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London’s FTSE 100
UK:UKX
was an outperformer across European bourses Monday, as a fresh Middle East conflagration boosted the price of oil and lifted energy stocks.
Brent crude
BRN00,
jumped more than 4% to near $90 a barrel at one point as traders expressed fears that Hamas’s attack on Israel may draw in other countries and destabilize energy supplies.
“As it nearly always does, an escalation of tensions in the region has helped push up oil prices. This is inevitable given how much of the world’s crude reserves and production are centered there,” said Russ Mould, investment director at AJ Bell.
Richard Hunter, head of markets at Interactive Investor, said that against this backdrop, the FTSE100 was seeing the benefit of its defensive, established constituents providing something of a haven compared to its European counterparts.
“The likes of BP
BP,
and Shell
SHEL,
were inevitably marked up given the oil price spike, while [defense company] BAE Systems
BA,
also popped higher in the wake of the Middle Eastern turmoil,” said Hunter.
London-listed gold miners such as Centamin
CEY,
and Fresnillo
FRES,
were also higher as the price of the yellow metal
GC00,
rose above $1,850 an ounce.
Shares in airlines suffered, however, with International Consolidated Airlines
IAG,
whose brands include British Airways, easyJet
EZJ,
and Wizz Air
WIZZ,
all lower as some flights to the region were cancelled.
And that risk-off tone was the dominant theme across European markets. The DAX
DX:DAX
in Frankfurt lost 0.4% while the CAC 40
FR:PX1
in Paris shed 0.3% as investors moved into the perceived havens of German government bonds, pushing the 10-year yield
BX:TMBMKDE-10Y
down 3.7 basis points to 2.851%.
A traditional move into the dollar at such times of geopolitical stress left the euro
EURUSD,
and sterling
GBPUSD,
down about 0.5% apiece.
Back in equities, a notable performer was Metro Bank
MTRO,
whose shares jumped about 20% off their lows after the U.K. challenger bank agreed a deal over the weekend to raise £325 million ($395 million) and refinance £600 million in debt to shore up its balance sheet.
“Management is calling this a new chapter for the bank, but more developments are expected to trim down its loan book and put it on a firmer footing. It’s still in discussions about selling a big chunk of its mortgage book,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“The costs of running its branch network, which offers much more extensive opening times and services compared to its rivals are high, and there is likely to be a significant amount of tinkering ahead to ensure the bank can stay profitable,” Streeter added.
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