FTSE 100 lags European peers as oil drags

By Shubham Batra and Sruthi Shankar

(Reuters) -The UK’s FTSE 100 lagged broader European markets on Monday as energy stocks followed oil prices lower, while investors looked ahead to the start of the earnings reporting period and a slew of economic data this week.

The blue-chip FTSE 100 closed up 0.1% and lagged its European peers that were driven by gains in the tech sector.

The FTSE 350 oil and gas index fell 2.9% as crude prices tumbled nearly 4% on sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output. [O/R]

Adding to the downside pressure, energy giant Shell fell 3.1% as it flagged impairment charges of up to $4.5 billion for the fourth quarter, mainly related to the Singapore refining and chemicals hub the oil major is looking to sell.

“Shell has been a beneficiary of higher commodity prices over the approximate two years which have followed Russia’s invasion of Ukraine. The company needs to show it can deliver when market conditions aren’t so helpful,” said AJ Bell investment director Russ Mould.

UK stocks finished the first week of 2024 lower, with FTSE 100 falling by the most since November and the FTSE 250 the most since early October as markets scaled back bets on early rate cuts.

U.S. earnings season kicks off later this week with results from Wall Street banks including JPMorgan and Bank of America, while focus in the UK will be on updates from retailers like Marks and Spencer Group, Sainsbury’s and Tesco. U.S. inflation and UK gross domestic product data will also be on investors’ radar later this week.

Goldman Sachs forecast the FTSE 100 rising to 7,900 over the next 12 months, citing low valuation and improving global demand. The target represents a roughly 3% gain from current levels.

The midcap index FTSE 250 climbed 1.0%.

CMC Markets soared 21.6% to an over four-month high after the online trading platform raised its full-year operating income forecast, while rival Plus500 rose 8.0%.

(Reporting by Shubham Batra and Sruthi Shankar in Bengaluru; Editing by Janane Venkatraman, Mrigank Dhaniwala and Richard Chang)