Sector movers: Oil stocks head lower, as miners recover

The London market closed higher on Monday, aided by a recovery in mining and metals stocks as oil related ones took a tumble.

The FTSE 100 closed up 0.26% or 17.73 points at 6736.22, while the FTSE 250 closed up 0.60% or 105.05 points at 17760.88 taking their cue earlier in the session from Chinese data.

China’s imports fell 8.1% year-on-year in July as expected, while exports also declined 8.3% pointing to weakness in industrial production. Nonetheless, expectations of an economic stimulus by Beijing boosted the country’s equity market and supported selected metals futures contract in European trading.

Past the midway point in trading on the London Metal Exchange, three-month futures contracts of copper (up 0.4%), nickel (up 1.6%) and zinc (up 0.4%) were all trading higher. However, primary aluminium (down 0.4%), lead (down 0.5%) and tin (down 1.0%) were all trading lower.

Meanwhile, precious metals saw a much better session with platinum finally reversing a dire six weeks of decline on the back of miners such as Lonmin (up 8.44%) announcing production cuts in a market grappling with oversupply.

Predictably, a plethora of other miners responded too, with Vedanta (up 10.01%) - benefitting from Indian clearance for its projects in Goa - leading the way. Evraz (up 6.75%) was not far behind. Concurrently, blue chips Rio Tinto (up 1.84%), Fresnillo (up 1.80%) and BHP Billiton (up 1.51%) were also trading higher.

However, oil and gas stocks endured a miserable session. Oil benchmarks began in the red in Asia, but European buying sent both Brent and WTI on gradual hike up upwards from six-month lows seen last week.

The Brent front month futures contract was just shy of the $50 per barrel level at $49.85, up $1.24 or 2.55%, while the WTI was up 2.10% or 92 cents at $44.79, as traders absorbed the potential of a Chinese stimulus and moved to cover their losses.

However, it wasn’t enough to trigger and uptick for oil related stocks. Petrofac (down 2.89%) and Cairn Energy (down 1.39%) were among the biggest midcap fallers. However, Nostrum Oil & Gas (up 5.58%) bucked negative sector trends on the back of its ongoing bid for Tethys Petroleum.

Blue chips BP (down 0.03%), BG Group (down 0.32%) and Royal Dutch Shell (down ‘a’ shares down 0.32% / ‘b’ shares down 0.68%) also marginally ended in negative territory.