London close: Risk rally interrupted by surge in Mideast tensions
London stocks finished lower on Monday following an attack on key Saudi Arabian oil installations at the weekend that cut the Kingdom's crude oil output by half, dealing a blow to the previous week's incipient recovery in risk appetite in financial markets on the back of an apparent easing in US-China trade tensions.
Nineteen strikes with drones or cruise missiles against knocked over half of the Kingdom's crude oil production and nearly 6.0% of global supplies, leaving investors wondering who exactly was to blame, how long it would take to restore output and how the international community would respond.
Houthi rebels in Yemen backed by Iran's Revolutionary Guards claimed responsibility for the attack but some US experts were skeptical that they had the technological base to carry out such actions on their own, if a all.
Describing the mood music in markets in the wake of the attacks, IG's Chris Beauchamp said: "today's markets have echoed to the sound of furious scribbling, as investors and analysts try to work out the impact of the attacks on oil facilities in Saudi Arabia. In markets, the first reaction is often the wrong one – witness the euro’s plunge last week as the ECB decision was announced, followed up by a swift rebound."
The FTSE 100 was down 0.63% or 46.05 points to 7,321.41, while the pound was off 0.66% against the US dollar to 1.2420 although against the euro it was barely changed at 1.1292.
In parallel, front month Brent crude oil futures on ICE came off their 200-week moving average, jumping by 10.88% to $67.56 a barrel after surging by nearly 20% at the start of trading.
Against that backdrop, and ahead of an expected UK Supreme Court ruling on his decision to prorogue Parliament the next day, the Prime Minister, Boris Johnson, reportedly refused to rule out that he might suspend Parliament again in order to ensure that the UK would leave the European Union on 31 October.
Following a lunch between European Commission chief Jean Claude Juncker and Johnson, the EC said the PM had not offered any new proposals on replacing the Irish backstop.
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 in China meanwhile 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 traded 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.
FTSE 100 - Risers
BP (BP.) 524.60p 4.00%
BT Group (BT.A) 177.22p 3.38%
Royal Dutch Shell 'A' (RDSA) 2,331.00p 2.12%
Royal Dutch Shell 'B' (RDSB) 2,322.50p 1.89%
Micro Focus International (MCRO) 1,147.60p 1.83%
Next (NXT) 6,150.00p 1.49%
SSE (SSE) 1,200.00p 1.39%
BAE Systems (BA.) 576.60p 1.09%
3i Group (III) 1,125.00p 0.90%
Coca-Cola HBC AG (CDI) (CCH) 2,617.00p 0.73%
FTSE 100 - Fallers
Prudential (PRU) 1,485.00p -3.46%
Evraz (EVR) 518.00p -3.25%
Rolls-Royce Holdings (RR.) 805.60p -3.15%
St James's Place (STJ) 1,005.50p -2.72%
CRH (CRH) 2,761.00p -2.68%
International Consolidated Airlines Group SA (CDI) (IAG) 445.10p -2.67%
Just Eat (JE.) 674.00p -2.57%
Anglo American (AAL) 1,936.40p -2.48%
Auto Trader Group (AUTO) 515.20p -2.46%
Johnson Matthey (JMAT) 3,160.00p -2.32%
FTSE 250 - Risers
Premier Oil (PMO) 94.16p 10.34%
Wood Group (John) (WG.) 451.40p 9.30%
Tullow Oil (TLW) 241.00p 8.41%
Cairn Energy (CNE) 206.80p 7.71%
Hunting (HTG) 513.50p 4.79%
Petrofac Ltd. (PFC) 455.90p 3.33%
Metro Bank (MTRO) 290.20p 3.20%
Elementis (ELM) 166.00p 2.47%
Domino's Pizza Group (DOM) 256.60p 1.91%
Restaurant Group (RTN) 140.20p 1.74%
FTSE 250 - Fallers
Sirius Minerals (SXX) 10.10p -10.47%
CYBG (CYBG) 124.45p -5.36%
Wizz Air Holdings (WIZZ) 3,372.00p -4.99%
Intermediate Capital Group (ICP) 1,379.00p -4.77%
Intu Properties (INTU) 43.00p -4.40%
Wetherspoon (J.D.) (JDW) 1,486.00p -4.13%
Funding Circle Holdings (FCH) 101.00p -3.56%
Shaftesbury (SHB) 864.50p -3.41%
CLS Holdings (CLI) 241.00p -3.41%
Synthomer (SYNT) 330.60p -3.33%