London midday: Miners, energy shares pace decline as oil collapses
London stocks had fallen further into the red by midday on Tuesday after oil prices slid into negative territory, with energy and mining issues under the cosh.
The FTSE 100 was down 2% at 5,697.95 after oil prices in the US fell overnight to below zero for the first time in history as demand is hit by the coronavirus pandemic. West Texas Intermediate slumped to as low as -$40 a barrel compared to $50 before the virus outbreak. This means that producers are now paying buyers to take oil off their hands as there is nowhere to put it.
IG’s Chris Beauchamp said: "Oil’s rout continues to command all the attention in global markets, as investors move on from the Covid-19 crisis to the complete breakdown of normality in one of the world economy’s most vital components. While the May contract is now banished to the history books, it looks like the June contract is going the same way, falling below $20 and then taking out $19 and $18 in short order for WTI, while Brent crude has met the same fate.
"We are witnessing markets finally play catch-up to the reality on the ground in the oil market - huge oversupply and non-existent demand have combined with nearly-full storage facilities to drive complete dislocation in the crude oil market. And this is being felt in stock markets too, which could not long remain indifferent to the chaos. But as risk appetite vanishes, the carnage has spread beyond oil stocks, hitting mining shares, banks and indeed almost every other sector on the FTSE 100. Having decided they could weather the coronavirus crisis, equities now have to reckon with an entirely different problem."
On home shores, investors were mulling the latest jobs figures from the Office for National Statistics, which showed the ILO unemployment rate ticked up to 4.0% in the three months to February from 3.9% and versus consensus of 3.9%. The number of people employed increased by 172,000, coming in better than expectations for a 108,000 rise, while average earnings growth fell to 2.8% from 3.1%, compared to consensus expectations of 3.0%.
Spreadex analyst Connor Campbell said the most important figure was the claimant count change for March as it was the "only true Covid-19 number of the trio".
"Fearing a similar situation to that in the US, analysts had forecast a 170,000 person increase in unemployment claims; instead it arrived at a pretty standard 12.1k. Of course, that likely means the ugly number will instead be delayed until April’s reading. Nevertheless, the FTSE and pound were left off in this regard, if only for now."
In equity markets, Shell and BP fell as oil prices collapsed, while Premier Oil and Wood Group also lost ground.
BHP retreated as it warned global steel production excluding China could fall by double digits in percentage terms as the Covid-19 pandemic forced shutdowns. The world's biggest miner reported a 6.3% rise in third-quarter iron ore production and maintained its iron ore forecast despite global economic disruption caused by the outbreak.
Miners were weaker generally, with Glencore, Antofagasta and Anglo American all lower, while Russian steelmaker Evraz also declined.
On the upside, Admiral was the standout gainer after saying it would give a £25 refund for each vehicle insured with the company as of 20 April in recognition of the fact that most people are not using their cars much if at all because of the lockdown.
Halma rallied after saying adjusted pre-tax profit for the year ended 31 March should be in line with the guidance given last month, while Croda was boosted by an upgrade to ‘buy’ from ‘hold’ at Liberum.
Market Movers
FTSE 100 (UKX) 5,697.95 -1.98%
FTSE 250 (MCX) 15,534.40 -1.82%
techMARK (TASX) 3,497.40 -1.01%
FTSE 100 - Risers
Admiral Group (ADM) 2,275.00p 3.64%
Sainsbury (J) (SBRY) 201.90p 3.27%
Halma (HLMA) 2,151.00p 2.87%
Fresnillo (FRES) 715.20p 1.85%
Croda International (CRDA) 4,740.00p 1.83%
Morrison (Wm) Supermarkets (MRW) 186.95p 1.25%
Severn Trent (SVT) 2,350.00p 1.12%
Sage Group (SGE) 642.00p 0.85%
Polymetal International (POLY) 1,559.00p 0.84%
Ocado Group (OCDO) 1,600.00p 0.76%
FTSE 100 - Fallers
Evraz (EVR) 240.20p -8.81%
Glencore (GLEN) 133.90p -6.40%
Melrose Industries (MRO) 85.34p -5.60%
3i Group (III) 731.80p -5.23%
Antofagasta (ANTO) 755.20p -5.13%
Anglo American (AAL) 1,334.00p -5.11%
Intermediate Capital Group (ICP) 944.00p -4.98%
Royal Dutch Shell 'B' (RDSB) 1,283.40p -4.58%
Carnival (CCL) 854.60p -4.54%
Rolls-Royce Holdings (RR.) 312.70p -4.49%
FTSE 250 - Risers
Gamesys Group (GYS) 800.00p 5.26%
Hiscox Limited (DI) (HSX) 814.40p 2.98%
Petropavlovsk (POG) 24.75p 2.48%
Elementis (ELM) 64.25p 2.23%
Ninety One (N91) 156.60p 2.22%
4Imprint Group (FOUR) 1,856.00p 1.87%
Avast (AVST) 454.60p 1.56%
Cranswick (CWK) 3,714.00p 1.48%
Babcock International Group (BAB) 400.90p 1.42%
Sabre Insurance Group (SBRE) 282.50p 1.25%
FTSE 250 - Fallers
Premier Oil (PMO) 20.76p -14.32%
Wood Group (John) (WG.) 158.00p -9.30%
Capita (CPI) 32.13p -9.01%
Cineworld Group (CINE) 55.24p -7.93%
Energean Oil & Gas (ENOG) 661.00p -7.81%
FirstGroup (FGP) 57.90p -7.73%
Virgin Money UK (VMUK) 67.36p -7.73%
PureTech Health (PRTC) 246.00p -7.69%
Petrofac Ltd. (PFC) 155.25p -7.56%
RHI Magnesita N.V. (DI) (RHIM) 2,034.00p -7.55%