FTSE 100 ends in the red, while BP slides along with oil price

• FTSE 100 drops 38 points
• US stocks rebound at midday
• US jobless claims fall sharply

5.20pm: Oil price does FTSE no favors

The FTSE 100 closed Thursday down 38 points, 0.6%, at 6,675, and the FTSE 250 dropped 125 points, 0.6%, to 21,278. 

“From a UK perspective, we are seeing continued fears over a sharp reduction in the number of vaccine imports coming from the EU,” IG Senior Market Analyst Joshua Mahony wrote Thursday. “With almost 30% of the 70 million vaccine doses exported by the EU having gone to UK, a decision to limit that flow could severely hamper the UK reopening timeline. With the UK clearly well ahead of EU nations in the vaccination drive, there is a real risk that politicians such as Angela Merkel push for action as their popularity wanes.”

Not helping matters is the declining price of , which has fallen 4.47% to $61.53 a barrel.

( (NYSE:BP) finished 2.6% lower at £293.70.

3.57pm: Commodity companies hit by Brent crude slide

Oil prices continue to slide, maintaining the pressure on the FTSE 100 which is chock-full of companies sensitive to commodity prices.

Brent crude has fallen 4.47% to $61.53 a barrel. Investors are cautious about further lockdowns dampening economic demand, especially in Europe.This is outweighing the concerns about supply problems following the container ship managing to block the key transport artery of the Suez canal.

Edward Moya at Oanda said: “Crude prices are lower as the short-term demand outlook continues to get downgraded as many European countries seem nowhere near to easing restrictions.” 

So with Wall Street also lower – albeit off its worst levels – the FTSE 100 remains firmly in the red, down 60.63 points or 0.9% at 6652.26.

As if two days of Congress testimony was not enough, Federal Reserve chair Jerome Powell has waded into the timing of the central bank removing its support measures for the economy.

He told National Public Radio that the US government’s stimulus package and improved vaccine distribution meant the economy was recovering faster than expected, which will mean the Fed gradually rolling back on the amount of Treasury bonds and mortgage backed securities it has been buying. The comments have helped push 10 year yields up to 1.616%, in turn undermining the equity market.

Oanda’s Moya again: “US stocks are dropping as investors shrug off improving growth and jobless claims data and focus on Fed Chair Powell’s comment about talking about rolling back aid. After months of reiterating that Fed is not ready to start talk about tapering, an early morning NPR interview delivered a candid comment [that] led everyone to think we are a few months away from hearing how the Fed will gradually change policy.

“The timing of Powell’s comments and better-than-expected jobless claims data and fourth quarter GDP painted a picture that the economy is about to see substantial progress with employment and pricing pressures.  Powell’s comments are not the beginning of the taper tantrum for markets, but did provide a reminder at how dependent stocks are for the punchbowl of stimulus.”

Back in the UK, the drop in the oil price means BP PLC (LON.BP) is down 2.92% or 8.8p at 292.75p while mining group Antofagasta PLC(LON.ANTO) has fallen 5.07% or 85.5p to 1600p.

Defensive stocks such as utilities are in demand, with SSE PLC (LON.SSE) up 27p or 1.89% at 1456p and Severn Trent PLC (LON.SVT) 25p or 1.1% better at 2306p.

2.35pm: Luxury goods group leads FTSE fallers

Burberry Group PLC (LON.BRBY) is the leading faller in the UK blue chip index, a sympton of the concerns of a third wave and extended lockdowns in Europe, brought to mind again after Germany reported an overnight jump in infection rates. On top of that, there fears it could face a boycott in China, given it is one of the clothing companies refusing to use cotton from Xinjiang over claims of forced labour in the region, The luxury goods group is down 120.5p or 6.02% at…