London close: Stocks slide on fall in oil prices, Brexit worries

Falling oil prices and concerns about the possibility of Britain leaving the European Union dragged UK equities lower on Wednesday.

Oil prices declined after Saudi oil minister Ali al-Naimi said a global production cut was not on the cards but more countries would join a deal to freeze output.

“It is now clearer than ever Saudi Arabia is in it for the long run and want low prices to persist until the high-cost producers exit the market,” said IG market analyst Joshua Mahony.

“With Iran calling plans to freeze output ‘laughable’, and Iraq reiterating plans to raise production to 6 million barrels per day by 2020, there is no doubt this oversupplied market is here to stay.”

Brent crude dropped 1.03% to $32.93 per barrel and West Texas Intermediate slid 2.8% to $31.00 per barrel at 1621 GMT.

Meanwhile, worries that Britons may vote to leave the EU in a 23 June referendum weighed on investor sentiment and pushed the pound to a new seven-year low. The pound fell 0.58% to 1.3941 US dollars at 1620 GMT.

International Monetary Fund chief Christine Lagarde has warned that the economies of Britain and Europe would suffer if the UK exits the EU.

The ComRes poll for the Daily Mail revealed 51% were leaning towards the campaign to remain in the EU while 39% wanted a so-called Brexit and 10% were undecided.

“It will be a momentous decision and a vote for Brexit would have potentially huge consequences for all asset classes,” HSBC said in a note.

“Following a vote to leave, we think uncertainty could grip the UK economy, triggering a potential slowdown in growth and a collapse in sterling.”

In economic data, the number of mortgage approvals in January gained 33% with remortgaging up 42% and house purchases up 27%, the British Bankers’ Association revealed. Loans for house purchases rose to 47,509 in January from 43,660 in December, surging past analysts’ expectations of 44,800. The BBA said that reports suggest the increase in borrowing is due to buy-to-let and second-home buyers rushing to complete purchases ahead of the 3% increase in stamp duty in April.

In the US, the Mortgage Bankers’ Association said mortgage applications fell 4.3% in the week to 19 February.

Markit’s purchasing managers' index for US services fell to 49.8 in February from 53.2 a month earlier, below estimates for a reading of 53.5 and under the 50 level that separates an expansion from a contraction.

US new home sales plunged 9.2% to a seasonally adjusted rate of 494,000 in January, the Commerce Department revealed. It marked the lowest figure since October and was worse than analysts’ estimates for a 4.4% drop.

On the company front, shares in Barratt Developments jumped after it hiked its dividend by a quarter and said profits mushroomed in the first half of the year.

Persimmon also continued to rally after reporting healthy full year results as UBS upgraded the stock to ‘buy’ from ‘neutral’ and raised the price target to 2,330p from 2,135p.

Mining shares tumbled as metal prices fell as part of a wider downturn in commodities. Anglo American, Glencore, BHP Billiton, Antofagasta and Rio Tinto were among the top fallers

International Personal Finance Group dropped after revealing a drop in annual profit and revenue.

Man Group edged lower after reporting a 20.25% fall in adjusted pre-tax profit for the full year.

Hays slumped after the recruitment agency said it was mindful of increasing global uncertainties as it posted its half year results.

Meanwhile, Standard Chartered continued to tumble a day after reporting disappointing full year results as Bank of America Merrill Lynch downgraded stock to ‘neutral’ from ‘buy’ and slashed the price target to 475p from 650p.

Market Movers

FTSE 100 (UKX) 5,867.18 -1.60%
FTSE 250 (MCX) 16,117.50 -0.69%
techMARK (TASX) 3,087.56 -0.96%

FTSE 100 - Risers

Persimmon (PSN) 2,071.00p 2.07%
Randgold Resources Ltd. (RRS) 6,640.00p 1.84%
Fresnillo (FRES) 992.50p 1.69%
Barratt Developments (BDEV) 571.50p 1.69%
Intertek Group (ITRK) 2,869.00p 1.34%
Associated British Foods (ABF) 3,321.00p 0.70%
3i Group (III) 425.00p 0.66%
Taylor Wimpey (TW.) 177.60p 0.62%
Rexam (REX) 607.00p 0.50%
Bunzl (BNZL) 1,909.00p 0.32%

FTSE 100 - Fallers

Glencore (GLEN) 116.35p -10.12%
Anglo American (AAL) 409.75p -9.57%
BHP Billiton (BLT) 684.30p -8.38%
Rio Tinto (RIO) 1,871.50p -5.86%
Sports Direct International (SPD) 381.50p -5.03%
Coca-Cola HBC AG (CDI) (CCH) 1,385.00p -5.01%
Antofagasta (ANTO) 474.10p -4.53%
Standard Chartered (STAN) 389.10p -4.39%
Burberry Group (BRBY) 1,180.00p -4.38%
Old Mutual (OML) 165.60p -4.17%

FTSE 250 - Risers

Entertainment One Limited (ETO) 150.00p 10.29%
CLS Holdings (CLI) 1,500.00p 5.56%
Acacia Mining (ACA) 250.50p 5.52%
Petrofac Ltd. (PFC) 777.50p 4.78%
Riverstone Energy Limited (RSE) 825.00p 4.43%
Interserve (IRV) 412.80p 3.93%
Evraz (EVR) 68.00p 3.66%
Homeserve (HSV) 406.20p 3.18%
Dignity (DTY) 2,513.00p 3.08%
Kier Group (KIE) 1,308.00p 2.83%

FTSE 250 - Fallers

International Personal Finance (IPF) 230.40p -13.12%
Amec Foster Wheeler (AMFW) 326.60p -9.23%
Hays (HAS) 113.30p -8.78%
Capital & Counties Properties (CAPC) 316.30p -7.78%
Man Group (EMG) 149.50p -7.43%
Auto Trader Group (AUTO) 359.00p -7.26%
Drax Group (DRX) 222.40p -6.63%
Tullow Oil (TLW) 149.60p -6.50%
Vedanta Resources (VED) 241.90p -6.24%
Meggitt (MGGT) 403.70p -5.83%