FTSE 100 slips with commodities in focus

The FTSE 100 was weaker on Monday as miners and oil majors dragged on the index after Saudi Arabia cut its oil prices and enthusiasm around interest rate cuts began to ebb.

Global equities had a stellar end to 2023 on hopes central banks would start to cut rates early in the new year. However, since then, economic data points and central bank comments suggest the first cuts won’t come as soon as some market participants hope.

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Indeed, market pricing of rate cuts has reversed slightly since the turn of the year, which continued in equities and fixed income on Monday. London’s leading index had been sharply lower earlier in the session, but dip buyers stepped in to provide support as trade progressed.

The FTSE 100 was down 0.15% at the time of writing.

“The FTSE 100 dipped on Monday as weak commodity prices hit the big resources stocks which populate the index,” said AJ Bell investment director Russ Mould.

“In general, the momentum which stocks built up in the latter part of 2023 seems to have been lost for now as some of the excitement over interest rates has dissipated and doubt has crept in about a soft landing for the economy.

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“US inflation figures scheduled for Thursday could either help get markets out of their mild New Year funk or put shares under renewed pressure, so this release will be closely monitored. Disruption to shipping routes in the Red Sea are hinting at renewed inflationary pressures coming down the pipe.”

FTSE 100 movers

The FTSE 100’s commodity companies were the main detractors of the index’s performance with Glencore, BP, Shell and Anglo American down between 1.3% – 2.4%.

However, after last week’s shock profit warning, JD Sports was the top faller as the sell-off continued. JD Sports shares are now worth 29.9% less than they were at the end of 2023 and are by far the FTSE 100’s worst performer so far in 2024.

Melrose was the top gainer amid fluctuations in the aerospace caused by Boeing’s malfunction over the weekend. Those in Boeing’s supply chain are suffering while competitor supply chains are benefiting.

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