2nd Dec 2015 16:58
LONDON (Alliance News) - The FTSE 100 encountered a volatile final two hours of trade Wednesday, after an Iranian official said the majority of the Organization of Petroleum Exporting Countries would agree to a reduction in crude production at the group's meeting on Friday.
Mehdi Asali, director general of OPEC and energy forums at the Iranian Ministry of Petroleum said the majority of members would agree, with the exception of Saudi Arabia and the Persian Gulf Arab countries, according to a Bloomberg report which cited local newspaper Shana.
"Under current international conditions between Iran and certain Persian Gulf littoral states, it is unlikely that these countries voluntarily cut their output," Asali said.
Oil prices sprung higher on the news but data from the US Energy Information Administration late in the session, which showed its crude oil stocks unexpectedly rose in the week ending November 27, saw prices decline again. The EIA said crude oil stocks rose by 1.18 million barrels last week compared to expectations of a 471,000 barrel decline.
At the London close Brent oil traded at USD43.29 a barrel and West Texas Intermediate was quoted at USD40.65 a barrel.
Oil major Royal Dutch Shell 'B' shares still closed amongst the best performers, up 1.3%, while BP ended down 0.7%.
Elsewhere in commodities, gold was quoted at USD1,055.60 an ounce at the London stock market close.
The FTSE 100 made sharp movements on the oil news and closed up 0.4% at 6,420.93. The FTSE 250 ended up 0.2% at 17,553.92 and the AIM All-Share ended up 0.5% at 741.70.
European shares ended lower before Thursday's highly anticipated European Central Bank meeting. The CAC 40 in Paris down 0.2% and the DAX 30 in Frankfurt ended down 0.6%.
The ECB will announce its interest rate decision at 1245 GMT on Thursday before President Mario Draghi holds a press conference at 1330 GMT. Analysts widely expect the central bank to ease monetary policy in order to support the weak inflation in the eurozone. On Wednesday, preliminary inflation data showed eurozone consumer prices grew by less than forecast in November.
A report from Eurostat showed inflation rose 0.1% year-on-year, the same rate as seen in October, marking the second consecutive rise in prices after the 0.1% fall in September. However, economists had forecast inflation to rise by 0.2%. Headline inflation also remains well below the European Central Bank's target of 'below, but close, to 2%'.
This saw the euro fall against other major currencies and at the London close it traded at USD1.0578.
On Wall Street at the London close, the Dow Jones Industrial Average was down 0.3% and S&P 500 down 0.2%, while the Nasdaq Composite was up 0.1%.
Before the open in New York, payroll processor ADP released a report showing employment in the US private sector increased by more than expected in November. The report said private sector employment jumped by 217,000 jobs in November after climbing by an upwardly revised 196,000 jobs in October. Economists had expected an increase of about 190,000 jobs compared to the 182,000 jobs originally reported for the previous month.
The report comes ahead of the nonfarm payroll data on Friday.
The strong number supported the dollar as it raised expectations for a Fed rate hike later this month. At the European equity close cable traded at USD1.4938, having touched USD1.4934, its lowest level since April. The pound was also driven lower by weak construction data in the morning.
On the London Stock Exchange, Sage Group closed as the worst performer in the FTSE 100, down 2.7%. The business software company reported full year results in line or slightly ahead of analyst forecasts, as one-off restructuring costs dented profit slightly and the company detailed changes to its accounting policies.
The company reported a pretax profit of GBP275.8 million for the year to the end of September, down slightly from GBP278.7 million a year before, as a result of exceptional costs related to restructuring. Stripping out those exceptional costs, pretax profit rose to GBP358.5 million from GBP340.9 million, on revenue of GBP1.44 billion, up from GBP1.35 billion.
Outsourcer Meggitt was amongst of the worst performers in the FTSE 100, down 0.7%. The company is expected to be relegated from the FTSE 100 in the FTSE index review along with Wm Morrison Supermarkets and G4S. The company's are expected to be replaced by payments company Worldpay Group, logistics company DCC and lender Provident Financial. The final results of the index review will be released after the market close on Wednesday, with the changes coming into effect on Monday, December 21.
Greene King ended as the best performer in the FTSE 250, up 13%. The pub company said its pretax profit and revenue rose in the first half thanks to the integration of the Spirit Pub business, though like-for-like sales growth also was solid, and the group hiked its interim dividend.
The company said its pretax profit for the 24 weeks to October 18 was GBP84.9 million, up from GBP72.0 million, as revenue surged up to GBP917.7 million from GBP614.9 million. Greene King will pay an interim dividend of 8.45 pence, up from 7.95p.
Pace shares ended up 7.6% after US broadband network equipment maker Arris Group said the US Department of Justice has closed its investigation into its proposed acquisition of the set-top box maker. Having agreed a GBP1.4 billion deal to acquire Pace in April, Arris has already secured clearance in Colombia, Germany, Portugal and South Africa, and is now awaiting regulatory approval in Brazil.
Saga shares ended down 5.0% to 201.61p, making it one of the worst performers in the FTSE 250. Acromas sold a 13% stake in the over-50s products and services provider to institutional investors, more than had initially been planned and raising GBP290.0 million for the seller.
Acromas sold 145.0 million Saga shares at 200.00 pence per share compared to Saga's closing price of 212.2p on Tuesday. The deal was announced late on Tuesday, but Acromas had initially only intended to sell around 110.0 million shares, or a 10% stake in Saga. Acromas now will hold 32% of Saga following the sale.
Price comparison site Moneysupermarket.com closed down 4.4% to 314.00p after founder Simon Nixon sold a 5.8% stake in the company through a share placing, almost half of his holding, and the company said he will step down from the board at the end of the year.
Nixon placed 32.0 million shares at 305.00 pence per share, raising gross proceeds of GBP98.0 million for Nixon. Shares in Moneysupermarket closed at 328.30p on Tuesday. Following completion of the placing, Nixon will be subject to a lock-up on its remaining shareholding in the company until the announcement of its 2015 results, due in March 2016. His remaining stake in Moneysupermarket.com is around 6.9%.
In the economic calendar Thursday, aside from the ECB announcements there are a number or services purchasing managers' index readings. Before the London open Markit services PMI for Japan is at 0135 GMT, just before Caxin China services PMI at 0145 GMT.
Later in the day, Markit services and composite PMI for France are at 0850 GMT, Germany is at 0855 GMT, the eurozone is at 0900 GMT, and the US is at 1445 GMT. UK services PMI is at 0930 GMT.
Following this is eurozone retail sales at 1000 GMT, continuing and initial jobless claims in the US at 1330 GMT, ISM non-manufacturing PMI at 1500 GMT alongside US factory orders.
In the UK corporate calendar, recycled packaging manufacturer DS Smith reports interim results, Scottish soft drinks company AG Barr issues a trading statement and International Consolidated Airlines Group releases November traffic statistics. There are number of full-year results from AIM-listed companies, including GW Pharmaceuticals, Impax Asset Management Group and Elegant Hotels Group.
By Neil Thakrar; [email protected]; @NeilThakrar1
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