Sector movers: Oil, resource stocks hammer London market

A dip in oil and metal prices saw commodity linked stocks drag the London market lower on Monday, with extractive industries feeling the heat.

The FTSE 100 ended 1.32% or 78.72 points lower at 5,874.06, while the FTSE 250 was 0.62% or 104.72 points at 16,772.57. As oversupply issues remain the dominant market concern, Brent breached the $38 per barrel level by a considerable margin before recovering to $37.97, up 0.11% or four cents by 1647 GMT. Concurrently, the WTI was up 1.49% or 53 cents to $36.15 per barrel.

With OPEC and non-OPEC providers jostling for market position around 3m bpd of surplus oil seems to be hitting the market. However, Iran’s deputy oil minister Amir Hossein Zamani Nia said there was “absolutely no chance” of his country delaying its oil shipments because of low prices or the supply glut.

Analysts at Barclays said negative sentiment with regard to the current and expected state of oil market balances has intensified following OPEC’s meeting in Vienna. “Fundamentals, on the other hand, have not deteriorated markedly since the meeting. However, beyond the near-term weakness, an oil market balancing in 2016 is still on course to help prices rebound.”

Away from the oil market, most metal futures headed lower during late afternoon trading in Europe. At 1635 GMT, three-month delivery contracts of primary aluminium (down 0.5%), tin (down 0.1%) and zinc (down 0.4%) were in negative territory on the London Metal Exchange.

The copper contract remained under pressure trading at $4,681.00 per metric tonne down 0.7%. However, lead bucked the trend with a 0.2% uptick.

The precious metal complex remained under pressure with traders pricing in a US interest rate hike. COMEX gold futures contract was down 0.63% or $6.80 to $1,068.90 an ounce, while spot gold was 0.60% or $6.46 lower at $1,068.31 an ounce. COMEX silver was down 1.11% or 15 cents to $13.73 an ounce; however spot platinum showed resistance with a rise of 1.20% or $10.11 to $850.41 an ounce.

As a result, Glencore (down 6.29%), Anglo American (down 4.15%) and Antofagasta (down 3.87%) dragged the FTSE 100 lower, with the index closing at a 10-week low. Royal Dutch Shell dipped as it said it was axing 2,800 staff as part of its massive merger with BG Group after clearing its last international regulatory hurdle.

Concurrently, Evraz (down 14.55%), Acacia Mining (down 9.89%), Ophir Energy (down 6.05%) and Kaz Minerals (down 5.20%) were among the biggest FTSE 250 fallers.

Elsewhere, information services company Experian also sank after it completed the sale of its consumer insights businesses Hitwise and Simmons to California-based private equity firm Symphony Technology Group for $47m (£31.1m) and up to an additional $5m based on an earnout.

Entertainment One declined after saying it has completed its refinancing arrangement which was announced to shareholders at the beginning of the month.

RPC Group was a high riser on its plans to acquire Global Closure Systems Group (GCS Group) in a deal valued at €650m (£470m). Finally, Old Mutual rebounded after last week’s losses due to political issues in South Africa, bumping rival financial stocks higher as well.