Oil, gold and the yen Japanese yen were what investors flocked to as equities were largely out of favour on Monday after events in Israel.
London’s FTSE 100, boosted by its oil majors and defence firm BAE Systems, outperformed. It registered a minor fall, however, having spent much of the day in the green.
The FTSE 100 index ended down just 2.37 points at 7,492.21. The FTSE 250 closed down 160.26 points, or 0.9%, at 17,572.06, and the AIM All-Share ended down 6.88 points, or 1.0%, at 687.83.
The Cboe UK 100 slipped 0.1% at 748.05, the Cboe UK 250 declined 1.1% at 15,263.22, and the Cboe Small Companies declined 1.5% at 12,968.73.
In European equities on Monday, the CAC 40 in Paris ended down 0.6%, while the DAX 40 in Frankfurt fell 0.7%.
Stocks in New York were lower around the time of the London close. The Dow Jones Industrial Average fell 0.2%, the S&P 500 index lost 0.4%, and the Nasdaq Composite fell 0.9%.
Israeli Prime Minister Benjamin Netanyahu vowed to ‘change the Middle East’ in Israel’s war with Palestinian militant group Hamas, as the army pounded the Gaza Strip with air strikes.
Hamas militants stormed towns and communities in southern Israel at dawn on Saturday under the cover of a barrage of rocket fire, in the deadliest attack on the country in decades.
Israel has retaliated by carrying out intense air strikes on the Gaza Strip which is controlled by the Islamist group.
More than 700 people have been killed in Israel since Hamas launched its attack on Saturday, while on the Gaza side, at least 560 people have been killed.
The upshot of the weekend’s events was a rise in oil and gold prices, while also giving the yen, recently hurt by monetary policy divergence between the US and Japan, some respite.
Against the yen, the dollar was trading at JP¥148.59 late Monday, lower compared to JP¥149.18 on Friday. The pound was quoted at $1.2213, down from $1.2226 at the London equities close on Friday. The euro stood at $1.0548, lower against $1.0576.
Brent oil was quoted at $87.94 on Monday, up from $84.22 at the London equities close on Friday.
Gold’s safe haven properties also meant it was attractive. Gold was quoted at $1,852.16 an ounce, higher against $1,831.35.
In London, oil majors Shell and BP rose 2.6% and 2.9%. Gold miner Fresnillo added 1.4%. Also helping support the FTSE 100, defence firm BAE Systems climbed 4.5%.
Defensive stocks, in the broader sense of the term, were also on the up. Consumer goods maker Reckitt rose 0.9%, tobacco company Imperial Brands added 2.0% and telecommunications firm Vodafone ended 1.7% higher.
Hurting the FTSE 100, however, British Airways parent International Consolidated Airlines Group fell 6.1%. The conflict has meant a number of airlines have cancelled flights. An oil price hike, potentially lifting jet fuel costs further down the line, is also hurting enthusiasm towards the travel sector. FTSE 250-listed budget carriers Wizz Air and easyJet fell 6.2% and 5.8%.
Energean, a hydrocarbon company developing a substantial gas field in offshore Israel, fell 18% amid fears of an escalation in the conflict.
AIM-listed t42 IoT, which provides tracking, security, and monitoring solutions, lost 7.7%. It reassured that its business is currently ‘unaffected’ by the events in Israel, however.
‘Our team in Israel remains safe and unharmed and is operating as usual, though our thoughts and prayers are with all our friends and colleagues who have lost dear friends and relatives,’ it added.
Croda International tumbled 4.5%. It said that its customers have continued to reduce their ingredient inventories in consumer care, crop and industrial end markets due to a combination of destocking and a weaker demand environment.
As a result, the chemicals company said its sales volumes have been depressed and its overall performance in the period from July 1 to September 30 has been weaker than originally expected.
With no indications of a rebound in the final quarter of its financial year, Croda now expects full-year adjusted pretax profit to be between £300 million and £320 million, slashing its outlook from £370 million to £400 million.
On the up, Metro Bank surged 11%. It announced a new deal with investors to shore up its finances.
The deal includes a £325 million capital raise and £600 million in debt refinancing. Spaldy Investments, Metro Bank’s largest shareholder, is contributing £102 million and will become the controlling shareholder of Metro Bank upon completion of the transaction – with roughly a 53% shareholding.
A quiet economic calendar on Tuesday has the latest British Retail Consortium-KPMG UK retail sales monitor just after midnight. US monetary policy will be in focus when Atlanta Fed President Raphael Bostic speaks later in the day.
The local corporate calendar has trading statements from newspaper publisher Reach and recruiter Robert Walters. There are also annual results from research and data analytics group YouGov.
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