London close: Stocks slip as oil price surge raises stagflation concerns

(Sharecast News) - A renewed surge in oil prices pushed UK stocks marginally lower on Monday, with the FTSE 100 continuing to flatline after hitting a five-week high last week, as all eyes were firmly fixed on developments in the Middle East following failed peace talks between the US and Iran.

The FTSE 100 settled 0.2% lower at 10,582.96, matching losses seen across most major equity indices across Europe. The UK index has traded within a narrow range of 100 points or so since rising to a five-week closing high of 10,608.88 last Wednesday.

"Stocks mostly pull back as the escalation in the Middle East conflict lifts oil prices above $100 per barrel and maintains risks of stagflation", said Axel Rudolph, chief technical analyst at IG.

After a tentative ceasefire was signed last week, helping calm prices moderately, talks between the US and Iran in Pakistan over the weekend failed to secure a lasting peace deal.

In response, Donald Trump has threatened a US naval blockade of the Strait of Hormuz, restricting Iran's ability to export and sell oil. It was due to start at 1500 BST on Monday afternoon. In response, Tehran has threatened to retaliate by targeting Gulf ports.

"The move reinforced concerns over prolonged disruption to a key global energy artery, which has already been effectively closed since the conflict began, driving sharp increases in oil and gas prices," Rudolph said.

Brent was 7.0% higher at $101.89 a barrel by the close in London, while WTI crude surged 6.7% to $102.99 a barrel.

Oil stocks provide support

Losses in London were limited as a jump in the price of oil supported heavyweight energy majors BP and Shell, and FTSE 250 peer Ithaca Energy. BP was also in focus after agreeing to buy a 60% interest in three offshore exploration blocks in Namibia from Eco Atlantic Oil & Gas as part of its strategy to grow its upstream portfolio.

Airlines were under the cosh amid disappointment over the lack of a peace deal and concerns about higher fuel costs, with BA owner IAG, easyJet and Wizz Air all sharply lower.

Housebuilder Vistry slumped as it announced the appointment of company insider Adam Daniels chief executive. Nevertheless, the wider housebuilding sector was broadly under pressure, with Persimmon and Taylor Wimpey also weaker.

National Grid lost ground as it said trading remained in line with expectations but it now expects to see a net impact of roughly 1p per share to underlying earnings from costs linked to customer refunds and higherthanexpected storm costs in its US operations. Others in the utilities sector were also out of favour, with United Utilities and Severn Trent also falling.

Primark owner AB Foods was knocked lower by a downgrade to 'underperform' from 'sector perform' at RBC Capital Markets, while WH Smith slid after a downgrade to 'sector perform' from 'outperform' by the same outfit.

Market Movers

FTSE 100 (UKX) 10,582.96 -0.17%

FTSE 250 (MCX) 22,272.75 -0.35%

techMARK (TASX) 5,848.65 0.15%

FTSE 100 - Risers

Metlen Energy & Metals (MTLN) 33.32p 3.22%

The Sage Group (SGE) 841.00p 2.86%

3i Group (III) 2,759.00p 2.55%

London Stock Exchange Group (LSEG) 9,190.00p 2.45%

BAE Systems (BA.) 2,245.50p 2.35%

Flutter Entertainment (DI) (FLTR) 7,790.00p 2.31%

Admiral Group (ADM) 3,328.00p 2.18%

Pearson (PSON) 1,016.50p 1.96%

Entain (ENT) 544.20p 1.87%

Relx plc (REL) 2,509.00p 1.78%

FTSE 100 - Fallers

United Utilities Group (UU.) 1,362.00p -2.37%

Smurfit Westrock (DI) (SWR) 3,058.00p -2.33%

Severn Trent (SVT) 3,184.00p -2.18%

National Grid (NG.) 1,319.80p -2.06%

Marks & Spencer Group (MKS) 357.40p -2.06%

Fresnillo (FRES) 3,524.00p -2.00%

Associated British Foods (ABF) 1,882.00p -1.98%

SSE (SSE) 2,699.50p -1.93%

Burberry Group (BRBY) 1,136.80p -1.78%

Convatec Group (CTEC) 230.00p -1.71%

FTSE 250 - Risers

GB Group (GBG) 196.90p 6.00%

Ithaca Energy (ITH) 257.00p 3.63%

NCC Group (NCC) 119.00p 3.27%

Avon Technologies (AVON) 1,784.00p 3.00%

Trustpilot Group (TRST) 232.60p 2.92%

CMC Markets (CMCX) 385.50p 2.66%

Man Group (EMG) 254.40p 2.17%

Pollen Street Group Limited (POLN) 855.00p 2.15%

Partners Group Private Equity Limited. (EUR) (PEY) 8.78p 2.09%

Harbour Energy (HBR) 283.00p 1.95%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 938.50p -5.44%

Wickes Group (WIX) 216.50p -5.04%

Ocado Group (OCDO) 179.90p -4.10%

Pennon Group (PNN) 545.00p -4.05%

Vistry Group (VTY) 326.80p -3.83%

Aston Martin Lagonda Global Holdings (AML) 40.72p -3.28%

WH Smith (SMWH) 589.00p -3.20%

Elementis (ELM) 156.20p -3.10%

Tate & Lyle (TATE) 348.70p -2.95%

Oxford Nanopore Technologies (ONT) 105.40p -2.86%