LONDON (Alliance News) - London's main stock indices ended higher Tuesday, with oil companies benefiting and travel companies suffering from the stabilisation of the Brent crude oil price above USD50, while data revealed UK manufacturing sector growth remained strong in January.
The FTSE 100 closed up 0.5% at 6,782.55, after oscillating in and out of the black all session. The FTSE 250 ended up 0.3% at 16,355.56. The AIM All-Share index finished up 0.1% at 691.05.
UK manufacturing sector growth remained solid in January, as the Markit purchasing managers' index reading came in ahead of economists' expectations. The UK manufacturing PMI rose to 53.0 in January from a revised score of 52.7 in December. The score exceeded the expected level of 52.8, and provided encouragement to London investors after disappointing German, French and Chinese PMI readings.
Despite the disappoint readings from the individual European countries, the overall eurozone's manufacturing activity grew at a faster rate in January than in December, confirming the flash estimate. The final Eurozone Markit PMI rose to 51.0 in January from 50.6 in December. This was unrevised from the flash estimate.
Among European exchanges, the CAC 40 in Paris ended up 0.5%, and the DAX 30 in Frankfurt finished up 1.3%.
In the US, the Institute for Supply Management said its purchasing managers index fell to 53.5 in January from 55.1 in December. While a reading above 50 indicates continued growth in the manufacturing sector, economists had expected the index to show a more modest decline to 54.5.
At the London equities market close, the DJIA was up 0.3%, the S&P 500 up 0.6%, and the Nasdaq Composite up 0.2%.
Among oil-related shares, the second best performer in London's blue-chip index was Tullow Oil, ending up 5.5%. Weir Group added 1.3%, while BG Group closed up 4.6%.
BG reports fourth-quarter and full-year results Tuesday and is expected to reveal a drop in earnings and a substantial write down of its assets. However, analysts believe the company has slightly more flexibility with its capital expenditure than some of its peers in 2015.
BP closed up 0.8%. BP also is reporting fourth-quarter and 2014 results Tuesday and also is expected to show a reduction in earnings. BP is expected to join peer Royal Dutch Shell in slashing its capital expenditure budget in response to the fall in world oil prices.
At the London equities close, the price of Brent oil was up 5.1% at USD54.22 a barrel, above the USD50 mark.
Royal Dutch Shell A ended up 1.7%, while B shares ended up 1.9%. The oil company is leading negotiations in a large-scale strike at nine refineries in the US after workers failed to reach a new national contract with major oil companies, the BBC reported Monday.
The United Steelworkers Union began the strike on Sunday after the current contract expired and no deal was reached despite five proposals being made by oil companies, all of which have been rejected.
Meanwhile, industry trade association Oil and Gas UK said Monday that optimism in the industry fell dramatically in the fourth quarter of 2014, as the lobby group prepared to meet senior politicians to warn of an "uncertain" North Sea environment.
The claim comes after the association, which represents over 500 companies including oil majors BP and Shell, published its Business Sentiment Index, which now has fallen for the past seven quarters.
In US corporate news, Exxon Mobil reported a 21% decline in profit for the fourth quarter from the year before, as lower crude oil prices and production and weak refining margins in the US more than offset improved margins at the company's chemical segment. However, earnings per share for the quarter beat analysts' expectations, while revenues missed their estimates.
In London's FTSE 250 index, Afren was the best performer, up 89%. The oil and gas company said late Friday it has struck a deal with the lenders on its USD300 million Ebok facility for the deferral to February 27 of a USD50 million amortisation payment that had been due on Saturday. The company added that it has decided to utilise a 30-day grace period under its 2016 bonds in relation to a USD15 million interest payment due on February 1 in order to allow it to complete a review of its capital structure and funding alternatives.
Outside the energy sector, CRH was the best performer in the FTSE 100, closing up 6.8% at 1,712.52p. The Irish building materials company said it has agreed a deal with Lafarge and Holcim under which it will buy a range of assets being sold by its French and Swiss rivals as part of the conditions for their merger to be given regulatory approval. CRH will pay EUR6.5 billion in cash to buy assets from the companies primarily in Europe, Canada, Brazil and the Philippines.
Part of the money for the deal came from a EUR1.6 billion share placing that CRH conducted on Monday. It said it placed 74.0 million shares at 1,650 pence each.
EasyJet was the worst performer in FTSE 100, down 6.4%, after rival Ryanair Holdings raised its guidance for its current financial year for a fourth time, citing lower oil prices, but it also urged investors and analysts to be cautious about fiscal 2016, saying that rivals who haven't hedged fuel prices at all will use that advantage to cut fares. Ryanair shares closed down 3.3%.
International Consolidated Airlines fell 2.8%. The owner of British Airways and Spanish airlines Iberia and Vueling offered a number of commitments in order to secure the support of the Irish government for its EUR1.36 billion takeover offer for Irish airline Aer Lingus, including protecting the Irish flag carrier's routes and identity.
In the AIM All-Share, Ashcourt Rowan was the best performer, ending up 55% at 260.78p. The financial adviser's shares surged after the company agreed to a GBP97 million takeover by Towry Finance Co, a unit of wealth manager Towry Holdings. Under the terms of the deal, Ashcourt shareholders will get 270 pence per share in cash, along with a principal amount of 5 pence in loan notes.
ISG was the second worst performer in the AIM All-Share, finishing down 27% at 260.00p. The construction services company issued a warning on its full-year results after it said problems with a few contracts in its UK construction arm had offset a strong performance for the rest of the business. As a result of that provision, it expects its results for the year to June 30 to be below its previous expectations. Numis cut its price target for ISG to 335p from 370p, keeping its rating at Add.
In the UK corporate calendar Tuesday, in addition to the results from BP and BG, Aberdeen Asset Management will publish a first-quarter trading statement. In the FTSE 250, online-only grocer Ocado Group will report full-year results, while Talk Talk Telecom Group will issue an interim management statement.
In the economic calendar, UK Halifax House Prices are at 0800 GMT, while the UK Construction Purchasing Managers' Index is at 0930 GMT. The Eurozone Producer Prices Index is at 1000 GMT and US Factory Orders are at 1500 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
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21 Jan 2015 11:48
