MARKET REPORT: Sliding oil stocks hit FTSE as crude takes a tumble

The London stock market went into reverse as a fall in commodity prices hit oil stocks and miners while surging inflation fuelled fears of recession.

On another difficult day for investors, the FTSE 100 was dragged down 0.9 per cent, or 62.83 points, to 7089.22 while the FTSE 250 shed 0.3 per cent, or 57.83 points, to close at 18,891.22.

Heavyweight oil stocks were on the slide after the price of Brent crude fell 4 per cent, though it remained almost 40 per cent higher than its level at the start of the year.

It came as the US moved to tighten its grip on spiralling energy costs, with President Joe Biden expected to urge states to slash fuel taxes to ease the burden on drivers.

But Hargreaves Lansdown analyst Susannah Streeter said the petrol-pumps price frenzy is unlikely to fade any time soon.

‘The surging oil price is a major culprit of the painful rises companies and consumers are having to deal with right now so the retreat of oil will be welcomed,’ she said. 

‘However supply concerns are set to conspire to keep it elevated given that intense fighting continues in Ukraine, and there little end in sight to this war.’

Shell shares slid 3.5 per cent, or 75p, to 2076p while BP was off 3.1 per cent, or 12.05p, at 383.3p.

Miners fell as the prices of copper tumbled to their lowest level for more than a year over recession fears and China’s efforts to curb Covid-19 cases.

Aluminium, zinc, nickel, lead and tin were also on the slide.

‘The industrial metals are most certainly caught in the crosshairs, with China still on the slow path to recovery and then the added worries about the overall global outlook,’ said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

As a result, blue-chip miner Glencore slid 6.9 per cent, or 33.25p, to 449.35p, Antofagasta fell 6.4 per cent, or 85.5p, to 1244p, Rio Tinto shed 4.4 per cent, or 231p, to 5019p and Anglo American dipped by 5 per cent, or 167p, to 3207p.

Markets’ mood was not helped by signs the cost of living crisis could continue to spiral. Official figures showed UK inflation hit 9.1 per cent – its highest in 40 years – as anxiety over recession mounts.

And with concerns about the health of the global economy also rising, the losses in London were echoed in Europe where the main benchmark in France, the CAC, was dragged down 0.8 per cent while the Dax slid 1.1 per cent in Germany.

On Wall Street, the Dow Jones Industrial Average rose 0.02 per cent while the S&P 500 climbed 0.1 per cent and the tech-heavy Nasdaq was up 0.2 per cent.

Back in London, housebuilder Berkeley Group was among the blue-chip fallers despite annual profits rising 6.4 per cent to £551.5million.

While it brushed off fears of a slump in prices in London due to a lack of homes, official figures showed house prices across the UK increased by 12.4 per cent in the year to April to a record £281,000. It fell 3.1 per cent, or 116p, to 3676p.

But AJ Bell investment director Russ Mould said: ‘An increase to profit forecasts for the next three years and strong hints of even greater cash returns to shareholders are failing to move shares in high-end housebuilder Berkeley.

‘Investors are focusing instead on rising interest rates, falling consumer confidence and fears of a recession, especially as acquisitions, dividends and buybacks are whittling down the FTSE 100 firm’s net cash pile.’

In the FTSE 250, tech firm Micro Focus tumbled 16.2 per cent, or 58p, to 299.5p after it warned revenues were ‘marginally behind’ target partly due to suspending its operations in Russia. 

Revenues fell 6.8 per cent to £1.1billion in the six months to the end of April.