As rising tensions between Russia & Ukraine threatened global crude oil supplies, major oil stocks fell.
Brent crude oil fell more than 11% to just over $88 a barrel as Russia’s continued build-up on Ukraine’s border led politicians both in the US, and Europe, to condemn it.
It is possible that sanctions could be imposed by the US and other nations in response to a Russian invasion in Ukraine. This would impact Russian supplies of oil and gas on the global market.
Concern: Brent crude dropped by over 1.1 per cent to just above $88 a barrel
The timing of such a decision is crucial for oil supplies around the world, which have been tightening as the economy recovers from the pandemic. Fuel demand has risen while production remains constant.
This could threaten projects managed by Shell and BP in the UK, which both have Russian operations. Shell shares fell by 30.8p to 1808.4p due to lower crude oil prices. BP’s share was down 1.8p or 6.9p at 382.25p.
Neil Wilson, chief market analyst at Markets, noted that a full-scale war between Russia and Ukraine would also cause ‘heavy losses’ for global stock markets.
The FTSE 100 fell due to oil stock drops, sending it into negative territory so far for 2022. This was a disappointing end to the week. Blue-chip index was down 1.2%, or 90.88 point, to 7494.13.
The FTSE 250 fell almost 2 percentage points to 22263.24, or 451.74points.
Also yesterday saw markets in Asia and Europe suffer heavy losses. Yesterday, the Dax index of Germany fell 1.9%, while that of Japan’s Nikkei dropped 0.9%).
Wall Streetjitters and a continued sell-off in tech firms weighed on the market sentiment. It has been especially punishing for Scottish Mortgage Investment Trust, which counts tech giants such as Tesla and Nvidia among its biggest holdings. This resulted in shares falling by 3.9% or 44.5p to 11099.5p.
The fund was then followed by US-focused funds. Baillie Gifford US Growth Trust dropped 6.7%, or 16.5p to 230.5p. Allianz Technology Trust, which holds a substantial stake in Google parent Alphabet’s stock, fell 5.5 percent, or 16p to 277p.
As Plan B restrictions, Omicron infections and other constraints reacted to Christmas shopping, retailers also suffered as December sales plunged almost 4 percent.
High street giant Next slumped 1 per cent, or 72p, to 7486p while Dunelm dropped 2.9 per cent, or 39p, to 1292p, B&M fell 2 per cent, or 10.8p, to 543p and JD Sports slipped 1 per cent, or 1.95p, to 192.7p.
Some stocks that are considered defensive were able to see their prices rise due to the market’s cautious mood. These stocks had slower growth rates but better dividend payouts.
Lucky Strike cigarette maker BAT climbed 0.8 per cent, or 24.5p, to 3138p and rival Imperial Brands rose 0.4 per cent, or 6.5p, to 1731p.
After increasing its profit forecasts, promotional merchandise manufacturer 4imprint saw its profits rise by 1.7 percent, or 45p to 2675p. The FTSE 250 firm expects profits for 2021 to be ‘towards the upper end’ of expectations, while revenues for the period are due to rise 41 per cent year-on-year to £580m.
Mid-cap merchant bank Close Brothers flagged an expected 2.9 per cent rise in its loan book to £8.7billion for the six months to the end of January, boosted by new business in its asset and motor finance divisions. Assets under management also grew to £16.6billion from £15.6billion at the end of July last year. Stocks fell 6.1%, or 82%, to 1266p.
Entain (Ladbrokes owner) dropped 5.2%, or 89p at 1635p following a mixed reception by two investment banks.
Morgan Stanley analysts raised their target price for the stock from 2430p to 2530p, while Deutsche Bank reduced theirs to 2354p.