OIL AND commodity price concerns have continued to drag on the FTSE 100, with the index touching 10-week lows at its close last night. It finished down 1.3 per cent at 5,874, its eighth straight session of losses, and down around 10 per cent so far this year.
The price of key metals, including copper and gold, fell as the dollar rose. The price of crude neared levels not seen since 2008 on growing expectations the oil glut would continue well into 2016, following Iran promising to up production.
“The oil price taking another leg down isn’t helping, it’s bringing down some of the heavyweights… and then continuing to weigh on the commodities sector,” said Mike van Dulken, head of research at Accendo Markets.
Royal Dutch Shell fell 2.4 per cent and BP was down 2.6 per cent. The company faces a class action lawsuit in Mexico over its deadly 2010 Gulf of Mexico oil spill, which a civic group on Friday said it had filed against the company.
Shares in mining companies also suffered, with Glencore, BHP Billiton, Antofagasta, Anglo American and Randgold Resources down between 2.1 and 6.3 per cent.
South Africa-exposed insurance company Old Mutual, which slumped nearly 22 per cent last week, climbed 1.3 per cent after President Jacob Zuma named widely respected Pravin Gordhan as South Africa’s third finance minister in a week. The rand climbed five per cent after reaching an all-time low at the end of last week.
Shares in Investec, which is also exposed to Africa, rose 3.2 per cent, when the South African currency rebounded after falling about nine per cent last week.
“The rand’s recovery is good news for South Africa-exposed stocks such as Old Mutual. Investors hope that the appointment of a new finance minister will ease the political tension in the country and give some stability to the markets,” said Keith Bowman, equity analyst at Hargreaves Lansdown.
Out of the FTSE 100, and education support-services company Tribal Group ended a terrible day down 50 per cent at 27.13p, by far the worst performer in the FTSE All-Share, having earlier reached an all-time low of 19.16p.
The company blamed slow sales and contracts being delayed to 2016. It is planing to raise up to £30m in a rights issue early next year in order to cut debt and provide capital.