oil (PMO) 20.97p -13.45%
Energean Oil & Gas (ENOG) 642.00p -10.46%
Cineworld Group (CINE) 53.92p -10.13%
Marston's (MARS) 34.86p -9.97%
McCarthy & Stone (MCS) 67.60p -9.87%
Aston Martin Lagonda Global Holdings (AML) 53.00p -9.63%
Senior (SNR) 57.00p -9.38%
Capita (CPI) 32.08p -9.15%
Shaftesbury (SHB) 600.50p -9.02%
Mitchells & Butlers (MAB) 161.40p -8.92%