London midday: FTSE flat on oil prices slump, disappointing data

London stocks were flat on Monday amid a lack of drivers as oil prices remained under pressure.

At 1137 GMT Brent crude fell 2.6% to $31.35 per barrel and West Texas Intermediate dropped 3.04% to $31.24 per barrel.

“As it is we’ve probably seen one of the worst ever starts to a trading year, driven primarily by concerns around plunging oil prices, disappointing earnings, and slowing global growth, particularly in China and emerging markets,” said Michael Hewson, chief market analyst at CMC Markets.

“With oil prices also slipping to 13-year lows the correlation between the two has been the primary driver for some weeks now, with quite a bit of evidence that oil prices were at peak bearishness, as forward predictions for oil prices got steadily revised lower, on a daily basis.”

Meanwhile, the only UK data release of note on Monday was the CBI industrial trends survey. The index for total orders in January came in at -15 compared to analysts’ expectations of -10 and the previous month’s -7. Nevertheless, the balance of manufacturers expecting to increase output over the next three months improved to a five-month high of +14% in January from -5% in December.

“Manufacturers have seen a flat start to 2016 but while we have seen real problems in some industries in the last few months, there are signs that orders and production are stabilising overall,” said Rain Newton-Smith, CBI director of economics.

In the Eurozone, the German Ifo survey for January came in weaker than expected.

The business climate index fell to 107.3 from 108.6 the previous month and below the 108.4 reading expected by economists. The current assessment and expectations indexes also undershot estimates, at 112.5 and 102.4, respectively. Economists had been expecting readings of 112.8 and 104.1.

Looking ahead, the attention will be on the Federal Reserve’s interest rate announcement on Wednesday and the Bank of Japans’ policy decision on Friday.

Analysts expect the Fed will keep interest rates unchanged after last month’s first hike in more than a decade by 25 basis points to 0.50%.

“While the Fed is expected to maintain status quo, the accompanying statement is going to be the centre of attention, especially given the recent slide of oil prices below $30 and the renewed Chinese sell-off,” said Brenda Kelly, head analyst at London Capital Group.

“The global macroeconomic conditions may not be appropriate for the Fed to hike 3-4 times this year as scheduled.”

Bank of Japan Governor Haruhiko Kuroda raised hopes of further stimulus on Saturday at Davos after saying the central bank “won’t hesitate adjusting policy, including easing policy, if necessary to achieve our 2% price target”.

Rabobank said while Haruhiko’s remarks were dovish, the BoJ is in the habit of reiterating that the BoJ ”won’t hesitate”.

“This phrase was used by Kuroda last May, September and November although the BoJ has not made any significant adjustment to its QQE programme since October 2014,” analysts at the financial services group said in a note.

In company news, Kingfisher slumped as it said profits would take a £50m hit in the first year of its five-year transformation programme.

Lloyds Banking Group was under the cosh on reports the lender faced another major mis-selling bill and as JP Morgan cut its price target from 98p to 90p.

Ophir Energy jumped after signing a non-binding head of terms agreement with Schlumberger, which will receive a 40% interest in the company’s Fortuna project in Equatorial Guinea.

Imagination Technologies was a high riser after saying it is reviewing strategic options for its audio products division Pure.

Randgold and Glencore rallied as gold and copper prices rose 0.96% and 0.37% on the Comex, respectively.

Market Movers

FTSE 100 (UKX) 5,895.21 -0.08%
FTSE 250 (MCX) 16,150.63 0.14%
techMARK (TASX) 3,119.39 0.57%

FTSE 100 - Risers

Glencore (GLEN) 82.54p 5.04%
Randgold Resources Ltd. (RRS) 4,683.00p 2.81%
Berkeley Group Holdings (The) (BKG) 3,543.00p 2.25%
ARM Holdings (ARM) 1,015.00p 1.96%
AstraZeneca (AZN) 4,441.00p 1.85%
Coca-Cola HBC AG (CDI) (CCH) 1,395.00p 1.75%
Sage Group (SGE) 564.00p 1.71%
Fresnillo (FRES) 672.50p 1.66%
GlaxoSmithKline (GSK) 1,414.50p 1.65%
Reckitt Benckiser Group (RB.) 6,146.00p 1.64%

FTSE 100 - Fallers

Kingfisher (KGF) 331.70p -3.86%
Lloyds Banking Group (LLOY) 64.41p -3.66%
Barclays (BARC) 185.85p -2.57%
Royal Bank of Scotland Group (RBS) 255.40p -2.56%
BP (BP.) 344.10p -2.44%
Tesco (TSCO) 157.30p -2.02%
GKN (GKN) 288.00p -1.64%
Standard Chartered (STAN) 480.60p -1.62%
BT Group (BT.A) 479.75p -1.54%
Rio Tinto (RIO) 1,630.00p -1.42%

FTSE 250 - Risers

Allied Minds (ALM) 287.90p 7.43%
Evraz (EVR) 65.95p 6.89%
Genus (GNS) 1,427.00p 4.31%
Ophir Energy (OPHR) 87.75p 4.28%
Ted Baker (TED) 2,752.00p 4.24%
Paragon Group Of Companies (PAG) 313.60p 4.19%
Telecom Plus (TEP) 965.50p 4.04%
Centamin (DI) (CEY) 64.90p 3.59%
Pets at Home Group (PETS) 264.90p 3.48%
Lancashire Holdings Limited (LRE) 623.00p 3.23%

FTSE 250 - Fallers

Tullow Oil (TLW) 141.20p -4.47%
Weir Group (WEIR) 846.50p -4.46%
IMI (IMI) 784.00p -3.39%
Spectris (SXS) 1,577.00p -2.83%
AO World (AO.) 150.90p -2.77%
Amec Foster Wheeler (AMFW) 387.70p -2.71%
Aggreko (AGK) 799.00p -2.62%
Just Retirement Group (JRG) 148.50p -2.24%
P2P Global Investments C (P2P2) 936.00p -2.19%
Petrofac Ltd. (PFC) 723.00p -2.17%