By Patrick Munnelly, Market Strategist, Tickmill
The UK’s commodity-focused FTSE 100 commenced the week on a positive note, opening 0.41% higher, driven by elevated oil prices due to concerns about escalating conflict in the Middle East.
In contrast, Asian equities faced declines, and the safe-haven dollar maintained strength amid growing concerns about the intensifying violence in Gaza and the potential for the conflict to extend beyond Israel and Hamas into the broader region.
Crude oil prices, although slightly lower, remained above $90 a barrel, having surged by almost 6% on the previous Friday.
FTSE 100 biggest risers: Rio Tinto and St James’s Place
Energy stocks registered a 0.6% increase, while industrial metal miners experienced a notable 1.3% jump, closely following the upward trajectory of copper prices, with Rio Tinto LON:RIO leading the gains as one of the top performers on the blue-chip index.
However, sitting top of the FTSE is investment manager St James’s Place LON:STJ as bargain hunters stepped in after Friday’s 20%+ bludgeoning. Shares closed up 5%.
Ocado is the day’s biggest faller
On the negative side of the ledger, Ocado LON:OCDO, the British online supermarket, witnessed a 5.8% decline in its shares, falling to 508.5p, which made it the top percentage loser on the FTSE 100 index. This drop followed a downgrade by Barclays, which revised the stock’s rating to “underweight” from “equal-weight” and lowered the target price from 680p to 430p.
Barclays expressed concerns regarding Ocado’s medium-term guidance, suggesting it could be jeopardised by delays in rolling out its existing customer Customer Fulfilment Centres (CFCs) or modules. CFCs are highly automated warehouses used for fulfilling orders for the grocery companies that partner with Ocado.
Additionally, Barclays noted limitations in Ocado’s new customer pipeline within the grocery sector and increasing competition from Autostore, a warehouse automation provider. Barclays also highlighted the potential negative impact of the ongoing Amazon/Autostore trial in the United States, which could pose a significant risk not well understood by the market.
As a result of these developments, Ocado’s shares reached their lowest level since June 28 and have declined by 17.6% year-to-date, including intraday movements,
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