15th Apr 2016 11:03
LONDON (Alliance News) - Stocks in London were mostly lower Friday midday, in a light day of UK corporate news, with buyers staying away from the market as Sunday's oil producers meeting in Doha to discuss an output freeze looms.
The FTSE 100 was down 0.4%, or 23.92 points, at 6,341.18. In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were down 0.5% and 0.6%, respectively.
"A tangible sense of apprehension has swept across global markets today, with traders unwilling to hold positions into the weekend given the clear risk of events in Doha on Sunday," said IG analyst Joshua Mahony.
There has been a lot of chatter about the potential outcome of the meeting as the date approaches. On Tuesday, Russian news agency Interfax reported that Russia and Saudi Arabia had reached a consensus on freezing oil output, citing a diplomatic source in the capital of Qatar. However, Iran remains one of the key players to accept any deal.
On several occasions, Tehran has ruled itself out of a freeze to production as it looks to regain market share after international sanctions on it were lifted.
Nevertheless, last week, Kuwait's OPEC governor showed confidence that the meeting will deliver a freeze in output. Meanwhile, Iraq's state oil company said an agreement to freeze production "must" be found, the Financial Times reported Tuesday.
Falah Alamri, director-general of the oil marketing company of Iraq, said: "They should do this deal as this is the only way to support the oil price. Everybody needs it and Iraq supports this deal".
IG's Mahony noted that, given the FTSE 100's exposure to crude prices, "it comes as no surprise that traders will reduce their exposure given the unpredictability of Sunday's meeting".
Brent reached its highest level so far in 2016 earlier this week, at USD44.90. The North Sea benchmark has made a significant recovery in the first months of the year, following the multi-year lows reached mid-January around USD27. It was quoted at USD43.10 at midday, lower than the USD44.27 at the close Thursday.
Economic data from China failed to support Asian stocks, as well as those in Europe, with investors finding a lack of reasons to buy.
The National Bureau of Statistics showed Chinese GDP expanded 6.7% year-on-year in the first quarter of 2016. This was in line with expectations but slower than the 6.8% economic growth seen in the three months prior. The growth rate fell in the range of the Chinese government's 2016 growth target of between 6.5% to 7.0%, which it set in mid-March.
Economists at Japanese bank Nomura said the breakdown of the data shows that restructuring in the economy continued, with the tertiary sector's share of GDP rising to 56.9% in the first quarter of 2016 from 54.9% in the first quarter of 2015. This helped offset the 68.1% year-on-year decline in stock market turnover in the period.
The Chinese bureau also released a report showing industrial production gained 6.8% annually in March, topping forecasts for 6.0% growth and up from 5.9% in February. Retail sales advanced 10.5% from a year before, beating expectations for 10.3% growth and accelerating from 10.2% in the previous month.
The Nikkei 225 in Tokyo ended down 0.4%, the Shanghai Composite finished down 0.1%, as well as the Hang Seng in Hong Kong.
In New York, stocks were called for a lower open, with the Dow 30 seen down 0.1%, while the S&P 500 and the Nasdaq 100 were both pointed down 0.2%.
As the US earnings season continues, financial firm Citigroup releases its first-quarter results before the US equities open.
Still ahead in the economic calendar Friday, the Empire State manufacturing index is at 1330 BST, US industrial production and capacity utilisation are both at 1415 BST, and a preliminary reading of the US Reuters/Michigan Consumer Sentiment Index is at 1500 BST.
In London, Anglo-South African drinks giant SABMiller was among the best blue-chip performers, up 1.3%. Brewing giant Anheuser-Busch InBev late Thursday said it agreed on its approach on public interest commitments in South Africa as it progresses its proposed takeover of SABMiller.
AB InBev said it has struck a deal with the government of South Africa concerning employment, localisation of production and inputs used in the production of beer and cider, empowerment in the company, long-term commitments to South Africa and participation of small beer brewers in the local market. AB InBev is acquiring SABMiller for GBP71.0 billion in a deal which will create by far the largest brewer in the world.
The FTSE 250 was down 0.4% at 16,938.80 and the AIM All-Share was up 0.1% at 733.16.
Man Group was the best mid-cap performer, up 5.3%. The money manager reported stable funds under management in a volatile first quarter of 2016, warning that market uncertainty has the potential to hit its clients' appetite for risk and have a knock-on effect on the company.
Funds under management edged down slightly to USD78.6 billion from USD78.7 billion in the three months ended March 31, a result of net inflows of USD0.5 billion, a USD0.7 billion hit from the value of investments, and a USD0.8 billion boost from the weakening of the dollar against the yen and euro.
Polymetal International was down 1.2%, after the Russian-focused miner said production slipped in the first quarter of 2015 due to declining grades whilst sales lagged behind due to seasonal factors. However, the miner reiterated its full-year production guidance for 2016.
The group reported production of 260,000 ounces of gold equivalent in the first quarter of 2016, down 4% from a year earlier due to lower grades, as expected, at the mature Okhotsk operations, lower-grade stockpiles at Varvara, and a "one-off release of work in progress" at Voro, it said.
In AIM, shares in oil and gas company Circle Oil were up 24% after it said the International Finance Corp has agreed to extend the suspension of repayments due under Circle's reserve-based lending facility. The repayment deadline has been extended to May 13, having previously been due to expire Friday. Circle said IFC has indicated willingness to consider further waivers as may be required as Circle Oil continues its strategic review.
By Daniel Ruiz; [email protected]
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