Image Source: DepositPhotos

On Monday, the FTSE 100 in the UK continued its decline from the previous week as energy stocks followed the downward trend of oil prices. Meanwhile, investors were anticipating the beginning of the earnings reporting period and a series of economic data releases scheduled for this week. Oil and gas stocks, particularly the heavyweight ones, experienced the largest decline among sectors, dropping 1.5% to reach a three-week low following a more than 1% decrease in oil prices due to significant price reductions by leading exporter Saudi Arabia and an increase in OPEC output. The bluechip UK market ended the initial week of 2024 on a downward trend, with the FTSE 100 experiencing its most substantial drop since November. 

Leading the charge lower Shell's stock plunged just under 3% after announcing a potential writedown of up to $4.5 billion for Q4. The company's shares dropped by 2.3% to 2,512p, making it the biggest loser on London's FTSE 100 index. The impairment charges, estimated at $2.5 billion to $4.5 billion, are primarily linked to the planned sale of the Singapore refining and chemicals hub. This includes a 237,000 barrels per day refinery and a one million metric ton per year ethylene plant on Singapore's Bukom and Jurong islands. Additionally, Shell anticipates an adjusted earnings loss in Q4 for its chemicals and products division. In separate news, oil prices declined by over 1% due to significant price cuts by Saudi Arabia, the top exporter, and an increase in OPEC output. BP's shares also fell by 1.16%, while the FTSE 100 index was down by 0.29% during morning trade. Despite this, Shell's stock had gained 10.5% in 2023. Following hot on the heels of Shell, Endeavor Mining shed just over 2%, the gold miner continued its decline from last week. The company announced on Thursday the immediate removal of CEO Sebastien deMontessus due to "serious misconduct." On Friday, the shares dropped by 6.9% to 1,577p, marking their lowest point since October 2022. If the current trend continues, the stock is expected to record its sixth consecutive session of losses. The company stated that the CEO's termination follows a board investigation into irregular payment instructions amounting to $5.9 million issued by deMontessus in connection to an asset disposal conducted by the company. In 2023, the stock had experienced a gain of 2.7%.

On the positive side of the ledger Melrose Industries saw significant gains after JPMorgan placed the shares on "positive catalyst watch" in anticipation of the 2023 results in March, catapulting the manufacturing firm to the top of the table for the session with gains of over 4%.

"Melrose is scheduled to announce its 2023 results on 7 March. Given the strong business momentum observed throughout 2023, we anticipate that Melrose will achieve the upper end of the 2023 guidance (at least) and raise the 2024 guidance beyond consensus expectations during the preliminary results," stated JPMorgan analysts.

FTSE Bias: Bullish Above Bearish below 7600

• Below 7590 opens 7530

• Primary support at 7382

• Primary objective 7827

• 20 Day VWAP bullish, 5 Day VWAP bearish

More By This Author:

Daily Market Outlook: Monday, January 8
Daily Market Outlook: Thursday, January 4
Winning Trades: Is There An Ideal Exit Time?