London midday: Stocks slump as oil surges; miners buck trend
London stocks were still firmly in the red by midday on Monday as oil prices surged amid the ongoing Russia-Ukraine war.
The FTSE 100 was down 1.3% at 6,895.62, while oil prices hit their highest level since 2008 after the US said over the weekend that it was in talks with European allies about a potential ban on imports from Russia.
Hussein Sayed, chief market strategist at Exinity, said: "Prices soared at the open in Asia, with Brent crude rallying $21 to trade slightly above $139 a barrel before slipping back below $130.
"Sanctioning Russian oil would be the most significant escalation in the West's response to Moscow's invasion of Ukraine, and it poses serious negative consequences for the global economy. While Russia's economy will be hurt the most, Europe will likely fall into a recession and US growth will be hit, with consumers feeling the most pain.
"In 2008, demand destruction occurred when prices approached $140. Brent crude actually hit $147.50 in July 2008, shortly before the global financial crisis. Adjusting for inflation, prices need to go above $200 to have a similar effect on consumption. However, the current spike in prices is not a demand-driven shock but a supply-driven one, and there's no ceiling in sight.
"Russia currently exports approximately 4.5 million barrels of crude. If exports were cut in half, prices would likely remain elevated in the short to medium-term around current levels, even if the US and other nations release oil from their strategic reserves. However, if the crisis gets worse and Europe imposes sanctions on Russian oil with no response from OPEC members, expect prices to jump above $200."
In equity markets, banks were under the cosh, travel-related shares slid, with BA and Iberia owner IAG, Wizz Air, Tui and easyJet all down.
Oxford Instruments tanked after Spectris pulled its £1.7bn bid for the company, citing global market uncertainties caused by the “deplorable” events in Ukraine after the Russian invasion. Last week, Oxford Instruments said it had received a non-binding, indicative offer that included £19.50 a share in cash, plus new shares in Spectris worth £11.50 each.
On the upside, Russian steelmaker Evraz, Anglo-Russian precious metals miner Polymetal and gold miner Petropavlovsk - which has operations in Russia - all gained after tumbling in recent days. Earlier, the London Stock Exchange said it had cancelled all Polymetal trades executed between 0841 GMT and 0902 GMT after a 700% spike in the share price.
Defence company BAE Systems racked up strong gains, while oil giants Shell and BP gushed higher amid surging oil prices.
Shipping services company Clarkson also gained after it posted "record" results for 2021 following a particularly strong performance in the broking and financial segments.
Market Movers
FTSE 100 (UKX) 6,895.62 -1.31%
FTSE 250 (MCX) 18,785.15 -3.11%
techMARK (TASX) 4,015.07 -1.95%
FTSE 100 - Risers
Evraz (EVR) 85.70p 42.83%
Polymetal International (POLY) 200.40p 18.30%
BAE Systems (BA.) 742.80p 7.40%
Shell (SHEL) 1,966.40p 7.25%
Anglo American (AAL) 4,043.00p 5.62%
Antofagasta (ANTO) 1,617.00p 5.55%
BP (BP.) 361.55p 3.85%
Rio Tinto (RIO) 6,234.00p 3.42%
Glencore (GLEN) 475.55p 3.23%
Pearson (PSON) 621.60p 2.47%
FTSE 100 - Fallers
Melrose Industries (MRO) 112.15p -7.54%
Ocado Group (OCDO) 1,122.50p -7.54%
Scottish Mortgage Inv Trust (SMT) 831.80p -6.85%
Intermediate Capital Group (ICP) 1,342.50p -6.51%
International Consolidated Airlines Group SA (CDI) (IAG) 115.56p -6.41%
Prudential (PRU) 1,016.50p -6.36%
Royal Mail (RMG) 331.70p -6.03%
Coca-Cola HBC AG (CDI) (CCH) 1,482.00p -5.90%
Kingfisher (KGF) 252.80p -5.35%
Smurfit Kappa Group (CDI) (SKG) 2,885.00p -5.25%
FTSE 250 - Risers
Petropavlovsk (POG) 2.50p 32.98%
Clarkson (CKN) 3,290.00p 5.62%
TP Icap Group (TCAP) 118.40p 4.87%
Hochschild Mining (HOC) 127.00p 4.79%
Centamin (DI) (CEY) 106.70p 3.79%
Weir Group (WEIR) 1,478.00p 3.43%
BlackRock World Mining Trust (BRWM) 762.00p 3.39%
Capricorn Energy (CNE) 218.20p 3.31%
Endeavour Mining (EDV) 2,060.00p 3.26%
Harbour Energy (HBR) 407.80p 3.24%
FTSE 250 - Fallers
Oxford Instruments (OXIG) 1,734.00p -23.95%
Greencore Group (CDI) (GNC) 108.20p -11.67%
TUI AG Reg Shs (DI) (TUI) 175.80p -9.61%
Oxford Biomedica (OXB) 581.00p -8.93%
easyJet (EZJ) 434.30p -8.63%
Lancashire Holdings Limited (LRE) 345.20p -8.44%
Capita (CPI) 20.55p -8.01%
Bridgepoint Group (Reg S) (BPT) 260.50p -7.95%
Ibstock (IBST) 149.90p -7.92%
TBC Bank Group (TBCG) 884.00p -7.92%