Sector movers: Energy, mining stocks hammer London market

The FTSE 100 ended 1.88% or 118.52 points lower at 6,178.68, while the FTSE 250 was 1.36% or 232.27 points lower at 16,869.50. The Brent front-month oil futures contract was down 2.03% or 93 cents to $44.88 per barrel. Concurrently, WTI was 2.12% or 91 cents lower at $42.02 per barrel, as the US Energy Information Administration (EIA) noted a rise of 4.2m barrels in domestic crude inventories to 487m for last week, compared with analysts' expectations for an increase of 1 to 1.5m barrels.

Furthermore, crude stocks at the US delivery hub of Cushing, Oklahoma rose by 2.237m barrels, the biggest weekly increase since March, with growing evidence of additional Iraqi barrels coming to an already oversupplied market. EIA estimates, based on global shipping data, suggest US imports of Iraqi oil would be in the region of 19m barrels for November; the highest on record since January 2012.

Meanwhile, base metals took another tumble in European trading on persistent concerns about China’s importation levels, as copper hit another six-year low. On the London Metal Exchange, the three-month copper delivery futures contract was down 2.0% to $4,838.00 per metric tonne. Primary aluminium (down 0.8%), nickel (down 0.3%), tin (down 1.3%) and lead (down 0.1%) futures were also in negative territory.

Precious metals also continued lower, with the COMEX gold futures contract down 0.57% or $6.20 at $1,078.70 an ounce, while spot gold was 0.62% or $6.72 lower at $1,079.54 an ounce. COMEX silver fell 0.41% or six cents to $14.21 an ounce, while spot platinum was down 0.58% or $5.15 at $876.65 an ounce.

Anglo American (down 8.70%) and Glencore (down 7.64%) led the blue chips lower. Concurrently, Morgan Advanced Materials (down 12.80%) and Nostrum Oil & Gas (down 7.93%) were among the biggest fallers on the FTSE 250. A plethora of small to medium natural resource stocks also ended on a negative patch, along with the blue chip oil and gas trio of BG Group, BP and Royal Dutch Shell.

Chris Beauchamp, senior market analyst at IG, said, “A stronger US dollar has put commodity prices on the back foot, which has translated into the usual weakness for miners in London, but Glencore has once again commanded attention, falling 9% on the day.”

“The firm is back below 100p per share, as investors read across from rival Noble Group’s abysmal results, factor in the poor Chinese data from earlier in the week and draw their own conclusions. Glencore’s sole consolation is that it is hardly alone, with Anglo American hard on its heels and all the other big names in the red too.”

Elsewhere, Rolls-Royce shares ended 19.57% lower after the aerospace and engineering firm said earnings for the year will be at the low end of guidance as it downgraded its expectations for next year, and warned of a possible cut to the dividend. The company reaffirmed its 2015 guidance but said profit for the year is expected to be at the lower of its £1.33bn to £1.48bn range.

However, a broader decline in the aerospace sector was prevented by BAE Systems (up 3.81%) as investors welcomed the military hardware maker’s plans to axe 371 jobs at its military aircraft unit.

The company said it was slashing the jobs and slowing the production rate of its Typhoon fighter jet “to ensure production continuity at competitive costs over the medium term”.