LONDON (Alliance News) - Stocks in London were lower Friday midday, with miners and oil companies as the main drag, as oil prices resumed their slide, sending the Brent and West Texas Intermediate crude benchmarks below USD30 a barrel.
The FTSE 100 index was down 1.3% at 5,840.20 points, the FTSE 250 down 1.1% at 16,235.55 and the AIM All-Share down 0.4% at 705.61. In Europe, the French CAC 40 was down 1.5% and the German DAX 30 down 1.2%.
Oil prices were again under pressure Friday, giving back the gains seen around the equities market close Thursday. Brent and WTI rebounded to highs of USD31.16 a barrel and USD31.73 a barrel, respectively, on Thursday, helping London stocks to trim losses in the last hours of trading, as well as supporting Wall Street.
However, both Brent and WTI slipped again below the USD30 line on Friday, with the North Sea benchmark quoted at USD29.84 a barrel at midday, having touched a low of USD29.41 a barrel in early trade, a level not seen since February 2004. Similarly, the US benchmark touched lows it hasn't seen since December 2003 at USD29.37 a barrel. WTI was quoted at USD29.71 a barrel at midday in London on Friday.
That hurt oil-related stocks, with Royal Dutch Shell 'A' down 2.8%, BP down 2.4% and BG Group down 1.9%. Mid-caps Tullow Oil and Cairn Energy were down 7.7% and 4.2%, respectively.
Miners also were among the worst performing stocks. Anglo American fell 9.3%. Glencore was down 7.8%, Antofagasta down 4.8% and Rio Tinto down 4.7%, after a further sell-off in Chinese shares, which fed fears about the health of the world's second largest economy.
The Shanghai Composite index ended down 3.6% Friday. The Hang Seng in Hong Kong closed down 1.5%, and the Nikkei 225 index in Tokyo down 0.5%.
"Last night's Chinese selloff has once again seen the Asian powerhouse move back into bear market territory for the second time in just over six months," said IG analyst Alastair McCaig. "This overnight performance has been enough to trigger a sell-off across the board in Europe. The top five fallers in the FTSE [100] are all miners – a template we have seen all too frequently over the previous twelve months."
The miner that rounded out the worst five blue-chip performers was BHP Billiton, down 6.4%. BHP said Friday it will book a USD4.9 billion impairment charge in the first half to the end of December due to a fall in the value of its US shale assets.
US stocks were called for a negative open, set to give back Thursday's gains, with the Dow Industrials seen down 1.6%, the S&P 500 down 1.7% and the Nasdaq 100 down 1.9%.
It's a busy afternoon for economic releases in the US, ahead of three-day weekend for Martin Luther King's Birthday.
The New York State manufacturing index is due at 1330 GMT, as are the US retail sales and producer price indices. US capacity utilisation and industrial production are at 1415 GMT, and the Reuters/Michigan Consumer Sentiment Index is at 1500 GMT.
The US earnings season also will continue to command market attention, with fourth-quarter updates from Wells Fargo and Citigroup expected at 1300 GMT.
In London, Experian was among the few gainers in the FTSE 100, up 1.2%. The company posted strong third-quarter revenue growth at constant currency, which helped to boost the stock in early trade, although the strength of the US dollar has continued to exert pressure on its business.
The information services company, known for providing credit checks on consumers and businesses, said total and organic revenue growth of 6% at constant currency was balanced across the regions in which it does business, enabling Experian to leave its guidance for the full year unchanged.
Robin Speakman, an analyst at Shore Capital, said the company delivered a "positive surprise" with the strength of its third-quarter update. "Our organic growth expectation for the group was for 3% for the Q3 period," Speakman said in a note.
Pharmeceutical giant Shire was at the top of the blue-chip index, up 2.9%, still recovering from the losses seen on Monday after the announcement of its much anticipated share-and-cash acquisition of US-based Baxalta.
The UK Competition and Markets Authority approved BT's GBP12.5 billion acquisition of mobile operator EE. The CMA, the UK's antitrust regulator, said it decided, despite a number of concerns raised by other UK telecoms operators, that the deal would not result in a substantial lessening of competition.
"Since our provisional findings, we have taken extra time to consider responses in detail but the evidence does not show that this merger is likely to cause significant harm to competition or the interests of consumers," said John Wotton, chair of the CMA's inquiry.
Shares in BT were down 0.2% having initially gained on the news.
In the FTSE 250, Tate & Lyle was the biggest gainer, up 3.9%. Liberum issued a positive note on the sugar and sweeteners company, with the broker saying the group hosted a "confident" capital markets day on Thursday.
"In our view, Tate laid out credible plans to deliver its ambition to transform the group into a materially Specialty Food Ingredients-focused business by 2020," said Liberum analyst Robert Waldschmidt.
Fellow Bovis Homes Group was up 1.0% after it said it expects to deliver a big rise in pretax profit and revenue for 2015 following a strong year for the UK housebuilding industry.
The housebuilder said it sold 3,934 homes in the year to the end of December, up 8.0% year-on-year, at an average selling price of GBP231,000, up from GBP216,600. Bovis said its operating margin improved to over 17%, which should result in its return on capital employed for the year rising to over 18%, up from 16.2% in 2014.
Bovis added the UK land market remains strong, and it expects to increase its estate of sales outlets in 2016 as it remains optimistic the robust conditions in the housing market will continue.
At the other end of the mid-cap index, MoneySupermarket.com Group was down 9.1%. The company said full-year operating profit adjusted for costs relating to amortisation and acquisitions, should grow by around 13% and end up slightly ahead of market expectations.
However, there was a decline in revenue at the price comparison website's insurance activities in the final quarter of the year, as rivals stepped up the competition.
On AIM, Sierra Rutile was up 15%. The miner achieved the top end of its production guidance in 2015, driven by record levels of production in Sierra Leone, and said the Ganagama mine is set to boost volumes further in 2016. The company said production in the fourth quarter of 2015 reached 38,787 tonnes of rutile and 10,484 tonnes of ilmenite, representing a 25% and 14% year-on-year increase, respectively, its highest level of production in one quarter.
By Daniel Ruiz; danielruiz@alliancenews.com
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21 Nov 2016 14:51
