27th Jan 2016 17:01
LONDON (Alliance News) - London stocks managed to reverse a weak open for the second consecutive day on Wednesday, while Wall Street was pinned in the red following disappointing results from Apple after the closing bell on Tuesday and ahead of the Federal Reserve's monetary policy decision.
It was a familiar story for London-listed stocks on Wednesday, starting the day off in the red and overturning losses towards the close of trade as oil prices rallied. Brent crude oil was quoted at USD32.45 a barrel at the close of European equity trade, compared to USD31.68 at the close on Tuesday. US benchmark West Texas Intermediate ended the day at USD31.85 a barrel.
The gains in oil came despite the US Energy Information Administration saying its crude oil inventories rose by 8.4 million barrels in the week ending January 22, ahead of expectation of a 3.3 million barrel rise. The EIA said at 494.9 million barrels, US crude oil inventories remain near levels not seen for this time of year in at least the last 80 years.
The rise in oil prices saw the FTSE 100 close up 1.3% at 5,990.37, the FTSE 250 end up 0.6% at 16,280.98, and the AIM All-Share close up 0.4% at 686.14.
In Europe, the CAC 40 in Paris closed up 0.5%, and the DAX 30 in Frankfurt was up 0.6%.
In New York, the Dow Jones Industrial Average was down 0.3% at the London stock market close, the S&P 500 was down 0.1% and the Nasdaq Composite was down 0.8%.
Apple traded down 4.7% after the tech giant reported better-than expected fiscal first quarter earnings Tuesday, but said sales came in shy of estimates. The company also provided disappointing guidance, forecasting its first drop in sales in thirteen years.
Apple's results weighed on the Nasdaq and also on shares of London-listed chip designer ARM Holdings, which closed as one of the worst FTSE 100 performers, down 2.0%. ARM designs microprocessors for iPhones and is heavily reliant upon smartphone sales for growth.
Investors will now be preparing for the Federal Reserve's interest rate decision announced at 1900 GMT. The Fed is expected to leave interest rates unchanged, but the main focus will be on the wording of the policy statement accompanying the bank's decision. The consensus is that the Fed will deliver cautious commentary in the wake of mixed US economic data, plunging commodity prices, and sharp sell-off in stock markets.
"Today, in the US, no policy action is expected to come out of the [Federal Open Market Committee] meeting, but the committee is likely to acknowledge the recent slowdown in activity and tighter financial conditions, thereby coming off a bit more dovish than in December," said analysts at Societe Generale.
The dollar made up some ground just before the London equity market close and before the Fed meeting. The pound traded the greenback at USD1.4261 on Wednesday, compared to USD1.4342 on Tuesday. The euro was at USD1.0868 versus USD1.0850 on Tuesday.
Gold remained steady after two days of strong gains. At the European equity close, the metal was quoted at USD1,116.84 an ounce compared to USD1,118.01 on Tuesday.
On the London market, Royal Bank of Scotland Group was one of the big decliners in the blue-chip index, down 2.0% at 255.70 pence, having touched its lowest level since September 2012 at 246.00p earlier in the day.
The bank said it will make a GBP4.2 billion payment into its main pension scheme, while setting aside billions of pounds to deal with past misconduct, and an impairment charge in relation to its private bank. Wednesday's actions are expected to wipe GBP3.6 billion from the group's tangible net asset value.
The latest developments underline the scale of the turnaround job at hand for Chief Executive Ross McEwan, who has been leading the effort to return the bank to health. The financial crisis of 2007-09 still weighs heavily on RBS. The UK government remains its majority shareholder, with a 72.9% stake following Chancellor George Osborne's move to sell a 5.4% holding at a loss last August.
Antofagasta closed down 0.7% after the miner said its copper and gold production accelerated in the fourth quarter, but said full-year 2015 production still was lower than the year before.
Antofagasta said its copper production for the fourth quarter to the end of December hit 169,900 tonnes, up 8.2% from the third quarter, thanks to higher production from its Los Pelambres and Centinela concentrates projects, plus a contribution from the Antucoya and Zaldivar mines.
Sage Group ended as one of the biggest gainers on the FTSE 100, up 4.4%. The software group said its organic revenue grew in the first quarter of its financial year, and saw good growth in its recurring revenue stream.
Sage said organic revenue, on a like-for-like and constant currency basis, grew 6.6% in the quarter to the end of December. The growth was driven by recurring revenue, where organic growth hit 10% in the quarter, helped by 36% growth in software subscription revenue.
TalkTalk Telecom Group was the second best mid-cap performer, up 6.4%, helped by speculation the company could be a potential takeover target for French telecom group Iliad, which is reported to have expressed an interest in entering the UK market.
TalkTalk was followed in the gainers list by Britvic, up 5.5%, which said trading for the first quarter to December 20 had been hit by difficult trading conditions, but that revenue was boosted by encouraging Christmas trading.
Britvic reaffirmed its earnings before interest, tax, depreciation and amortisation guidance range of GBP180 million to GBP190 million, after it said it saw good trading in its core markets over the entire Christmas period, with reported revenue for the first quarter 4.8% ahead of last year at GBP311.6 million.
Aside from the Fed, still ahead in the economic calendar are Japanese retail trade data and Foreign bond and stock investment, both at 2350 GMT. On Thursday, there is the first reading of the UK's fourth quarter GDP at 0930 GMT, and eurozone economic climate survey results at 1000 GMT. German inflation numbers are at 1300 GMT before US initial and continuing jobless claims and durable goods orders, both at 1330 GMT, and US pending home sales at 1500 GMT.
In a busy UK corporate calendar, there are half-year results from drinks giant Diageo and engineering company Renishaw. There are also trading statements from energy company SSE, private equity company 3i Group, transport operator FirstGroup, publisher and events company Euromoney Institutional Investor, pub operator Mitchells & Butlers, miner KAZ Minerals, construction, and property and services company Kier Group amongst others.
By Neil Thakrar; [email protected]; @NeilThakrar1
Copyright 2016 Alliance News Limited. All Rights Reserved.
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