Finance

FTSE 100 Live: Brent crude above $80, Facebook slides


O

il prices at multi-year highs and pressure on the valuations of Wall Steet tech giants including Facebook have set the scene for another testing session in London.

The failure of OPEC and its allies to expand on their existing production targets meant Brent crude yesterday spiked at $81 a barrel, which is where it remains today to add to concerns about inflationary pressures in the global economy.

London stocks in focus today include entrepreneur Matt Moulding’s Hut Group after an eight-day losing streak for the shares, while Greggs is among the companies updating on their recent trading performance.

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Oil price pressure

US oil prices have risen to their highest level in seven years and Brent crude is at a three-year high of $81 a barrel after OPEC and its allies failed to extend production beyond their existing plan for an increase in November of 400,000 barrels a day.

The move will do little to ease the global energy crunch, where sharp rises in the prices of natural gas and coal have contributed to the recent momentum in the oil price.

Bank of America warned on Friday that Brent crude could easily pass $100 a barrel if low stocks and an air travel rebound “collide with a cold winter.”

OPEC has argued that the rise in prices is an issue over natural gas and coal supply rather than to do with oil and that seasonal factors usually temper consumption.

Oanda’s senior market analyst Jeffrey Halley said: “Assuming the energy squeeze is the new normal, it is hard to see transient inflation being as transient as the world’s central bankers are forecasting/hoping it will be. The effect will be felt throughout the worlds supply chains.”

The potential for higher US interest rates kept up the recent pressure on technology stocks on Wall Street overnight, resulting in the tech-heavy Nasdaq sliding more than 2%.

Higher rates diminish the appeal of tech stocks and other high growth sectors where their present value is built around future cash flows. Facebook shares fell 5% last night and Amazon was down 3%.

The negative sentiment was also felt in Asia markets, although the FTSE 100 index is set for a steadier session amid forecasts for it to open more than 20 points higher at about 7,030.

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