London open: Stocks slide as oil prices surge
London stocks tumbled again on Monday as oil prices surged amid the ongoing Russia-Ukraine war.
At 0840 GMT, the FTSE 100 was down 1.7% at 6,870.71, 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, with Lloyds, Barclays and NatWest all weaker.
Travel-related shares also 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 and Anglo-Russian precious metals miner Polymetal were the top gainers on the FTSE 100, having tumbled in recent days.
Miners rallied as metals prices rose, with Anglo American, Glencore, Rio and Antofagasta all sharply higher.
Oil giants Shell and BP were also high risers amid surging oil prices.
Market Movers
FTSE 100 (UKX) 6,870.71 -1.67%
FTSE 250 (MCX) 18,692.73 -3.58%
techMARK (TASX) 3,988.36 -2.60%
FTSE 100 - Risers
Evraz (EVR) 81.06p 35.10%
Polymetal International (POLY) 192.30p 13.52%
Anglo American (AAL) 4,059.50p 6.05%
Shell (SHEL) 1,929.40p 5.24%
BAE Systems (BA.) 723.80p 4.66%
Fresnillo (FRES) 775.60p 4.53%
Glencore (GLEN) 480.30p 4.27%
Rio Tinto (RIO) 6,234.00p 3.42%
Antofagasta (ANTO) 1,579.50p 3.10%
BP (BP.) 354.80p 1.91%
FTSE 100 - Fallers
Intermediate Capital Group (ICP) 1,307.00p -8.98%
International Consolidated Airlines Group SA (CDI) (IAG) 113.10p -8.41%
Lloyds Banking Group (LLOY) 39.59p -7.99%
Coca-Cola HBC AG (CDI) (CCH) 1,449.50p -7.97%
Barclays (BARC) 144.42p -7.90%
NATWEST GROUP PLC ORD 100P (NWG) 186.80p -7.75%
Melrose Industries (MRO) 112.30p -7.42%
Mondi (MNDI) 1,249.00p -7.31%
BT Group (BT.A) 155.85p -6.93%
Smurfit Kappa Group (CDI) (SKG) 2,838.00p -6.80%
FTSE 250 - Risers
Clarkson (CKN) 3,330.00p 6.90%
Harbour Energy (HBR) 417.60p 5.72%
Hochschild Mining (HOC) 126.90p 4.70%
Centamin (DI) (CEY) 106.90p 3.99%
Capricorn Energy (CNE) 219.40p 3.88%
BlackRock World Mining Trust (BRWM) 760.00p 3.12%
Energean (ENOG) 1,062.00p 2.21%
QinetiQ Group (QQ.) 306.80p 0.72%
Diversified Energy Company (DEC) 109.00p 0.55%
Ultra Electronics Holdings (ULE) 3,200.00p 0.44%
FTSE 250 - Fallers
Oxford Instruments (OXIG) 1,730.00p -24.12%
Wizz Air Holdings (WIZZ) 2,304.00p -13.80%
TUI AG Reg Shs (DI) (TUI) 172.85p -11.13%
IWG (IWG) 214.00p -9.67%
Petropavlovsk (POG) 1.70p -9.57%
easyJet (EZJ) 430.90p -9.34%
Aston Martin Lagonda Global Holdings (AML) 719.20p -8.48%
TBC Bank Group (TBCG) 879.00p -8.44%
Marks & Spencer Group (MKS) 144.05p -8.42%
Pagegroup (PAGE) 414.80p -8.03%