London stocks closed slightly lower on Monday as rising oil prices added to inflation concerns, while investors assessed Chancellor John Healey’s pledge to keep public spending under control ahead of next month’s Budget.
The FTSE 100 slipped 8.96 points, or 0.1%, to close at 10,822.13, while the FTSE 250 fell 78.03 points, or 0.3%, to 24,506.68. The AIM All-Share edged 0.1% lower to 799.50.
Energy markets remained firmly in focus after Brent crude climbed to $97.89 a barrel, compared with $95.18 at Friday’s London close. Oil prices strengthened following US attacks on Iranian tankers and Tehran’s threat to establish a new restricted zone outside the Strait of Hormuz.
The US said it had struck three Iranian oil tankers over the weekend, destroying one, in retaliation for attacks on US Navy warships. Iran subsequently warned that a restricted zone outside the strategically important Strait of Hormuz would be announced in the coming days.
Higher crude prices supported London-listed energy majors, with Shell gaining 1.3% and BP rising 1.2%.
In the UK, Chancellor John Healey said the economy was “turning a corner” as he promised to maintain control over government spending and borrowing ahead of next month’s Budget.
In his first major speech since taking over at the Treasury, Healey acknowledged the pressure caused by elevated government borrowing costs but struck an optimistic tone on the economic outlook.
Sterling traded at $1.3516 at the London close, compared with $1.3522 on Friday. Against the euro, the pound edged higher to €1.1638.
Among individual stocks, Centrica led the FTSE 100 higher with a 2.2% gain.
Standard Life rose 2.0% after reporting stronger-than-expected half-year profit and reiterating its full-year guidance, while Next gained 1.1% after winning its appeal against a landmark UK equal-pay ruling.
On the FTSE 250, Oxford BioMedica climbed 5.8%, while B&M European Value Retail gained 3.4% after RBC increased its price target to 275p from 240p and maintained an ‘outperform’ rating.
Hollywood Bowl Group was the biggest mid-cap faller, losing 6.0% after Deutsche Bank reduced its price target to 358p from 376p, although the broker retained its ‘buy’ recommendation.
Among smaller companies, Kropz plunged 33% after launching an urgent operational review of its Elandsfontein phosphate operation. The company said lower realised selling prices and rising costs had prevented the asset from achieving operating profitability, with the US-Iran conflict contributing to difficult trading conditions.
United Oil & Gas jumped 24% after appointing Donal Meehan as its new Chief Operating Officer. Meehan, who previously served as the company’s Head of Commercial, has more than 20 years of upstream oil and gas experience, including time at ExxonMobil.
Semiconductor wafer manufacturer IQE gained 3.0% after reporting a strong first half, with revenue increasing 43% and losses narrowing. Adjusted earnings also improved, with trading ahead of the company’s internal expectations.
Gold traded at $4,412.10 an ounce, down from $4,439.40 on Friday.
US financial markets were closed on Monday for the Labor Day holiday.
Looking ahead to Tuesday, the UK economic calendar includes the British Retail Consortium’s August retail sales figures. International releases include Japanese GDP, trade figures from China, Germany and France, the US NFIB small-business optimism index and US consumer inflation expectations.
On the UK corporate calendar, Dunelm Group is due to report full-year results.
