The London market began the final week of January on the back foot as commodity and oil-related stocks fell.
The FTSE 100 Index dropped 31.01 points to 5869 as oil prices resumed their descent following a recovery late last week, with the price of a barrel of Brent crude dropping 3.1% to US$31.22.
Last week, BP (LON:BP.) chief executive Bob Dudley compared the current oil supply glut to the 1986 oil crisis and said he did not expect the situation to ease until next year.
Shares in BP were off 8.05p to 344.65p. Royal Dutch Shell (LON:RDSB) leaked 15p to 1373p and BG Group (LON:BG.) dropped 8.2p to 972p.
Miners were also taking a hit on continued jitters about the outlook for prices given Chinese economic uncertainty and global geopolitical concerns.
Anglo American (LON:AAL) subsided 4.4p to 222.3p, Rio Tinto (LON:RIO) backtracked 36p to 1617.5p, Glencore (LON:GLEN) reversed 1.06p to 77.52p and BHP Billiton (LON:BLT) shed 10p to 638.9p.
Elsewhere, DIY retailer Kingfisher (LON:KGF) was 15.9p down at 329.1p after announcing plans to return £600mln to shareholders, but saying its £800mln restructuring drive would hit profits in the first two years of the shake-up.
Shares in Stellar Diamonds (LON:STEL) lost their sparkle by 0.7p to 8.8p as it found its biggest stone yet at a project in Guinea, but added that the average grade of all stones unearthed to date there was slightly lower than thought.
Oil producer Andes Energia (LON:AEN) lifted production at the Chachahuen block in Mendoza, Argentina, and said it continued to find positive leads there. Shares rose 0.05p to 17.8p.
Latest drilling at Galantas Gold's (LON:GAL,CVE:GAL) Omagh project in Northern Ireland has thrown up the largest accumulation of gold so far, the company revealed. The stock gleamed 0.38p, or 9.1%, to 4.5p.
MARKET PREVIEW
The FTSE 100 is set for a quiet start to the week following what can only be described a tumultuous opening three weeks of 2016 – a period in which world equity markets tipped into bear territory.
The UK benchmark share index is expected to open the session up around 36 points at 5,936.1, according to the spread betting firms.
That is nothing compared with the triple digit movements (mainly downward) we have seen recently.
“Having looked at one stage last week as if we were well on course to post three successive weekly declines in a row, as equity markets across the globe tipped into bear market territory, few could have anticipated the abrupt about turn that came about at the back end of last week,” said CMC Markets analyst Michael Hewson.
“As it is we’ve probably seen one of the worst ever starts to a trading year, driven primarily by concerns around plunging oil prices, disappointing earnings, and slowing global growth, particularly in China and emerging markets.
“With oil prices also slipping to 13 year lows the correlation between the two has been the primary driver for some weeks now, with quite a bit of evidence that oil prices were at peak bearishness, as forward predictions for oil prices got steadily revised lower, on a daily basis.”
Overnight in Asia the markets were mainly pointing upwards with the ASX leading the way with a 1.5% rally as its energy companies, well, found a little energy.
Driving the mini renaissance was the oil price, which was trading around US$32 a barrel for both West Texas and Brent crude – halting the 17% side seen in the past month. The driver? The snowstorms on eastern seaboard of the US.
Elsewhere in Asia, Japan’s Nikkei swung out of the red and into the black with a 0.9% gain, while Shanghai Composite had a reasonably quiet session by its recent standards with a 0.2% advance.
Here in the UK, news over the weekend pointed to the sustained slowdown of UK PLC, where the number of profit warnings issues by listed companies has spiked sharply.
The company reporting schedule is a little slower in the week coming, with Diageo, Sky and BT all slated to report.
Outside the UK, the US Federal Reserve and Bank of Japan meet later this week to decide interest rates for their respective nations