Sector movers: Commodity prices impact London markets

Commodities had a big impact on the London markets on Monday after concerns about growing supplies of petroleum products.

Both the FTSE 100 and the FTSE 250 started the week in the red, with the top-tier market closing down 23.31 points (0.36%) at 6,420.77, while the 250 closed down 59.64 points (0.35%) at 17,181.06.

Overall the market declined after the CBI Industrial Trends Survey’s headline total orders balance fell from -7 in September to -18 in October, its lowest level in two-and-a-half years and well below the consensus expectation of -9. The decline was driven by lower exports mainly due to a stronger pound and subdued foreign demand.

Oil and gas producers as well as the oil equipment services and distribution sector slipped due to lower oil prices on concerns about growing supplies of petroleum products. Goldman Sachs warned in a note on Sunday that crude oil prices could drop sharply as refined product storage sites come close to maximum capacity in the US and Europe, adding to worries about an oversupply. Brent crude futures fell 0.3% to $47.80 per barrel and West Texas Intermediate dipped 0.9% to $44.17 per barrel at 1532 GMT. Key fallers included Tullow Oil and Premier Oil on the FTSE 250.

Mid-way through the London Metal Exchange session, three-month contract futures were mainly lower including primary aluminium (-1.0%), copper (-1.2%), nickel (-1.0%), tin (-2.5%), zinc (-0.4%) and lead (+0.1%). That led mining stocks to drop, led by Anglo American and Glencore on the FTSE 100.

The media sector was hit as advertising and PR firm WPP dropped following its third quarter results. While it showed a healthy rise in revenue and said it expects an even better fourth quarter, Investec analysts Steve Liechti and Richard Holroyd said it was “not as good as hoped”. However they kept its full-year guidance unchanged for like-for-like 3% growth.