23rd May 2016 15:55
LONDON (Alliance News) - A positive start on Wall Street and a slight rebound in oil prices helped the FTSE 100 pare some of its earlier losses Monday, but it was not enough for the blue-chip index to end the day higher.
The FTSE 100 ended the day down 0.3%, or 19.89 points, at 6,136.43. The index had been lower throughout the afternoon, but a slight recovery in oil prices and a firm US equities open helped lift it towards the end of the session.
By the London close Brent oil traded at USD48.28 a barrel, coming off its intraday low of USD47.56. However, the commodity remained below the USD48.73 seen at the London equities close on Friday.
The price of gold eased Monday, trading at USD1,248.30 an ounce at the close, lower than the USD1,249.50 at the same time on Friday.
The FTSE 250 outperformed its blue-chip peer the entire day and closed up 0.7%, or 109.68 points, at 17,031.74. The AIM All-Share rose 0.4%, or 2.95 points, at 730.81.
UK stocks were lifted by a positive start to US trade with the Dow 30 rising at the open. By the London stock market close the Dow was up 0.2%, the S&P 500 was up 0.1% and the Nasdaq Composite was up 0.3%.
The positive open came despite the latest flash Markit manufacturing Purchasing Managers' Index reading showing a surprise slowdown in US manufacturing activity.
The preliminary reading for May showed index fell to 50.5, marginally down from 50.8 in April and remaining just above the 50.0 mark which separates expansion and contraction. The May reading was the weakest since October 2009. Economists had expected it to rise to 51.0.
Markit said a renewed fall in production was one key factor weighing on the headline index in May, alongside softer new order growth and further cuts to stocks of inputs.
Connor Campbell, financial analyst at Spreadex, said the rise in US equities on Monday could be because the PMI figure dampened prospects of a US interest rate hike.
"Investors were perhaps buoyed by the damage the figure does to any hawkish rumblings in the Fed; then again, perhaps not, with central bank members James Bullard and Eric Rosengren beating the pro-hike drum to varying degrees across the past 2 days," Campbell said.
In Europe, the CAC 40 in Paris ended down 0.6% and the DAX 30 in Frankfurt closed down 0.7%.
The euro weakened after data showed that the eurozone private sector growth weakened to a 16-month low in May.
Financial information services company Markit said that the eurozone flash composite output index slipped unexpectedly to 52.9 in May, a 16-month low, from 53.0 in April. It was forecast to rise to 53.2.
The manufacturing PMI slipped to 51.5 in May from 51.7 in the prior month. Economists had forecast the score to improve to 51.9. The services PMI score held steady at 53.1, against expectations for a rise to 53.3.
The euro eased back to USD1.1203 against the dollar by the London close, having traded at USD1.1222 prior to the data. At the close Friday, the euro was quoted at USD1.1207.
The pound traded the dollar at USD1.4475 at the London close Monday, versus USD1.4514 at the same time on Friday.
On the London Stock Exchange, Royal Mail ended as the top FTSE 100 gainer, up 4.3% after RBC upgraded the postal and logistics operator to Sector-Perform from Underperform. As more clarity on issues surrounding wages and a review from regulator Ofcom emerge in the summer and autumn, Royal Mail can focus on driving higher efficiency, the bank said.
Chipmaker ARM Holdings rose 2.0%, boosted by reports that its customer US tech giant Apple has warned suppliers that orders for the new iPhone 7 will be higher than expected.
Citing the Economic Daily, Bloomberg said Apple asked suppliers to get ready for between 72 million to 78 million unit orders of the iPhone 7 by the end of 2016, the highest target in about two years. The Economic Daily cited unidentified suppliers it surveyed in China.
The new iPhone 7 is likely to be released in September.
Satellite communications company Inmarsat led the fallers in the FTSE 100, down 4.0% after it was downgraded to Equal Weight from Overweight by Morgan Stanley.
Meanwhile ICAP was the worst FTSE 250 performer, down 4.1%, after the interdealer broker was downgraded to Neutral from Outperform by Credit Suisse.
Mitie Group ended as the best performer in the mid-cap index, up 6.0%. The outsourcer retained a confident outlook on its prospects as it posted a marginal rise in underlying profit and proposed a share buyback, though sales dipped as the group faced project spending delays and cancellations driven first by the General Election and now by the Brexit referendum.
Mitie said it has secured 82% of its projected revenue for the 2017 financial year, down from the 85% it had secured at the same point a year earlier, and said its sales pipeline was GBP9.1 billion, down from GBP9.7 billion. Mitie's order book at the close of the year was also lower year-on-year, down to GBP8.5 billion from GBP9.0 billion.
But the group said the order book and sales pipeline both remain substantial, and it continues to see a good range of outsourcing opportunities in its key markets, leaving it positive on its current financial year to March 2017.
In the economic calendar on Tuesday, German GDP figures for the first quarter are released at 0700 BST, UK public sector borrowing is at 0930 BST and ZEW economic sentiment surveys for Germany and the eurozone are at 1000 BST. In the afternoon, US new home sales are at 1500 BST.
It is a busy day in the UK corporate calendar. The FTSE 100 companies in focus are water company Severn Trent, which reports full-year results, and DIY retailer Kingfisher, which issues a trading update.
Outside blue-chip names, there are full-year results from engineering software company Aveva Group, fund manager Intermediate Capital Group, pork and poultry producer Cranswick, home emergency cover provider Homeserve, buy-to-let lender Paragon Group of Companies, and film and television producer Entertainment One.
By Neil Thakrar; [email protected]; @NeilThakrar1
Copyright 2016 Alliance News Limited. All Rights Reserved.
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