FTSE 100 preview: Downbeat start ahead as oil enters bear market

on Jun 21, 2017

The UK benchmark index looks set to open lower this morning, as oil retreated into bear market territory. Barclays (LON:BARC) is set to stay in focus today with experts weighing in on the Serious Fraud Office charges over the group’s fundraising during the financial crisis which helped the lender avoid a state-funded bailout.

IG’s opening calls suggest that the Footsie will start the day 0.22 percent lower at 7,456 points. The blue-chip index is likely to take cues from the US where stocks fell last night, pressured by a fall in oil which retreated amid prospects of rising output.
Oil prices are ‘most definitely’ heading to $40 a barrel and will likely dip into the upper $30s, John Kilduff, founding partner at energy hedge fund Again Capital, told CNBC’s ‘Squawk Box’.

“Not only do we have a struggle with production and an ineffectual OPEC, non-OPEC production regime, but you have this overhang again that is not clearing, and so that is what this market is reacting to,” he pointed out.
Tamas Varga at London-based broker PVM meanwhile told the Financial Times that “the future might be bright for oil prices, but the present is not,” adding that any immediate price recovery was ‘wishful thinking’. Asian shares have tracked the US lower this morning.

At home, the Footsie shed 51.10 points to end the session 0.68 percent lower at 7,472.71, pressured by a selloff in mining shares. Antofagasta (LON:ANTO) was the session’s biggest faller, dipping 4.67 percent to close at 755.50p.
There are no major macroeconomic releases out of Europe this morning. On the other side of the Atlantic, existing home sales numbers for May are due out at 15:30 BST. In corporate reports, Whitbread (LON:WTB) is scheduled to update investors on its first-quarter performance this morning.