Markets take fright after Oilmageddon warning

(MENAFN- ProactiveInvestors - UK)

Shares in London and continental Europe slumped to lows not seen since October 2014 as crude prices fell after a warning of "Oilmageddon" from broker Citigroup.

The FTSE 100 Index shed 127.16 points to 5720 while Frankfurt's Dax dropped 287 points and Paris's CAC-40 was 128 points adrift.

The US broker said the global economy seemed stuck in a "death spiral" that may trigger an "Oilmageddon" situation of more weakness in crude prices recession and a bear market for shares.

Connor Campbell at spread-betting firm Spreadex said: "With Citigroup warning of a potential 'death spiral' if investors behave irrationally to the stronger dollar/weaker commodities/harmed emerging markets cycle that the world appears to be trapped in at the moment the markets have taken another kicking this Monday."

Latest polling on the potential outcome of the UK's EU referendum showed a majority in favour of leaving the bloc.

But commentators said the latest survey was conducted in the wake of the announcement of David Cameron's re-negotiation package which was predictably criticised in the Tory press.

They also pointed out that the survey was an online poll and phone polls - which have consistently shown big majorities in favour of staying in the EU - were more accurate in predicting the outcome of last year's general election.

In equities news of record production at Randgold Resources (LON:RRS) sent its share price up 265p to 5565p. But other miners were on the slide with Anglo American (LON:AAL) losing 15.65p to 347.7p Glencore (LON:GLEN) reversing 4.22p to 97.93p Rio Tinto (LON:RIO) down 19.5p to 1798.5p and BHP Billiton (LON:BLT) 17.7p off at 691.5p.

In a separate announcement Alecto Minerals (LON:ALO) struck a joint venture deal with Randgold over its 137 sq km Kossanto West Gold Project in Mali which sees the major fund all costs up to and including a pre-feasibility study. Shares soared 14.9% to 0.07p.

Imagination Technologies (LON:IMT) plunged in early trade but recouped much of the loss later easing 4.25p to 127.5p as investors digested news that chief executive Hossein Yossaie was quitting and the firm warned on profits.

Elsewhere North African-focused oil & gas explorer Petroceltic International (LON:PCI) has received from its lenders a further waiver to the repayment of debt until February 19. The stock drifted 0.25p to 18.5p.

Solo Oil (LON:SOLO) put on 1% to 0.3p on news that it and other oil & gas companies had started flow tests at the Horse Hill site near Gatwick Airport in East Sussex.

Another firm involved in the scheme Stellar Resources (LON:STG) was up 6% to 0.26p but Alba Mineral Resources fell 4.4% to 0.26p.

Fitness technology firm Fitbug (LON:FITB) softened 3% to 0.8p as it hired a new director and announced it has settled all litigation and claims between it and Fitbit.

KIbo Mining (LON:KIBO) completed the first phase of a feasibility Study (IBFS) for the Mbeya coal to power project in Tanzania but shareslost 3% to 4p.

London shares started the week in the red on Monday as economic worries and fears about a potential UK exit from the EU weighed.

The FTSE 100 Index dropped 51 points to 5796 as a survey showed that British business confidence had hit a three-year low due to concerns about the global economy and low oil prices.

Latest polling on the potential outcome of the UK's EU referendum showed a majority in favour of leaving the bloc.

But commentators said the latest survey was conducted in the wake of the announcement of David Cameron's re-negotiation package which was predictably criticised in the Tory press.

They also pointed out that the survey was an online poll and phone polls - which have consistently shown big majorities in favour of staying in the EU - were more accurate in predicting the outcome of last year's general election.

In equities news of record production at Randgold Resources (LON:RRS) helped buoy sentiment among mining stocks. Anglo American (LON:AAL) gained 7.15p to 370.5p Glencore (LON:GLEN) hardened 2.55p to 104.7p Rio Tinto (LON:RIO) strengthened 58p to 1876p and BHP Billiton (LON:BLT) climbed 8p to 717.2p. Randgold itself glittered 165p to 5465p.

In a separate announcement Alecto Minerals (LON:ALO) struck a joint venture deal with Randgold over its 137 sq km Kossanto West Gold Project in Mali which sees the major fund all costs up to and including a pre-feasibility study. Shares soared 17.1% to 0.07p.

Imagination Technologies (LON:IMT) plunged in early trade but recouped much of the loss later standing 2p off at 129.75p as investors digested news that chief executive Hossein Yossaie was quitting and the firm warned on profits.

Elsewhere North African-focused oil & gas explorer Petroceltic International (LON:PCI) has received from its lenders a further waiver to the repayment of debt until February 19. The stock rose 1.05p or 5.6% to 19.8p.

Solo Oil (LON:SOLO) bounced 6.8% to 0.32p on news that it and other oil & gas companies had started flow tests at the Horse Hill site near Gatwick Airport in East Sussex.

Other firms involved in the scheme such as Stellar Resources (LON:STG) and Alba Mineral Resources were up 6% to 0.26p and 1.85% to 0.28p respectively.

The FTSE 100 Index looks set to open the week in positive territory ignoring a see-saw session in Asia overnight.

The blue-chip index should advance 30 points to 5878.06 according to the spread-betting firms.

Investors will be hoping the Chinese year of the monkey heralds a more stable period for the country's equity market which in turn has had a seismic impact on world share prices.

In the short term it was a case of no news is good news as Shanghai and Hong Kong were closed for New Year celebrations.

The main indicators then were Australia's ASX which pared early losses to finish flat and the Nikkei 225 in Japan which too staged an about turn to trade in positive territory.

Both indexes had initially at least been spooked by the mixed employment data issued by the US on Friday.

For Japan the prospects of negative interest rates became the driver as it then hit the value of the yen.

The weaker Japanese currency also provided the country's exporters giants such as Nissan and Sharp a boost (as their output will be cheaper).

A late session rally meant the Nikkei was up 1.1% after having been off 1.5% at one point.

Looking ahead testimony by US Federal Reserve chair Janet Yellen on Thursday will be scrutinised not just for her take on American interest rate policy but for her assessment of the strength or otherwise of the world's largest economy.

It looks set to be a busy week for scheduled UK company news with ARM Holdings Randgold Resources Rolls-Royce and Thomas Cook slated to report.