Gold rises and safe haven investments benefit from gyrations on equity markets, energy stocks keep falling as the slide in the price of oil continues.
Sharp falls in global stock markets this week were driven by extreme turbulence in China and hefty losses for industrial commodity prices. The Shanghai Composite managed a 2% rally on Friday but was down 10 per cent since the end of 2015.
London equities ended their first week of 2016 lower, reversing Friday’s early gains in the afternoon as traders sold resources and punished Sports Direct (SPD) for a profit warning. Europe ended down as Wall St fell on crude oversupply concerns despite well-received jobs data. Calmer conditions in Chinese markets and a positive US jobs report failed to stop the sell off in US and European equity markets.
FTSE 100 ended 41.64 points lower, or 0.7%, to 5912.44, taking it within range of three-year lows. WTI crude was down another 1.5% at $33.25 a weekly drop of nearly 11%, it hit an 11 year low of $32.16 on Thursday.
Thereafter the key driver was essentially resources. Shell (RDSA) plunged 5.14% to 1379.75p, this on both the price of crude and jitters its planned tie-up with BG (BG.), up 0.52 to 941.8p, will win shareholder approval despite concerns about crude’s price. BP (BP.) tapered 2.07% to 330.7p.
Anglo American (AAL) took a 2.85% sortie south to 229.53p and was followed by BHP Billiton (BLT), off 2.63% to 656p. FTSE 350 indices related to mining and oil were down considerably, with that for industrial metals shedding 6.8%.
Resources stocks remain very much exposed to a posse of factors, among them metals-hungry China’s economic outlook and potential stock-market volatility, a global supply glut of crude oil and lingering tensions in the Middle East, notably between Saudi Arabia and Iran.
Gold, although down $6 on Friday was up $41 or 3.9% over the week at $1,102 an ounce.