UK Markets closed

FTSE slides after UK credit rating downgrade and OPEC output cut

FTSE fell after OPEC+ meeting in Vienna
An OPEC flag is seen on the day of OPEC+ meeting in Vienna this week. The FTSE was down on Thursday. Photo: Lisa Leutner/Reuters

European stock markets were in the red on Thursday after OPEC agreed to cut oil output to keep oil prices propped up.

In London, the FTSE 100 (^FTSE) closed 0.7% lower by the end of the day, testing the 7,000 point mark once again, as Fitch became the latest ratings agency to lower the credit outlook for British government debt to "negative" from "stable".

Meanwhile the Frankfurt DAX (^GDAXI) was down 0.4%, and the CAC (^FCHI) lost 0.7% in Paris.

On Wednesday, the OPEC+ Joint Ministerial Monitoring Committee recommended a cut of 2 million barrels of oil per day at their meeting in Vienna.

This is the equivalent of around 2% of global oil demand as the group looks to stop a slide in oil prices caused by the weakening global economy.

It came as experts warned on Thursday that Russia could cut its oil production by as much as 3 million barrels per day if the EU and US push ahead with a plan to cap prices.

Kevin Book at ClearView Energy Partners said: "Russia might not find a plausible deniable pretext for all 3 million barrels a day right away, but Putin might not need to. Even half of that could exert immediate strain on markets."

Brent crude (BZ=F) was trading 0.8% higher at $94.11 (£84.21) per barrel after making gains earlier in the day, losing them and regaining them.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, said: "With the oil price ratcheting back up there is also going to be more pain at the pumps to come, especially with fresh weakness in sterling.

"Brent crude is still hovering around £93 dollars, up around 10% in a week after OPEC+ countries agreed a cut in production at top of the range expected, by 2 million barrels of oil per day.

"Higher oil prices might be inducing a severe inflation headache for many countries around the world, but they have been a bonanza for oil producers and they want the good times to continue to roll. Saudi Arabia has justified the cut because of weakening demand in the global economy brought on the continual ramp up in interest rates."

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Elsewhere, chancellor Kwasi Kwarteng is set to meet with bank chiefs at Downing Street as the turmoil in the mortgage market sent rates to a 14 year high.

The average rate on a two-year fixed-rate mortgage is now 6.07%, according to Moneyfacts, the first time it has exceeded 6% since November 2008.

Lenders withdrew a record number of deals after the mini-Budget two weeks ago.

Across the pond on Wall Street, the S&P 500 (^GSPC) dipped 0.2% by the time of the European close, and the tech-heavy Nasdaq (^IXIC) rose 0.1%. The Dow Jones (^DJI) edged 0.3% lower.

Investors were weighing up conflicting signals about the health of the economy, and assessing US jobless claims data.

Fresh figures on Thursday showed an increase in weekly jobless claims, raising hopes the Federal Reserve may need to ease its aggressive interest rate rises.

All three main indexes on Wall Street ended in the red on Wednesday, although they managed to claw back most of their earlier losses thanks to a late rally. The dollar climbed 1% on the euro and 1.3% on sterling overnight.

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Asian markets were mixed on closing as a global rally ran out of steam. After a 6% climb in the previous session, the Hang Seng (^HSI) fell 0.4% in Hong Kong, while the Nikkei (^N225) rose 0.7% in Tokyo.

The Shanghai Composite (000001.SS) was still closed for a holiday.

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