FTSE 100 drops as oil and mining stocks weigh

Spike in global coronavirus infections and rising inflation have restricted further gains

Traders work during the closing bell at the New York Stock Exchange on Wall Street

Traders work during the closing bell at the New York Stock Exchange on Wall Street

 

London’s FTSE 100 fell on Monday as weakness in commodity prices hit heavyweight energy and mining shares, while Ultra Electronics jumped after it agreed to a takeover deal.

The blue-chip FTSE 100 dropped 0.8 per cent, dragged down by miners Glencore, Anglo American and Rio Tinto and oil majors BP and Royal Dutch Shell.

Miner BHP Group fell 1.4 per cent after saying it was in talks to sell its petroleum business to Australia’s top independent gas producer Woodside Petroleum.

The FTSE 100 has gained 11 per cent so far this year and recovered nearly 28.5 per cent from its October 2020 lows, helped by dovish central bank policies and optimism related to reopening of economies.

However, a recent spike in global coronavirus infections and worries that rising inflation could lead central banks to pull back support have restricted further gains, leading the FTSE 100 to underperform most of its developed market peers.

“There appears to be very little evidence that rising Delta variant cases in Asia are causing markets anything close to anxiety or sleepless nights,” said Michael Hewson, senior market analyst at CMC Markets.

“The main focus this week is expected to be on the latest Fed minutes, with the discussions over the tapering of bond purchases to dominate this week.”

In the UK, investor focus for the rest of the week will be on the release of latest unemployment, retail sales and inflation numbers.

The domestically focussed mid-cap index eased 0.2 per cent, with travel and leisure stocks leading declines on rising uncertainty related to travel demand.

Helping limit losses, British media company Future Plc jumped 6.4 per cent to the top of the mid-cap index, after it said it would buy Dennis Publishing for £300 million ($415.4 million).

Ultra Electronics Holdings jumped 5.1 per cent after defence firm Cobham said it agreed to buy the company in a deal valuing its UK-listed rival at £2.57 billion ($3.56 billion). – Reuters