London midday: Stocks drop but energy gains cap losses after Saudi attacks
By Michele Maatouk
Date: Monday 16 Sep 2019
(Sharecast News) - London stocks were still a little weaker by midday on Monday amid heightened geopolitical tensions in the Middle East and following the release of disappointing Chinese data, although strength in the energy sector kept a cap on losses.
The FTSE 100 was down 0.2% lower at 7,351.81, while the pound was off 0.4% against the dollar at 1.2453 and 0.1% lower versus the euro at 1.1277, respectively, as Prime Minister Boris Johnson was set for Brexit talks with European Commission President Jean-Claude Juncker in Luxembourg later in the day.
Meanwhile, oil prices rocketed, with West Texas Intermediate up 7.6% at $59.35 a barrel and Brent crude 7.9% higher at $65.40 after drone attacks on two oil processing facilities in Saudi Arabia over the weekend.
Neil Wilson, chief market analyst at Markets.com, pointed out that the attacks have disrupted half of the country's oil output, which is equivalent to about 5% of global production. He said the spike in crude price is the largest in recent memory, with crude set for one of its biggest ever rallies.
"This is a big escalation in terms of the scale and reach of these attacks so raises prospect of ongoing disruption and raises the geopolitical danger. It's going to add a massive risk premium to crude prices, so it will likely materially drive prices higher for a while. The big uncertainties right now for crude are 1) the extent of the outage, 2) how does this escalate, and 3) could there be more attacks of this kind. What is certain is the genie is out of the bottle in terms of risk premium."
Investors were also digesting some disappointing data out of China, which showed that industrial production fell to a 17-year low in August.
Industrial production growth slowed to 4.4% year-on-year in August from 4.8% in July, falling short of expectations for a 5.2% increase. Meanwhile, retail sales growth slowed to 7.5% in August from 7.6% the month before, missing expectations of 7.9% growth.
Fixed-asset investment expanded at 5.5% in August, down from 5.7% in July and below expectations of 5.6% growth. The slowdown was driven by the private sector, where growth eased back to 4.9% from 5.4%.
In equity markets, oil giants BP and Shell were the standout gainers as oil prices spiked, while energy-related stocks such as Cairn Energy, Wood Group, Energean and Petrofac all rallied.
Tullow Oil was boosted by higher oil prices and news that its Joe-1 exploration well had successfully opened a new Upper Tertiary oil play in the Guyana basin.
The jump in oil prices had the opposite effect cruise operator Carnival, British Airways parent International Consolidated Airlines and budget airline Wizz Air.
Micro Focus was on the front foot following a report over the weekend that the software company is close to appointing Goldman Sachs to lead a review into a potential sale of the business.
Direct Line was in the red as it said former Royal London deputy chief executive Tim Harris had been appointed as chief financial officer effective 1 October.
Hedge fund Man Group was trading lower as it said chairman Ian Livingston will step down at the end of the year, to be succeeded by current non-executive director and former Deutsche Bank chief executive John Cryan.
Market Movers
FTSE 100 (UKX) 7,351.81 -0.21%
FTSE 250 (MCX) 20,055.42 -0.69%
techMARK (TASX) 3,836.17 -0.21%
FTSE 100 - Risers
BP (BP.) 525.11p 4.11%
Royal Dutch Shell 'A' (RDSA) 2,346.00p 2.78%
Royal Dutch Shell 'B' (RDSB) 2,338.00p 2.57%
Micro Focus International (MCRO) 1,151.80p 2.20%
SSE (SSE) 1,201.00p 1.48%
Next (NXT) 6,138.00p 1.29%
BAE Systems (BA.) 577.60p 1.26%
Severn Trent (SVT) 2,068.00p 1.17%
National Grid (NG.) 836.70p 0.99%
Centrica (CNA) 76.58p 0.98%
FTSE 100 - Fallers
St James's Place (STJ) 991.00p -3.83%
Carnival (CCL) 3,717.71p -3.66%
International Consolidated Airlines Group SA (CDI) (IAG) 444.10p -2.89%
Prudential (PRU) 1,493.50p -2.58%
London Stock Exchange Group (LSE) 7,354.00p -2.13%
Evraz (EVR) 524.60p -2.02%
Rolls-Royce Holdings (RR.) 815.40p -1.97%
TUI AG Reg Shs (DI) (TUI) 868.00p -1.92%
Direct Line Insurance Group (DLG) 296.20p -1.89%
Legal & General Group (LGEN) 251.00p -1.84%
FTSE 250 - Risers
Premier Oil (PMO) 93.06p 9.05%
Tullow Oil (TLW) 240.60p 8.23%
Wood Group (John) (WG.) 439.50p 6.42%
Cairn Energy (CNE) 200.60p 4.48%
Hunting (HTG) 508.00p 3.46%
Centamin (DI) (CEY) 124.75p 2.76%
Petrofac Ltd. (PFC) 449.90p 1.97%
Amigo Holdings (AMGO) 74.90p 1.63%
Bakkavor Group (BAKK) 118.40p 1.54%
Pennon Group (PNN) 765.60p 1.32%
FTSE 250 - Fallers
Intu Properties (INTU) 42.46p -5.60%
CYBG (CYBG) 124.50p -5.32%
Vivo Energy (VVO) 126.20p -4.10%
NewRiver REIT (NRR) 187.00p -3.61%
Wizz Air Holdings (WIZZ) 3,422.00p -3.58%
Go-Ahead Group (GOG) 1,931.00p -3.40%
Intermediate Capital Group (ICP) 1,399.00p -3.38%
Quilter (QLT) 134.00p -3.21%
Contour Global (GLO) 188.00p -3.09%
Senior (SNR) 200.00p -2.72%
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