London pre-open: Stocks to slump as oil prices surge
London stocks looked set for more heavy losses on Monday as oil prices surged above $130 a barrel amid the ongoing Russia-Ukraine war.
The FTSE 100 was called to open 130 points lower at 6,857.
CMC Markets analyst Michael Hewson said concerns over slowing growth across the world, as well as surging commodity price inflation are acting as a headwind for stock markets and are the biggest challenge facing central banks, starting with the European Central Bank later this week.
"While the outlook for economic growth has darkened, the picture for inflation is even worse as energy and agricultural commodity prices have soared since the start of the year, and this toxic cocktail poses a huge problem for central banks," he said.
"Do they tighten monetary policy and risk pushing the world into a recession even quicker, or do they allow inflation to rip even higher, which would do the same thing. This week’s US CPI numbers for February are set to highlight this problem even more starkly.
"If there is a silver lining coming out of all of this it’s that the labour market, not only in the US, but in the UK and Europe continues to look fairly resilient, even as consumer incomes get set to be squeezed further."
In corporate news, Spectris has pulled its £1.7bn bid for Oxford Instruments, citing global market uncertainties caused by the "deplorable" events in Ukraine after the Russian invasion.
"Since there is no certainty as to when the situation will be resolved, and market conditions will improve, the board has concluded that the proposed combination is no longer in shareholders' best interests at the current time," the company said.
Oxford Instruments last week said it had received a non-binding, indicative offer that included £19.50 a share in cash, plus new shares in Spectris worth £11.50 each.
Office space provider Workspace has disposed of Highway Business Park in Limehouse, East London, and an adjoining property owned by Canada Life Investments.
Workspace said the sale of Highway Business Park, made up of 20,000 square feet of light industrial space, will provide the group with £23.7m for its share, a "significant premium" to its 30 September 2021 valuation of £11.6m.