NEW YORK: U.K. stocks fell Thursday, marking their sixth consecutive losing session as oil firms and Sports Direct International PLC helped push the benchmark FTSE 100 lower.
Meanwhile, the pound moved off session lows that it hit after the Bank of England kept interest rates at a record low.
The U.K’s FTSE 100 UKX, -0.63% gave up 0.6% close at 6,088.05, representing its longest losing run since late August.
Oil worries: In the energy space, U.S. oil prices CLF6, -0.65% pushed below $37 a barrel after the Organization of the Petroleum Exporting Countries, in its monthly report, said production is at its highest since 2012. Brent crude LCOF6, -0.65% fell below $40 a barrel. OPEC’s update underscores concerns about producers pumping out more oil at a time of a supply glut and slowing demand. Oil and Brent crude prices have fallen about 30% this year.
Shares of oil major Royal Dutch Shell PLC RDSB, -1.16% RDS.B, -1.36% fell 1.2% and BG Group PLC BG., -0.97% gave up 1%, while BP PLC BP., +0.14% BP, -0.03% clung to a 0.1% gain.
OPEC’s report was the first since last week’s decision by the cartel to raise its production ceiling to 31.5 million barrels of oil a day, to reflect the “current actual production.” Analysts had expected the production cap to remain at 30 million barrels a day.
“The OPEC meeting was perhaps also the last hope for many financially distressed companies or even whole countries,” said analysts at UniCredit in a note outlining cuts to forecasts for oil prices. For energy companies, it “would therefore come as no surprise to see a wave of downgrades from rating agencies…This could trigger a credit crunch and a lack of financial accessibility for high-cost producers with negative free cash flows.”
Sterling: The pound GBPUSD, -0.1319% hit an intraday low of $1.5096 after the Bank of England held its main lending rate at a record low of 0.5% and made no changes to its 375-billion-pound ($568.68 billion) asset-purchases program. The Monetary Policy Committee voted 8-1 to keep rates unchanged, arguing that inflation is likely to stay below 1% until the second half of next year. The pound later recovered to buy $1.5181 compared with late Wednesday when it fetched $1.5179.
“[W]e continue to expect the first [rate] move to occur in Q2 next year, but we will place a lot of weight on the direction of the wage numbers (note that October’s figures are out next week) and trends in sterling,” said economist Philip Shaw at Investec in a note.
