31st Mar 2016 16:16
LONDON (Alliance News) - UK stocks closed lower Thursday, in a quiet end to the first quarter of 2016 as the market prepared for Friday's US jobs report.
"End-of-month repositioning and caution ahead of tomorrow's US unemployment report led to mixed trading in European markets on the final day of a very volatile first quarter," said Jasper Lawler, market analyst at CMC Markets.
The US jobs report, so often the cause of volatility in stock markets and the dollar, is scheduled for Friday at 1330 BST. A key barometer of the US economy's health, the report is watched closely by the US Federal Reserve when deciding its monetary policy stance.
However, the March report on Friday is unlikely to push the Fed into raising rates in its next policy meeting at the end of April, after Chair Janet Yellen struck a dovish tone in a speech on Tuesday. Analysts said Yellen's stance all but ruled out an April rate rise.
According to FXStreet, the market expects the US economy to have added 205,000 nonfarm jobs in March, lower than the 242,000 seen in February. The unemployment rate is expected to hold steady at 4.9%.
On Thursday, the FTSE 100 closed down 0.5%, or 28.27 points, at 6,174.90. The blue-chip index rose 1.3% over the course of March. In the first quarter of 2016, the index fell 1.1%.
The FTSE 250 ended the day down 0.3%, or 48.83 points, at 16,926.12, up 2.0% over the course of March. The AIM All-Share index ended Thursday up 0.2%, or 1.05 points, at 710.78, rising 2.6% in the month as a whole.
In Europe, the CAC 40 in Paris ended down 1.3% and the DAX 30 in Frankfurt fell 0.8%. The euro rose to its highest level of the year against the dollar, helped by data which showed inflation in the euro area improved modestly in March, albeit remaining negative due to sharp falls in the energy prices.
The euro rose to a high of USD1.1412 versus the greenback, its highest level since mid-October. At the London close, the euro traded at USD1.1388.
Flash data from Eurostat showed that consumer prices fell 0.1% in March from a year earlier, matching economists' expectations, following a 0.2% drop in February.
The core harmonised index of consumer prices, which excludes fresh food and energy prices, accelerated by more than expected to 1.0% from 0.8% a month ago. Prices were expected to gain 0.9% in March.
The pound briefly found support after data from the Office for National Statistics showed that UK gross domestic product climbed 0.6% in the fourth quarter from the third quarter, revised up from the 0.5% estimated on February 25. Likewise, annual growth was revised to 2.1% from 1.9% in the fourth quarter. This meant that GDP in 2015 grew by 2.3% instead of 2.2% estimated previously.
The ONS said the UK current account deficit widened to GBP32.7 billion in the fourth quarter from a revised GBP20.1 billion in the third quarter. The bigger current account deficit was due to a widening in the deficits on primary income, total trade and secondary income.
"The worsening in the current account deficit in the final quarter of 2015 to the equivalent of 7% GDP is concerning ahead of the [EU referendum], suggesting the economy continues to be unhealthily dependent on the goodwill of foreigners," Darren Ruane, head of fixed interest at Investec Wealth & Investment, said.
The pound was quoted at USD1.4426 against the dollar from USD1.4345 just prior the GDP data. By the London stock market close, sterling was quoted at USD1.4399, just below the USD1.4403 seen at the close on Wednesday.
On Wall Street at the London close, the Dow Jones Industrial Average and S&P 500 were both up 0.1%, while the Nasdaq Composite was up 0.3%.
In UK corporate news, TUI Group said it will deliver growth in underlying earnings before interest, tax and amortisation in the first half of its financial year to the end of March, as it offsets reduced demand to some locations by transferring capacity to other more popular destinations.
The travel operator said winter 2015/16 is closing as expected, with 95% of the source market programme sold and a 3.0% increase in revenue driven by higher average selling prices across most major source markets. Overall bookings were flat on the prior-year period.
The Canary Islands, Spain and long-haul destinations achieved a particularly good performance, TUI said, echoing the sentiment of its peers in the industry which have seen a shift in demand to those destinations from countries such as Egypt, Tunisia and Turkey which have been the victims of recent terrorist attacks.
The stock ended as the best performer in the FTSE 100, up 5.1%.
The blue-chip index was weighed down by a number of stocks going ex-dividend, meaning new buyers no longer qualify for dividend payouts.
In the FTSE 100, Anglo-South African financial services company Old Mutual closed down 1.8%, property developer British Land Co, down 1.7%, and building materials group Wolseley, down 1.4%, were all among the worst performers as they ex-dividend.
In the FTSE 250, AO World ended up 4.2%. The online domestic appliances retailer said its UK business performed ahead of expectations in the fourth quarter of its financial year, while the European segment also performed well.
AO World said UK revenue and earnings before interest, tax, depreciation and amortisation in the fourth quarter ended March 31 grew ahead of expectations, and that it now expects full-year UK revenue to be up by 19% and UK adjusted Ebitda to reach GBP17 million. Expectations for the UK business in the next financial year remain unchanged.
Serco Group also was one of the top mid-cap performers, up 3.2%. The outsourcer said the review of its joint venture contract managing the operations of the Atomic Weapons Establishment on behalf of the UK government has been concluded.
Serco said the updated contract provides a framework through to 2025, with regular pricing reviews put in place. The next pricing review will take place in 2019.
The company did not provide any financial details on the deal, but said the new structure of the contract will impose greater risk-sharing on the customer, the UK Ministry of Defence, with an opportunity to earn higher margins through outperforming against the terms of the deal.
In the AIM All-Share Alexander Mining's share price multiplied after it said its subsidiary has been awarded a 20-year patent in China for a Method for Ammoniacal Leaching, which forms part of the company's Ammleach technology portfolio.
It is the first patent to be awarded to the company in China and forms part of its Ammleach technologies, which offer a two-stage leaching process designed for the mining industry.
The patent encompasses methods for leaching one or more target metals from an ore, covering the method of curing ore to be leached through an application of an aqueous solution of a curing agent, which produces a cured ore, and the method used to leach the cured ore at atmospheric pressure through the application of an ammonium carbonate solution containing free ammonia, producing a pregnant leach solution.
In commodities, Brent oil rose back above the USD40 a barrel mark. At the European equity market close it was quoted at USD40.73 a barrel versus USD39.76 at the same time on Wednesday.
The price of gold also moved higher. At the London close Thursday it was quoted at USD1,236.00 an ounce compared to USD1,227.10 on Wednesday.
In the economic calendar before the London open on Friday, manufacturing and non-manufacturing purchasing managers' index for China is at 0200 BST, followed by Caixin manufacturing PMI for China at 0245 BST and the Nikkei manufacturing PMI for Japan at 0300 GMT.
After the open, there are Markit manufacturing PMIs for France at 0850 BST, Germany at 0855 BST, the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST. Eurozone unemployment is at 1000 BST, the US Reuters/Michigan consumer sentiment index is at 1500 BST, as is ISM manufacturing PMI and construction spending.
The only scheduled release in the UK calendar is North Midland Construction's full-year results.
By Neil Thakrar; [email protected]; @NeilThakrar1
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