London close: Stocks end on mixed note gas prices rebound

London stocks finished on a mixed note on Monday, as Brent oil moved higher and gas prices surged, the latter following Russia's decision to indefinitely suspended gas flows through the Nord Stream 1 pipeline to Germany.

Investors were also digesting news that Liz Truss had won the Tory leadership contest to become the next UK prime minister.

At the weekend, Truss told BBC One that she would reveal her plans to ease the pain from soaring energy prices and expanding energy supply within seven days from her arrival at Number 10.

The FTSE 100 edged up 0.09% to 7,287.43, but outperformed its European counterparts by a wide margin, as the Organisation of Petroleum Exporting Countries announced a 100,000 barrel per day reduction in their combined output starting from October.

A 27.34% rebound in Dutch TTF gas futures to €242/MWh on the other hand served to drag the second-tier index down by 1.19% to 18,629.68.

Sterling was trading just above $1.15, little changed, but only after having earlier hit its lowest level since March 2020 at 1.444.

A weaker pound tends to benefit the top-flight index, as around 70% of its constituents derive their earnings from overseas. Strength in the heavily-weighted mining sector also lent a hand.

"Once more, oil prices have come to the rescue of the FTSE 100, with the index looking to end this relatively uneventful session flat on the day. OPEC’s talk of a modest cut to production has provided the spark for another bounce in oil prices," said IG senior market analyst Chris Beauchamp.

"Should it continue to cut production if prices sink further, it risks intensifying the global recession that seems to be more likely with each passing day."

Investors were also mulling over the latest survey from S&P Global/CIPS, which showed that growth in the UK services sector eased to an 18-month low in August.

The purchasing managers’ index for the sector fell to 50.9 from 52.6 in July. This was above the 50.0 mark that separates contraction from expansion, but below the flash estimate and consensus of 52.5.

The survey found that although sales continued to rise, growth was only modest amid growing economic uncertainty, reduced client confidence and worries over high inflation. S&P Global/IPS said cost pressures remain extremely elevated due to rising energy, fuel, and utility bills, with confidence about the future again historically subdued.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The latest PMI data signal that the economy is on the brink of a recession.

"The services PMI fell to its lowest level since February 2021, and likely is consistent with overall services output flatlining, given its exclusion of public sector activities- which likely fell again due to the winding-down of Covid testing and vaccinations- and the tendency for the PMI to give an overly upbeat steer on growth in real GDP when inflation is high."

In equity markets, veterinary pharmaceuticals group Dechra slumped even as it posted a rise in full-year profit and revenue.

Aston Martin slid after the luxury car maker confirmed a £575.8m rights issue, supported by chairman Lawrence Stroll and Saudi Arabia’s sovereign wealth fund. The issue price was 103p per share, which is a discount of 78.5% to the closing share price on Friday.

On the upside, mining stocks were among the top performers as metals prices rose, with Glencore, Antofagasta, Anglo and Rio all up.

Countryside Partnerships rallied after it agreed to be bought by housebuilder Vistry in a £1.25bn deal. Under the terms of the acquisition, Vistry will pay 0.255 of a new Vistry share and 60p per share in cash.

Market Movers

FTSE 100 (UKX) 7,287.43 0.09%
FTSE 250 (MCX) 18,629.68 -1.19%
techMARK (TASX) 4,243.91 -0.52%

FTSE 100 - Risers

Glencore (GLEN) 471.50p 4.03%
BAE Systems (BA.) 789.40p 3.27%
Harbour Energy (HBR) 485.30p 2.60%
JD Sports Fashion (JD.) 122.80p 2.38%
Ocado Group (OCDO) 719.60p 2.22%
Kingfisher (KGF) 239.60p 2.17%
BP (BP.) 463.35p 2.13%
Next (NXT) 6,036.00p 1.79%
Antofagasta (ANTO) 1,121.00p 1.77%
National Grid (NG.) 1,090.50p 1.54%

FTSE 100 - Fallers

Dechra Pharmaceuticals (DPH) 3,126.00p -10.58%
Smurfit Kappa Group (CDI) (SKG) 2,798.00p -5.12%
CRH (CDI) (CRH) 3,075.00p -3.79%
Abrdn (ABDN) 147.50p -3.02%
Smith (DS) (SMDS) 263.00p -2.99%
International Consolidated Airlines Group SA (CDI) (IAG) 105.40p -2.75%
Fresnillo (FRES) 675.20p -2.68%
Spirax-Sarco Engineering (SPX) 10,275.00p -2.56%
Intermediate Capital Group (ICP) 1,285.00p -2.43%
Auto Trader Group (AUTO) 632.40p -2.32%

FTSE 250 - Risers

Bridgepoint Group (Reg S) (BPT) 296.80p 7.15%
Countryside Partnerships (CSP) 240.00p 5.17%
Moonpig Group (MOON) 180.30p 2.79%
Tullow Oil (TLW) 50.75p 2.77%
Energean (ENOG) 1,292.00p 2.46%
Balfour Beatty (BBY) 325.80p 2.26%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 168.60p 2.18%
Marks & Spencer Group (MKS) 123.65p 1.98%
Vistry Group (VTY) 755.00p 1.89%
Diversified Energy Company (DEC) 130.20p 1.32%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 405.00p -15.64%
Tyman (TYMN) 211.00p -7.66%
TI Fluid Systems (TIFS) 136.00p -5.95%
TUI AG Reg Shs (DI) (TUI) 123.45p -5.37%
Apax Global Alpha Limited (APAX) 157.40p -5.18%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,080.00p -4.59%
Genus (GNS) 2,342.00p -4.41%
Abrdn Private Equity Opportunities Trust (APEO) 413.00p -4.40%
Wizz Air Holdings (WIZZ) 2,009.00p -4.15%
Synthomer (SYNT) 182.30p -4.00%