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LONDON MARKET MIDDAY: Oil falls despite rising Iran-Israel tensions

15th Apr 2024 11:56

(Alliance News) - London's FTSE 100 was down at midday on Monday, as oil majors BP and Shell were hurt by falling prices, with investors showing caution following Iran's strikes on Israel over the weekend.

The FTSE 100 index was down 33.43 points, 0.4%, at 7,962.15. The FTSE 250 was up 12.21 points, 0.1%, at 19,733.45, and the AIM All-Share was down 4.01 points, 0.5%, at 751.90.

The Cboe UK 100 was down 0.5% at 795.86, the Cboe UK 250 was marginally down at 17,121.17, while the Cboe Small Companies was up 0.2% at 14,885.26.

Events in the Middle East dominated the headlines, as oil prices declined despite the threat of global tensions ratcheting up after further escalation between Iran and Israel.

Investors moved with trepidation amid fears Iran would strike Israel in response to an Israeli strike on the Iranian consulate in Damascus, Syria.

Iran on Saturday launched a wave of missiles and attack drones at Israel. The latter said the vast majority were repelled by air defences.

Israel and Iran accused one another Sunday at the United Nations of being the main threat to peace in the Middle East, each calling on the Security Council to impose sanctions on their sworn enemy.

"Oil prices had risen in anticipation of Iran's action but have fallen back, though gold prices remain near record highs which hints at continuing nervousness among investors," said AJ Bell analyst Russ Mould.

"The situation remains fraught and, beyond the geopolitical and humanitarian implications, a more widespread conflict in the Middle East could see energy prices surge and unpick central banks' careful efforts to bring down inflation."

Gold miner Fresnillo led FTSE 100 losses, falling 3.5%, followed by oil major BP which fell 2.8%. BP's rival Shell was also down 1.8%, behind British Gas owner Centrica which fell 1.9%.

Brent oil was quoted at USD89.69 a barrel at midday on Monday in London, down from USD91.05 a barrel late Friday.

Gold traded at USD2,350.02 an ounce, falling from USD2,396.43.

The US and UK are extending their ban on imports of metals produced in Russia, due to the Russian war against Ukraine.

Aluminium, copper and nickel produced in Russia after Saturday last week will no longer be traded on the world's two largest metal exchanges in London and Chicago, the US and British treasury departments announced overnight on Friday night.

In European equities on Monday, the CAC 40 in Paris was up 0.7%, while the DAX 40 in Frankfurt was up 0.8%.

Eurozone industrial output rose in February from January, though it declined annually, according to data from Eurostat.

Industrial output in the single currency area was up 0.8% in February from January, having fallen 3.0% in January from December. January's reading was upwardly revised from an initially reported 3.2% fall.

Durable consumer goods saw the sharpest increase of 1.4% in the month, while non-durable consumer goods experienced the largest dip of 0.9%.

On-year, industrial production fell 6.4% in February. In January, output had fallen 6.6% on year.

Annually, production of all goods was weaker, with capital goods dropping most significantly by 8.9%.

The pound rose to USD1.2487 on Monday afternoon in London, from USD1.2451 at the time of the London equities close on Friday. The euro stood at USD1.0656, rising from USD1.0643. Against the yen, the dollar was trading at JPY153.94, up from JPY153.09.

Elsewhere in the FTSE 100, IMI led gains, rising 1.9% to 1,799 pence after RBC raised the engineering firm's price target to 2,250p from 2,150p. RBC rates IMI at 'outperform'.

In the FTSE 250, Mitie led gains, rising 7.6%.

The facilities management and professional services firm said it expects to report an 11% rise in revenue to GBP4.50 billion for the year to March 31, from GBP4.06 billion. Operating profit of GBP200 million is expected, a 23% surge from GBP162.1 million.

Mitie also announced a further GBP50 million share buyback programme. A share repurchase programme of the same size had been completed last month.

Inchcape rose 4.5%, after the automotive distributor announced a deal to sell its UK retail operations of GBP346 million to New York-listed automotive retailer Group 1 Automotive, following a review of strategic options it kicked off earlier this year.

It plans to return GBP100 million of the disposal proceeds to shareholders through a buyback. "The remaining proceeds will be used to invest in future growth, through organic investment and value-accretive acquisitions," it added.

Inchcape said the transaction is expected to be completed in the third quarter of this year.

PageGroup led mid-cap losses, falling 6.9%, after the recruitment firm said it is being hit "from every angle" as harsh conditions in recruitment markets continued into 2024.

Gross profit in the three months to March fell 13% to GBP219.7 million from GBP263.0 million the year prior. Chief Executive Nicholas Kirk said the slower end to the fourth quarter continued into the first quarter of 2024, particularly within continental Europe.

Among London's small-caps, Petrofac lost 8.2%, with the oilfield services firm sliding further aftr a 20% fall on Friday. It said on Friday said "all options" remaining under consideration in regard to the restructuring of its debt.

Further, Petrofac said it is in talks with prospective investors and major shareholders for a potential investment in the company, including a potential sale of non-core assets.

On AIM in London, KRM22 surged 45%. The technology and software investment company, with a focus on risk management for capital markets, said it won a "major customer contract" worth over GBP600,000 over three years.

The deal will see KRM22 provide its Limits Manager trading limits management technology offering to a "major futures commission merchant".

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.3%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.5%.

Still to come on Monday's economic calendar, US retail sales figures are released at 1330 BST, while Bank of England Monetary Policy Committee member Sarah Breeden is due to speak shortly.

By Greg Rosenvinge, Alliance News senior reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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