London close: Stocks in the red as gas prices soar
London stocks finished Monday’s session in the red, as natural gas futures jumped after Russia said the Nordstream 1 pipeline would be closed for three days, and as investors eyed Friday’s Jackson Hole symposium hosted by the US Federal Reserve.
The FTSE 100 ended the session down 0.22% at 7,533.79, and the FTSE 250 was off 1.95% at 19,499.34.
Sterling was in a mixed state, last trading down 0.68% on the dollar at $1.1748, while it strengthened 0.411% against the euro to €1.1830.
“The fact this isn’t simply a round of profit-taking is underlined by the diverging fortunes of natural gas and oil prices,” said IG chief market analyst Chris Beauchamp.
“The latter continues to make new highs as the spectre of a European energy crisis and surging demand into the winter looms large once again.
“But the latter has taken a hit again as recession concerns lead to diminished forecasts of oil demand.
“Like it or not, it seems that the quiet summer rally in risk assets has met its match.”
In economic news, economists at Citi raised their forecasts for the peak in UK inflation to 18%, in the wake of the additional 25% rally in UK gas prices and 7% rise in electricity costs over the last week.
The new peak, which Citi said would likely be reached in January, was based on the assumption of a £300 offset on household energy bills from October through to 2023.
Ofgem is set to announce its new price cap for October this week.
Citi predicted that the typical dual tariff would increase to £3,717 ahead of winter, compared to the current £1,285.
China's central bank, meanwhile, cut two benchmark interest rates in a bid to boost sluggish economic activity, held back by the continued threat of Covid lockdowns and a weak property market.
The one-year loan prime rate, which serves as a benchmark for corporate loans, was lowered to 3.65% from 3.7%, the People's Bank of China said.
At the same time its five-year rate, which is used to price mortgages, was cut to 4.3% from 4.45%.
It was the second time in a week the PBoC cut rates, with the seven-day reverse repurchase rate - a key rate at which it provides short-term liquidity to banks - already reduced.
"The move comes after a data set in July highlighted the Chinese economy was slowing down,” said Hargreaves Lansdown analyst Sophie Lund-Yates.
“This latest tactic isn’t entirely a surprise, but it should act as a further indicator that the global economic stage is losing light.”
Elsewhere, Russian state-owned gas giant Gazprom announced over the weekend that gas flows through Nord Stream 1 would be halted for three days between 29 August and 2 June for “regular maintenance”.
In equity markets, Cineworld tumbled 21.36% by the close after it confirmed it was considering filing for bankruptcy in the US, as it looked to access near-term liquidity.
Shares in the company - which owns American chain Regal Cinemas - tanked on Friday following a press report that it was preparing to file for bankruptcy within weeks after struggling to rebuild attendance from pandemic lows.
Shares of Hungary-based Wizz Air descended 9.83% after the carrier said chief financial officer Jourik Hooghe would step down to pursue opportunities outside of the company.
He would be succeeded by Ian Malin, who would join the low-cost carrier on 1 October.
Vodafone Group reversed earlier gains to close down 1.53%, after announcing it was planning to sell its Hungary business to 4iG and Corvinus - a Hungarian state holding company - for €1.8bn.
The telecoms giant said its shared services business in Hungary, VOIS, was not included in the transaction and would continue to provide services to Vodafone's other operating companies.
On the upside, Harbour Energy rose 2.16%, National Grid added 1.41%, BP gained 0.27%, SSE advanced 1.11%, and Centrica was 1.91% higher on the prospect of higher consumer prices boosting profits.
FTSE 250 gas producer Energean was also in the green, rising 1.16% by the end of trading.
Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti and Alexander Bueso.
Market Movers
FTSE 100 (UKX) 7,533.79 -0.22%
FTSE 250 (MCX) 19,499.34 -1.95%
techMARK (TASX) 4,293.59 -1.11%
FTSE 100 - Risers
Haleon (HLN) 263.30p 2.81%
Harbour Energy (HBR) 406.00p 2.16%
Centrica (CNA) 84.26p 1.91%
AstraZeneca (AZN) 11,416.00p 1.69%
Endeavour Mining (EDV) 1,780.00p 1.60%
Standard Chartered (STAN) 591.20p 1.44%
National Grid (NG.) 1,185.00p 1.41%
British American Tobacco (BATS) 3,509.00p 1.26%
SSE (SSE) 1,862.00p 1.11%
Reckitt Benckiser Group (RKT) 6,746.00p 1.08%
FTSE 100 - Fallers
Scottish Mortgage Inv Trust (SMT) 822.80p -4.57%
International Consolidated Airlines Group SA (CDI) (IAG) 107.46p -4.53%
Abrdn (ABDN) 152.35p -4.35%
Hargreaves Lansdown (HL.) 914.80p -4.26%
Ocado Group (OCDO) 841.00p -4.10%
St James's Place (STJ) 1,171.50p -4.05%
JD Sports Fashion (JD.) 119.20p -3.91%
WPP (WPP) 783.80p -3.88%
Smurfit Kappa Group (CDI) (SKG) 2,946.00p -3.66%
Howden Joinery Group (HWDN) 610.80p -3.59%
FTSE 250 - Risers
Supermarket Income Reit (SUPR) 126.00p 2.43%
Energean (ENOG) 1,307.00p 1.16%
Apax Global Alpha Limited (APAX) 186.00p 1.09%
HGCapital Trust (HGT) 374.00p 1.08%
Bank of Georgia Group (BGEO) 2,085.00p 0.97%
FirstGroup (FGP) 109.00p 0.83%
Jlen Environmental Assets Group Limited NPV (JLEN) 130.60p 0.62%
The Renewables Infrastructure Group Limited (TRIG) 142.60p 0.56%
Morgan Advanced Materials (MGAM) 285.00p 0.35%
Chemring Group (CHG) 323.50p 0.31%
FTSE 250 - Fallers
Hammerson (HMSO) 22.53p -14.11%
Wizz Air Holdings (WIZZ) 2,100.00p -9.83%
TI Fluid Systems (TIFS) 148.40p -7.94%
Countryside Partnerships (CSP) 248.40p -7.45%
Bridgepoint Group (Reg S) (BPT) 239.00p -6.93%
888 Holdings (DI) (888) 138.70p -6.77%
Redde Northgate (REDD) 351.50p -6.27%
Allianz Technology Trust (ATT) 237.50p -6.13%
Oxford Instruments (OXIG) 1,994.00p -5.78%
TUI AG Reg Shs (DI) (TUI) 129.25p -5.73%