MARKET REPORT: BP and Shell plummet as oil drops on Covid fears

Oil majors were on the back foot as the price of Brent crude tumbled below $40 a barrel for the first time since June.

Fears are mounting that a rise in coronavirus cases around the world – including in the UK and US as well as parts of Europe and India – could hold back the global economic recovery and dent demand for fuel.

Brent crude fell as much as 6 per cent towards $39 while US West Texas Intermediate was down around 8 per cent. 

Both have shed 15 per cent since last week, with Saudi Arabia’s state oil company Aramco’s pledge to cut prices adding to the downward pressure.

On the FTSE 100 index, Royal Dutch Shell fell 3.3 per cent, or 36.4p, to 1065.2p while arch-rival BP was down 3.1 per cent, or 8.15p, to 258.5p.

After a buoyant start to the week, the FTSE 100 lost steam, closing 0.1 per cent lower, down 7.1p, to 5930.3 points.

The FTSE 250 also fell by 0.1 per cent, or 17.02p, to 17625.18.

Housebuilders fell out of favour with investors as Bovis Homes-owner Vistry Group swung into the red.

Disruptions and shutdowns at sites during the crisis sent it plummeting to a £12million loss in the first six months of the year, down from a profit of £72.5million in 2019.

The number of homes it completed fell too, from 3,371 to 1,235. 

But it struck an optimistic note, saying it had seen a ‘strong start’ to the second half as restrictions wound down and the housing market came out of hibernation and the Government brought in temporary changes to stamp duty.

It reckons full-year profits will still come in at £130million to £140million. 

According to chief executive Greg Fitzgerald, it has seen ‘positive sales trends since early May, with consumer interest higher than at any time in recent years’.

But traders were downbeat, sending shares 5.6 per cent lower, down 35.5p, to 600p by the close.

Other housebuilders also lost ground, with Persimmon falling 2.1 per cent, or 53p, to 2512p, Taylor Wimpey dropping 2 per cent, or 2.35p, to 114.8p, Barratt Developments down 2.2 per cent, or 11.2p, to 502.8p and Countryside Properties dropping 2.6 per cent, or 8.4p, to 311.6p.

Analysts were split by the sector-wide tumble, with AJ Bell investment director Russ Mould saying it came ‘as more investors digested recent news that various sector constituents are being investigated over the way leaseholds were sold’.

IG Group’s Chris Beauchamp said that it was ‘Brexit and the renewed lockdowns of the UK economy’ that were driving the bearish sentiment.

The pain in construction travels beyond builders, however, in a results-heavy day on the market. Travis Perkins slumped 6.6 per cent, or 80.5p, to 1139p as Britain’s largest supplier of building materials also slumped to a half-year loss.

Revenue fell by more than 20 per cent during the first half of the year as many construction projects were put on the backburner.

Salad sales plunged at prepared meals company Bakkavor as shoppers looked for comfort food to eat at home during the lockdown. 

Revenues slid by 4.6 per cent to £880.5million in the six months to June, though its pizza and bread business performed strongly. Shares climbed 5.1 per cent, or 2.8p, to 58.3p.

Aerospace and defence business Meggitt scrapped a planned dividend as bosses said the downturn in the travel industry meant it sank to a loss of £368million in the first six months of the year. 

Revenues fell 13 per cent to £917million. Shares fell 3.2 per cent, or 9.6p, to 291.1p.

Sofa chain ScS Group thanked ‘pent-up demand’ from customers for driving an extra £19million of sales in recent weeks. Shares rose 15.4 per cent, or 24p, to 180p.