The FTSE 100 has fallen at the bell after oil prices slipped and the number of global coronavirus cases topped 1m.
Britain’s oil-heavy FTSE 100 index was 1.3 per cent lower just after the open at 5,411 points. The benchmark had risen roughly 0.8 per cent the day before.
European markets were also lower. The pan-European Stoxx 600 was down 0.1 per cent while the German Dax was 0.3 per cent lower. France’s CAC 40 was down 0.2 per cent.
Oil prices pared some of their gains after the biggest one-day rise since the 1980s. Brent crude slipped overnight but was up 0.1 per cent at $29.97. US crude was 1.3 per cent lower at $24.99.
The price of oil shot up yesterday after US President Donald Trump said he had brokered a deal between Saudi Arabia and Russia to get them to reduce supply.
Saudi Arabian overproduction after the breakdown of talks with Russia has caused oil prices to roughly half this year. The coronavirus outbreak and global recession has also dragged down oil prices.
However, Trump yesterday tweeted: “Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more.”
Doubts about production weigh on FTSE 100
Yet doubt set in overnight about whether such cuts were achievable given the fractured relationships of the major producers.
The FTSE 100’s Asian counterparts slipped overnight. China’s Shanghai composite index fell 0.6 per cent, Hong Kong’s Hang Seng dropped 0.5 per cent, and Japan’s Nikkei was flat.
Jasper Lawler of London Capital Group said: “The way the US President put the news out there was unusual.”
“It had a bit of a Musk-style ‘funding secured’ feeling to it.” This referred to the incident when Tesla founder Elon Musk claimed to have secured funding to be taken private in a deal that never materialised.
Lawler said even if the cuts do take place, “the question is how much has demand dropped because the coronavirus lockdown. 50 per cent? 10 million barrels is probably still not enough”.
The number of global coronavirus cases has now topped 1m, with the spread of the virus also weighing on FTSE 100 investors’ minds.
US stock futures indicated that Wall Street is set to open lower by almost one per cent.