LONDON MARKET OPEN: Oil majors lifted by tensions in Middle East

(Alliance News) - Stock prices in London opened lower on Monday as investors were put in a risk-off mood at the start of a new week amid exploding tensions in the Middle East.

"Destabilisation in the [Middle East] could yet spread depending on any escalation in hostilities over the coming days...At the same time, such geopolitical tension is traditionally and unsurprisingly negative on sentiment, with investors likely to be unsettled by the prospect of further uncertainty," said Richard Hunter, head of markets at interactive investor.

The FTSE 100 index opened down just 2.80 points at 7,491.78. The FTSE 250 was down 58.22 points, or 0.3%, at 17,674.10, and the AIM All-Share was down 1.16 points, or 0.2%, at 693.55.

The Cboe UK 100 was marginally lower at 748.42, the Cboe UK 250 was down 0.5% at 15,356.60, and the Cboe Small Companies was down 0.1% at 13,017.60.

In London, BP and Shell were among the best-performing stocks in the FTSE 100 on Monday morning as they tracked oil prices higher.

BP was up 2.1% and Shell was up 1.5%.

Brent oil was quoted at USD86.99 a barrel early in London on Monday, up sharply from USD84.22 at the London equities close on Friday.

Oil prices surged amid flaring tensions in the Middle East as investors assessed the potential for the conflict to disrupt supply.

Prime Minister Benjamin Netanyahu warned Israel on Sunday to prepare for a "long and difficult" conflict a day after Palestinian militant group Hamas launched a surprise assault from Gaza.

More than 700 Israelis have been killed since Hamas launched its large-scale attack, according to the Israel Defense Forces on Monday – the country's worst losses since the 1973 Arab-Israeli war.

Gaza officials reported at least 413 deaths in the impoverished and blockaded enclave of 2.3 million people, which was hammered by Israeli air strikes on 800 targets ahead of what many feared may be a looming ground invasion.

Croda International was the worst blue-chip performer in early morning trade, down 7.0% after it said that its customers have continued to reduce their ingredient inventories in consumer care, crop and industrial end markets due to a combination of destocking and a weaker demand environment.

As a result, the company said its sales volumes have been depressed and its overall performance in the period from July 1 to September 30 has been weaker than originally expected.

With no indications of a rebound in the final quarter of its financial year, Croda now expects full-year adjusted pretax profit to be between GBP300 million and GBP320 million.

HSBC declared the acquisition of Citigroup's consumer wealth management portfolio in China to be a "milestone" on the road to building its wealth capabilities in Asia.

Citigroup announced it agreed to sell its onshore consumer wealth portfolio in China to HSBC Bank China, an arm of the London-based, Asia-focused lender.

The New York-based retail, commercial and investment bank said the portfolio sale includes clients, assets under management, and deposits, for a total value of around USD3.6 billion.

The terms of the transaction were not disclosed. The deal is expected to close in the first half of 2024, Citi said.

HSBC said it will integrate the business into Bank China's Wealth & Personal Banking Operations. It plans to extend offers to in-scope employees who are supporting the business in China.

Shares in HSBC were down 0.7% on Monday morning.

In the FTSE 250, Sirius Real Estate lost 0.3% despite saying it has continued to experience "strong" trading in the first half of its financial year, in line with its expectations.

The London and Johannesburg-listed property investor said like-for-like rent roll rose by 7.7% for the six months that ended September 30, compared to the same period last year. It said this was despite a backdrop of challenging economic conditions in both Germany and the UK.

Elsewhere in London, Metro Bank surged 16% after it announced a new deal with investors to shore up its finances.

The deal includes a GBP325 million capital raise and GBP600 million in debt refinancing.

Spaldy Investments, Metro Bank's largest shareholder, is contributing GBP102 million and will become the controlling shareholder of Metro Bank upon completion of the transaction – with roughly a 53% shareholding.

It comes after the bank's shares tumbled last week on reports it was in talks with investors to raise around GBP250 million in equity funding and GBP350 million in debt.

Daniel Frumkin, chief executive officer at Metro Bank, said: "Today's announcement marks a new chapter for Metro Bank, facilitating the delivery of continued profitable growth over the coming years."

In European equities on Monday, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was down 0.6%.

In Tokyo on Monday, the Nikkei 225 index closed down 0.3%. The S&P/ASX 200 in Sydney closed up 0.2%. In China, the Shanghai Composite closed 0.4% lower, while the Hang Seng index in Hong Kong was flat.

In the US on Friday, Wall Street ended higher with the Dow Jones Industrial Average up 0.9%, the S&P 500 up 1.2% and the Nasdaq Composite up 1.6%.

On Friday, the US Bureau of Labor Statistics said US nonfarm payrolls rose by 336,000 in September, significantly above FXStreet-cited consensus of 170,000. The September read was also above the 227,000 jobs added in August.

Growth in pay slowed, however. Average hourly earnings rose 4.2% in September on-year, missing consensus of a 4.3% rise and down from a 4.3% rise in August. Earnings rose 0.2% in September from August. They had also risen 0.2% in August from July.

ING's James Knightley said the report underscored the strength seen in US economic activity over the summer.

"While we doubt this can last, [Friday]'s number keeps alive the prospect of another rate hike and certainly backs the Federal Reserve's argument on the need for interest rates to stay higher for longer," he said.

Against this back drop, the dollar strengthened on Monday morning.

The pound was quoted at USD1.2188 at early on Monday in London, down from USD1.2226 at the London equities close on Friday. The euro stood at USD1.0537, lower against USD1.0576. Against the yen, the dollar was trading at JPY149.12, a touch lower compared to JPY149.18.

Gold was quoted at USD1,849.80 an ounce, sharply higher against USD1,831.35.

By Heather Rydings, Alliance News senior economics reporter

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