Sector movers: Mining and oil stocks back in negative territory

Natural resources companies led London trading lower, as persistent volatility in the commodities market hammered key mining and oil and gas shares.

Nearing market close, the FTSE 100 was down 5.32 points or 0.08% at 6747.09, with the FTSE 250 down 29.24 points or 0.16% at 17745.84, as oil and gas, and oilfield services stocks suffered.

Having swung back and forth around the $50-level, the Brent front month futures contract was down 0.58% at $49.30 per barrel. The WTI’s slide of 1.46% to $44.59 was even deeper as the market continues to grapple with a lacklustre Chinese market and supply-demand imbalances in markets.

Blue chip BP, down 3% or 11.85p to 383.20p, was among the FTSE 100’s biggest fallers having just announced a major investment in to capital intensive North Sea exploration. However, fellow blue chips BG Group and Royal Dutch Shell avoided slipping into negative territory with the former broadly flat and the latter up 0.44%.

A number of mid to small oil and gas companies also endured a rocky session. Tullow Oil down 7.81% or 19p to 224.30p ended up as the FTSE 250’s biggest faller. Rival Premier Oil, down 5.52% or 7p to 119.70p was also not far behind. Temporary power solutions provider Aggreko (down 4.80%) also felt the heat from a wider downturn in the oil and gas industry.

Oilfield services providers slipped into the red as well, with Hunting (down 0.77%), Lamprell (down 0.69%) and Petrofac (down 0.41%) trading lower, but market major John Wood Group marginally bucked the trend rising 0.49%.

Mining and metals stocks slipped as well, following a short-lived reprieve in the previous session, as the London Metal Exchange had most base metals futures seeing red. Three-month delivery contracts of primary aluminium (down 1.4%), copper (down 0.1%), nickel (broadly flat), lead (down 0.9%) and zinc (down 0.4%) were all trading lower, as Anglo American led the blue chip miners lower.

Shedding 2.84% or 22.70 to 775.40p made Anglo American the biggest mining sector faller on the FTSE 100. Meanwhile, platinum miner Lonmin, down 6.55% or 2.91p to 41.50p, continued to feel the heat among midcaps as the price of the precious metal stayed well below $1,000 an ounce on oversupply concerns.

Insurers continued to trade higher on M&A sentiment and positive performances. Legal & General (up 1.74%) was among the FTSE 100’s biggest climbers. A positive footnote was provided by the aerospace and defence sector, as Cobham (up 6.65%) topped the FTSE 250 risers chart on the back of a Charles Stanley upgrade.

The broker upgraded Cobham to ‘accumulate’ from ‘hold’ after the company’s encouraging first half results. Charles Stanley upped its target price to 299.7p from 262.5p and said it liked the company’s focus on high end niche technology.