London equities moved lower on Thursday as declining crude oil prices put pressure on heavyweight energy stocks, prompting the FTSE 100 to retreat from recent multi-week highs following a strong run for the index.
The FTSE 100 fell 0.5%, extending the pause that began on Wednesday after six consecutive sessions of gains. Lower commodity prices weighed on major constituents Shell PLC (LSE:SHEL) and BP PLC (LSE:BP.), offsetting positive corporate developments elsewhere in the market and a supportive backdrop from overnight US mega-cap earnings.
Investors were assessing a busy combination of company results, industrial production figures and ex-dividend adjustments as attention gradually shifted towards upcoming signals from global central banks.
Prudential PLC (LSE:PRU) was among the companies reporting results, with shares slipping 1.2% despite the insurer delivering an 8% increase in first-half new business profit to $1.38 billion.
UK automotive manufacturing figures provided a more cautious signal for the domestic economy. Vehicle production fell 11.6% year on year in July to 63,655 units, according to the Society of Motor Manufacturers and Traders.
The SMMT attributed the decline partly to exports falling 15.9%, alongside earlier-than-usual summer maintenance shutdowns at several major vehicle assembly facilities.
Energy shares faced pressure as Brent crude declined 0.5% towards $87.40 per barrel, continuing its recent retreat. The move followed diplomatic discussions between Qatari and Iranian officials in Tehran, which raised expectations that an agreement could eventually allow commercial traffic through the Strait of Hormuz to resume.
The prospect of improving transit conditions helped ease some of the concerns surrounding oil supplies that had previously supported crude prices, putting pressure on London’s integrated energy producers.
Mining stocks found a more supportive backdrop, however, as zinc prices advanced for a seventh consecutive session and copper markets strengthened, helping provide some balance to weakness elsewhere in the resources sector.
Investors turn attention to Jackson Hole
With the latest UK industrial figures absorbed and oil markets showing signs of stabilisation, attention in the City is increasingly turning towards the outlook for global monetary policy.
Investors are awaiting Federal Reserve Chair Kevin Warsh’s inaugural keynote address at the Jackson Hole Economic Policy Symposium on Friday, with markets looking for further guidance on the direction of interest rates, borrowing costs and liquidity conditions heading into the autumn.
The upcoming speech represents a key potential catalyst for global markets, with clearer signals on the Federal Reserve’s policy outlook likely to help shape investor positioning after the recent period of strength in UK equities.
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