Oil and mining stocks put breaks on FTSE’s rise

Oil prices dipped on Monday, putting pressure on BP and Shell.

Oil prices dipped towards the 100 dollar per barrel line on Monday. (Peter Byrne/PA) (PA Wire)

Falling prices of natural resources ate into the performance of the FTSE 100, dampening in London what was a better day on other European markets.

The index closed up by 0.5%, a nearly 38-point rise to 7,193.47, which was driven by, among others, housebuilders – helped by new lower estimates of how much the post-Grenfell cladding scandal could cost.

But the index was weak compared to its European counterparts. Germany’s Dax closed up 2.2%, while the Cac 40 in Paris rose 1.8%.

“European markets have continued to build on their gains from last week, with the Dax leading the way and the FTSE 100 lagging, on optimism over the progress in ceasefire talks currently taking place between Ukraine and Russia, and which are due to resume tomorrow,” said CMC Markets analyst Michael Hewson.

The FTSE 100 is heavily reliant on companies that dig things out of the ground. And on Monday the price of those commodities dropped.

As a result, the shares in these companies fell heavily. Glencore, Rio Tinto, Anglo American, BP and Shell were all among the biggest losers across the day.

The price of oil has pushed up in recent weeks, passing 100 dollars for a barrel of Brent crude two weeks ago for the first time in years.

After briefly peaking at around 130 dollars last week, the price gave back some of its gains and on Monday dropped 6% to 105.61.

“While welcome, today’s optimism conveniently ignores the escalation of hostilities by Russia over the weekend in hitting new targets in Ukraine, near the border with Poland,” Mr Hewson said.

He added: “There is certainly an element of hoping for the best in today’s firmer tone, which seems to fly in the face of the reality on the ground and that for a sustained end to hostilities to take place, one side or the other will have to back down quite significantly.

“For a start Ukraine is likely to insist that Russia would need to withdraw a lot of its troops, while Russia’s continued actions inside Ukraine don’t speak to a mood of compromise. Consequently, the current rebound is likely to remain quite fragile in nature.”

By the end of the trading day in Europe, markets on Wall Street were more mixed. The S&P 500 had dropped 0.2% while the Dow Jones was up 0.6%.

On currency markets, one pound could buy 1.3057 dollars, up 0.08%. A euro cost 1.1881, a 0.03% hit against sterling.

There was little news from London’s companies on Monday. Cake Box’s finance chief resigned less than two months after the firm admitted to problems in its annual report.

Shares in the business closed up around 20%.

Astrazeneca said that approval for one of its asthma drugs had been put on hold pending a decision in the US.

The US authorities have asked the pharmaceuticals giant for more information on the drug before giving the go-ahead.

Shares were up 1.3% in the business on Monday.

The biggest risers on the FTSE 100 were DS Smith, up 18.2p to 325.2p, Ferguson, up 645p to 11,670p, Persimmon, up 120p to 2,292p, Barclays, up 8.9p to 170p, and Smurfit Kappa, up 170p to 336.6p.

The biggest fallers on the FTSE 100 were Glencore, down 30p to 481.55p, Anglo American, down 202p to 3,698.5p, Rio Tinto, down 265p to 5,299p, Flutter Entertainment, down 224p to 8,726p, and Prudential, down 24p to 1,044p.