London’s blue-chip stocks ended the day lower as miners and oil companies were hit by a drop in commodity prices.
“The Asian session’s Chinese volatility continued to weigh on the commodities, with Brent Crude at US$48.50 per barrel and copper hitting fresh 6 year lows; this meant the FTSE’s oil and mining stocks returned to a uniform shade of red” Connor Campbell at spreadbetting firm Spreadex said.
Dragging the index lower were BP (LON:BP.) down 1.1% to 373p, Shell (LON:RDSB), which was 13p lower to 1,799p, and Rio Tinto (LON:RIO), which lost 33p to 2,412p.
Silver was trading more than 3% lower, sending silver miner Fresnillo (LON:FRES) to the bottom of the index, 1.7% lower to 659p. The FTSE 100 ended 24 points down to 6,526.
In the UK better than expected inflation figures provided a bit of excitement for the markets.
“Global markets eased lower today, as rising UK core inflation highlighted the fact that it’s only a matter of time before rates in both the UK and US rise in anticipation of higher inflation” Joshua Mahony said at IG said.
Yesterday, the BoE’s Kristin Forbes highlighted that there’s a two-year lag between interest rate changes and inflation, meaning rates will need to rise well before CPI goes anywhere near 2%.
Across Europe, markets struggled, with the French Cac40 and the Frankfurt-based Dax easing 0.2% to 4,975 and 10,916 respectively.
Back in the UK, Cairn Energy (LON:CNE) was one of the biggest fallers on the FTSE 350 as it reported widening losses for the first half. Shares dropped 7.25% to 143p.
Meanwhile, the biggest loser was platinum miner Lonmin (LON:LMI) as it was hit by lower prices of the precious metal, down US$11 or 1.1%. Shares eased 7.6% to 33p.
In small caps, IGas Energy (LON:IGAS) and Egdon Resources (LON:EDR) are among the first oil and gas firms to be offered new acreage in Britain as part of the government’s 28th licensing round.
The Oil & Gas Authority, the UK’s newly created regulator, today revealed that 27 new licence blocks have been offered to companies in the initial tranche of the round.
Shares in Egdon eased 1.85% to 13.25p while IGas eased 1.8% despite the seemingly positive news.
Elsewhere, shares in African Potash (LON:AFPO) yo-yoed today, initially rising 20% before dropping 20.58% by the close to 1.37p.
The company issued a statement saying it knew of no reason why the shares had risen, but reminded investors that it was in talks with third parties to secure sale orders from the trading memorandum of understanding (MOU) signed with the Common market for Eastern and Southern Africa and the Mask Africa Crowd Farm Fund Limited.
Mariana Resources (LON:MARL) jumped as the maiden resource estimate at the Hot Maden gold-copper project reckons it contains 4.7mln tonnes at 5.5 grams per tonne gold and 1.8% copper.
That takes the grand total up to 3mln ounces at a gold equivalent grade of 11.2 grams per tonne. Shares were 12.36% higher at 2.6p.