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Oil prices hit near six-month low

04 May 2017 17:03

A sharp drop in oil and commodity prices threatened to offset gains by banking and pharmaceutical stocks.

Brent crude oil declined 3.7% to $48.91 and West Texas Intermediate fell 3.8% to $46 per barrel.

Gold cheapened 1.5% to $1,227 per ounce and copper was down 1.4% to $5,511 per tonne.

The slide in prices was due to market concerns that the Organisation of the Petroleum Exporting Countries (OPEC) was not taking enough action as US stockpiles rose.

Royal Dutch Shell (RDSB) was initially flat but made last minute gains of 1.1% to £20.83. BP (BP.) also shook off the weak prices as it rose 1.2% to 452p.

Also among the casualties were Anglo American (AAL), Antofagasta (ANTO) and BHP Billiton (BLT), which dropped by up to 3.7%.

There was good news for the UK economy as the purchasing managers index data for the services sector came in ahead of expectations. This matched similar updates on the manufacturing and construction sectors earlier in the week.


The slump in oil prices also hit investor sentiment in the US as the S&P was flat, while the Dow Jones dipped lower as Wall Street opened on Thursday.

Overnight most Asian markets were also subdued with the exception of Japan's Nikkei 225 which closed 0.7% higher on Thursday.


Shell was among the biggest risers in early trading as it revealed its first quarter income climbed to $3.54bn compared to $484m at the same time last year.

High street bank HSBC (HSBA) ticked 3.6% higher as its first quarter adjusted pre-tax profits rose to $5,937m, up 12%.

Insurance group RSA (RSA) reported its first quarter 2017 net written premiums rose 14% to £1.71bn, while operating profit was ahead of company expectations, helping the share to climb 2% to 617.2p.

UK supermarket chain Morrisons (MRW) unveiled a 3.4% boost in like-for-like sales excluding fuel for the 13 weeks to April 30, although investors clearly hoped more as the stock nudged 1.4% up to 242.3p.

Gold miner Randgold Resources (RRS) was weaker at £65.70 after making a strong start in 2017, which put the group on track to achieve its guidance for year. In the first three months of 2017, gold production was up 10% on the year at 322,470 ounces.

High street fashion retailer Next (NXT) was out of touch as its sales fell 3%, although it blamed a challenging UK consumer environment. It lowered pre-tax profit expectations to £680m-£740m, from £680m-£780m, prompting the shares to fall 5% to £41.86.

Anglo American (AAL) agreed to sell its 88% interest in the Drayton thermal coal mine and Drayton South project in New South Wales to Malabar Coal.

The market doubted Rolls-Royce's (RR.) ability to meet full year profit expectations as it retreated 1.7% lower despite announcing it saw no reason to change its expectations for profit and cash flow.

Severe weather dragged on miner Glencore's (GLEN) production, but failed to move the share price at 281.7p. The company highlighted the impact of Cyclone Debbie in Australia, flooding in Peru and higher than average rainfall in the Democratic Republic of Congo and Hunter Valley.


It appeared sporting events become more of a gamble for Ladbrokes Coral (LCL) as results in Italy were 'unusually bad' in February and March. The stock declined 4.4% to 122.7p.

Global security services provider G4S (GFS) impressed the market as it revealed strong start to its financial year thanks to continuing momentum from the end of 2016.


Purplebricks (PURP) shares enjoyed 1.5% lift as it released its full year trading update. The company performed strongly in the UK, with a year-on-year instruction growth increase of 83%.

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Related Company: RDSB

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