An early rally on stock markets has soon fizzled out, as oil once again goes into reverse.
Among the fallers is Lloyds Banking Group, down 2.05p or 3% at 64.81p as JP Morgan cut its price target on the bank from 98p to 90p but kept its overweight rating. It reduced its forecast for Lloyds’ net interest margin, saying it could decline further in 2016 in the absence of interest rate rises. Last week Bank of England governor Mark Carney said now was not the right time to raise rates.
But although JP Morgan said Lloyds was best positioned in the sector, and any fall could be a buying opportunity, that has cut little ice in a volatile market.
The FTSE 100, having climbed as high as 5933 in the wake of rises in Asia and Friday’s gains, is now on the slide again, currently down 24.45 points at 5875.56.
Commodity companies are falling back as Brent crude drops nearly 3% to $31.22 on renewed fears of oversupply, with Iran back in the export market and Opec set against cutting production. Tony Cross at Trustnet Direct said:
We’ve got a rather troubling start to the European session with crude oil having sold off quite sharply over the last hour or so. We remain well up on the prices posted at the middle of last week, but this weakness could unsettle equity markets which soared last week as oil prices appeared to find something of a foot-hold.
BP is down 7.55p at 345.15p while as copper weakens again, Antofagasta has fallen 6.4p to 365.8p.