Sector movers: Banking, resource stocks head lower

Banking and resource stocks headed lower on Monday with a mixed impact on headline London indices.

The FTSE 100 closed 0.39% or 23.69 points lower at 6060.10, while the FTSE 250 ended broadly flat, up a mere 0.01% or 1.54 points, at 16,489.26. Oil futures endured another volatile day, while a further round of lacklustre US data saw gold extend gains for much of the Asian and European trading session propped up by safe haven demand.

At 1642 GMT, the Brent front-month oil futures contract was down 3.61% or $1.30 to $34.69 per barrel, while WTI was down 1.63% or three cents to $31.19 per barrel.

Data from the US Commerce Department showed the country’s construction spending nudged up 0.1% to $1.12trn compared with a downwardly-revised 0.6% decline the previous month, missing expectations for a 0.6% increase.

Spending on private construction was down 0.6% to a seasonally-adjusted annual rate of $824bn from $828.8bn in November. Residential construction was at a seasonally adjusted annual rate of $429.6bn in December, up 0.9 percent from November’s $425.8bn.

Concurrently, the Institute for Supply Management’s US manufacturing sector purchasing managers’ index edged higher from a reading of 48.0 for the month of December to 48.2. However, it too was less than the reading of 48.4 which economists had pencilled in.

On the COMEX, the front-month gold futures contract was up 0.73% or $8.20 to $1,124.60 an ounce while spot gold was 0.75% or $8.34 higher at $1,126.55 an ounce. COMEX silver rose 0.44% or six cents to $14.31 an ounce, while spot platinum rose 0.10% or $1.00 to $872.35 an ounce.

Unsurprisingly, blue chip Fresnillo (up 2.35%) and midcap Acacia Mining (up 3.83%) were among the biggest gainers on the FTSE 100 and FTSE 250 respectively. However, oil major BP (down 2.43%) headed lower as broker Exane BNP lowered its target prices for the company by 3% to 330p.

The midcap resource duo of Evraz (down 5.69%) and Vedanta Resources (down 4.22%) also posted noticeable declines. However, Premier Oil rose after it resumed trading on Monday as the terms of its deal to buy the UK North Sea assets of German power company E.ON were amended so that it no longer constitutes a reverse takeover.

Banking stock also endured a troubling session. Royal Bank of Scotland slipped lower following a report in The Sunday Times that AIM-listed lender Secure Trust could make an audacious bid to buy the lender’s Williams & Glyn subsidiary.

HSBC declined as a Reuters report said the bank has imposed a hiring and pay freeze across the bank globally in 2016 in an effort to cut costs. However, the banking trio of Standard Chartered (down 2.34%), Lloyds Banking Group (down 1.94%) and Barclays (down 1.72%) registered the biggest declines in the sector.

Prudential (down 3.00%) ended up as the biggest faller on the FTSE 100 after announcing that Michael McLintock has decided to retire as chief executive of its subsidiary M&G Investments.

On a more positive note, Ryanair flew higher after posting a jump in third quarter profit as traffic grew strongly and the budget airline announced a €800m share buyback programme. Rivals EasyJet (up 3.42%) and British Airways-owner International Consolidated Airlines Group (up 2.87%) also ended the session in positive territory.

Finally, InterContinental Hotels Group (up 2.09%) edged up following a report from The Sunday Times that it is preparing to return £700m to shareholders via a share buyback after it missed out on a number of hotel deals.