London close: Stocks fall as oil rises amid growing doubts over Hormuz

(Sharecast News) - London stocks ended lower on Monday as oil prices rose amid growing doubts the US and Iran will reach an agreement to reopen the Strait of Hormuz.

The FTSE 100 closed 0.4% lower at 10,862.50, while Brent crude was up 3.8% at $86.74 a barrel and West Texas Intermediate was 3.9% higher at $81.22 as Iran refused to engage in direct negotiations with the US.

Although Iranian Foreign Minister Araghchi confirmed that talks with Oman about reopening Hormuz are in the final stages, he also said a deal would not automatically lead to the reopening of the waterway. In addition, Iran made it clear there would need to be further US concessions, including US force withdrawals, war damages and sanctions relief before a deal could be done.

Danni Hewson, head of financial analysis at AJ Bell, said: "Investors have become sickeningly familiar with the rollercoaster ride they've been stuck on since the end of February.

"Although markets rocketed up to new highs on renewed hope of some kind of Middle East deal at the end of last week, today the brakes were slammed as sentiment shifted once again. The oil price edged back up and energy and defence stocks were back in vogue.

"It's a timely reminder of the impact the snarl up in the Strait of Hormuz has had on global shipping and the fluctuating costs that have made it impossible for businesses to accurately plan ahead.

"While the current price of oil is nowhere near April's highs, it is still significantly up on its pre-war price. That is being felt by ordinary consumers and is creating significant nervousness about how it will play into the latest US inflation data due out on Wednesday."

On the corporate front, Imperial Brands was under the cosh following a report it's preparing to cut thousands of jobs in critical markets, including the US and Europe, as part of a sweeping cost-cutting drive. According to Bloomberg, which cited people familiar with the matter, the tobacco company will begin notifying affected staff at ITG Brands - a subsidiary covering the US, the Dominican Republic and Puerto Rico - first from 19 August.

Peer British American Tobacco also suffered heavy losses.

Coca-Cola HBC was the worst performer on the FTSE 100, knocked lower by a downgrade to 'neutral' from 'outperform' at BNP Paribas, while Legal & General fell after a downgrade to 'sell' from 'neutral' at Citi.

Vistry tumbled following a report that leading credit insurer Allianz Trade could be reducing the cover it extends to suppliers of the housebuilder.

According to the Financial Times, which cited people familiar with the matter, the insurer warned suppliers in recent weeks that it is adjusting its credit limits for Vistry, which could result in cover being reduced by up to 70%. One of the sources said that the final level of cover provided will depend on Vistry's financial performance in the weeks ahead.

Russ Mould, investment director at AJ Bell, said: "The share price reaction shows investors are concerned and this will only ramp up the pressure on the company to pay down debt as it looks to weather a tricky period for the property market."

Building products manufacturer Marshalls fell as it posted a rise in first-half profit but a dip in revenue, and said it assumes no material market recovery in the second half.

On the upside, Plus500 rose as the fintech kept its full-year outlook unchanged after delivering record interim numbers, with revenue up 12% year-on-year to $462.9m, customer income rising 24% to a fiveyear high of $460.8m, and EBITDA edging up 1% to $187.5m.

Glencore rallied as Deutsche Bank, which rates the shares at 'buy', said it continues to see a compelling bottom-up story for the miner.

Market Movers

FTSE 100 (UKX) 10,862.50 -0.35%

FTSE 250 (MCX) 24,744.54 -0.44%

techMARK (TASX) 6,152.40 -0.27%

FTSE 100 - Risers

Fresnillo (FRES) 2,963.00p 3.46%

Glencore (GLEN) 568.70p 2.10%

Spirax Group (SPX) 7,650.00p 2.00%

Metlen Energy & Metals (MTLN) 50.75p 1.58%

BP (BP.) 524.60p 1.43%

BAE Systems (BA.) 2,244.00p 1.36%

Weir Group (WEIR) 2,758.00p 1.32%

IG Group Holdings (IGG) 1,360.00p 1.27%

Antofagasta (ANTO) 4,016.00p 0.88%

Croda International (CRDA) 3,292.00p 0.83%

FTSE 100 - Fallers

Coca-Cola HBC AG (CDI) (CCH) 4,724.00p -4.76%

Imperial Brands (IMB) 2,664.00p -4.55%

British American Tobacco (BATS) 4,228.00p -4.37%

Vodafone Group (VOD) 116.80p -3.07%

Whitbread (WTB) 2,460.00p -2.73%

Barratt Redrow (BTRW) 315.40p -2.53%

Admiral Group (ADM) 3,798.00p -2.26%

3i Group (III) 2,803.00p -2.23%

Kingfisher (KGF) 320.30p -2.23%

Associated British Foods (ABF) 2,083.00p -2.21%

FTSE 250 - Risers

The Schiehallion Fund Limited NPV (MNTN) 2.15p 5.39%

Ithaca Energy (ITH) 241.00p 4.24%

Oxford Nanopore Technologies (ONT) 128.90p 3.20%

Diversified Energy Company (DI) (DEC) 1,050.00p 2.94%

Playtech (PTEC) 377.20p 2.67%

Harbour Energy (HBR) 251.20p 2.36%

Edinburgh Worldwide Inv Trust (EWI) 253.00p 2.22%

Plus500 Ltd (DI) (PLUS) 3,836.00p 2.13%

Caledonia Investments (CLDN) 393.00p 1.81%

QinetiQ Group (QQ.) 563.50p 1.81%

FTSE 250 - Fallers

Vistry Group (VTY) 249.00p -12.20%

Oxford Biomedica (OXB) 478.50p -5.25%

WPP (WPP) 390.90p -4.98%

Trustpilot Group (TRST) 286.20p -4.02%

Rank Group (RNK) 99.70p -3.02%

Genuit Group (GEN) 305.20p -2.68%

Berkeley Group Holdings (The) (BKG) 3,534.00p -2.54%

OSB Group (OSB) 508.00p -2.40%

Balfour Beatty (BBY) 860.00p -2.38%

Domino's Pizza Group (DOM) 200.60p -2.34%