Market Report: Equity markets are having a 'weather bomb' of their own


Click to follow

It never rains, it pours – equity markets are having a “weather bomb” of their own.

A perfect storm of tumbling oil and commodity prices, uncertainty over the outcome of the snap Greek elections, and the collapse of the Russian rouble condemned the Footsie to its worst week since August 2011.

The index closed down 161.07 points at 6,300.63 yesterday, a fall normally registered across a week rather than a single day. It now stands 440 points lower than it started the week, with over £100bn knocked off the collective value of the UK’s 100 biggest listed companies.

Chris Beauchamp, a market analyst at IG, said: “Yet again the dive in oil demonstrates the gap between consumers and investors: the former can rejoice in lower prices but the latter cannot look at a chart without factoring in the implications for global economic demand and inflation.”

The oil services company Petrofac led the blue-chip index lower, falling 46p to 678p as Deutsche Bank slashed its target price. The bank thinks Petrofac’s cashflow could be stretched as business at its oil-rig management division slows.

Investors were spooked by Carillion’s move to take on more debt, as the construction company sealed a £170m convertible bond offering, due in 2019. Carillion, down 30p at 314p, said it was taking advantage of “currently favourable conditions” in the bond market.

Traders are expecting bad news from Kenmare Resources. The Mozambique-focused miner, which moved to quell fears over its balance sheet on Thursday, slipped 0.75p to 2.95p yesterday. Message boards were full of worried chatter, as retail punters speculated that merger talks with Iluka Resources, first revealed in October, may be called off.

Another retail investor favourite, Quindell, rose 5.5p to 41.5p as regulatory filings revealed that Roble SL, the short-seller that has stalked the insurance outsourcer for most of the year, has reduced its position to 1.84 per cent. At its height the company, believed to be a shell for US hedge fund Tiger Global, was shorting 5 per cent of Quindell’s entire stock.