2nd Mar 2016 12:04
LONDON (Alliance News) - Stocks in London had given up their morning gains by midday Wednesday, as oil prices turned negative, while Intertek and ITV led the FTSE 100 fallers following their full-year results.
The blue-chip index was down 0.3%, or 18.10 points, to 6,134.78 at midday, having started the session higher.
The mid-cap FTSE 250 index was down 0.1% to 16,773.00 and the AIM All-Share was down 0.1% to 695.88. In Europe, the CAC 40 in Paris was up 0.2% and the DAX 30 in Frankfurt was up 0.3%
At midday North Sea benchmark Brent oil was quoted at USD36.53 a barrel, falling from an earlier high of USD36.96. US benchmark West Texas Intermediate was at USD33.70 a barrel against its earlier high of USD34.26.
There could be more volatility seen in oil prices later in the day when the US Energy Information Administration releases its latest crude oil stock figures at 1530 GMT.
Futures indicated a lower open on Wall Street. The Dow Jones Industrial Average and the S&P 500 were both pointed down 0.2%, while the Nasdaq 100 was expected to open down 0.1%.
"The US indices themselves might be suffering from a Super Tuesday hangover, the fact that Donald Trump has won a further seven states in the nomination process arguably just as scary as any of the other macro issues currently plaguing the markets," said Connor Campbell, financial analyst at Spreadex.
The biggest day thus far in the US presidential campaign, dubbed 'Super Tuesday', saw Hillary Clinton, the Democratic favourite, and Donald Trump, the leading Republican, make big strides toward their goal of becoming their party's nominee to run for president in November's general election.
But their rivals performed well enough to postpone tough decisions about any of them leaving the race, at least until after the primaries in other large US states later in March.
On the London Stock Exchange, Intertek was the worst performer in the FTSE 100, down 4.0%. The inspection and certification services company booked a big impairment charge in its 2015 results related to the weakness of the oil and gas industry, causing the company to swing to a significant loss.
Intertek said its pretax loss for the year to the end of December was GBP307.7 million, swung from a GBP252.2 million profit a year earlier. The loss was driven by a GBP577.0 million non-cash impairment charge the group booked on past acquisitions as a result of the continued difficulties facing its oil and gas-related businesses.
ITV shares were down 3.8%, even though the television broadcaster said it expects "another good year" in 2016. It reported a rise in pretax profit for 2015, increased its regular dividend, and announced a bigger special dividend as well.
ITV proposed a final dividend of 4.1 pence per share, taking its total dividend for 2015 to 6.0p, up from 4.7p in 2014. It also plans a 10.0p per share special dividend, ahead of the 6.25p special dividend it paid in 2014, which ITV said reflects its strong cash generation and confidence in its business.
The company reported a pretax profit of GBP641 million in 2015, up from GBP605 million the year before, on revenue of GBP2.97 billion, up from GBP2.59 billion.
"It would appear that a drop in viewing numbers on its main ITV channel has raised concerns that despite rising advertising revenues the company is losing market share," suggested Michael Hewson, chief market analyst at CMC Markets.
In the FTSE 250, Entertainment One shares dropped 13%. The film and television content producer said trading was in line with expectations in the first nine months of its financial year.
The company said underlying earnings before interest, tax, depreciation and amortisation was 15% higher in the nine months to December 31, year-on-year, reflecting a strong performance in Television and from acquisitions, partly offset by weaker trading in Film.
Entertainment One's revenue, however, was down 3% in the period, as 39% growth in Television was offset by a 14% decline in Film.
Shares in funeral services provider Dignity were down 4.4%, despite the company saying it swung to a pretax profit in 2015 due to financing costs not repeating.
Pretax profit for the FTSE 250-listed company was GBP69.0 million, compared to a GBP67.7 million loss a year earlier when Dignity booked significant costs related to its refinancing. Revenue increased to GBP305.3 million from GBP268.9 million, up 14%, as deaths in the UK rose 7.0% year-on-year to 588,000, the largest growth in the country's death rate for 60 years.
However, Dignity said it expects the number of deaths in 2016 to revert to levels seen in 2014.
At the other end of the mid-cap index, Virgin Money shares were up 5.5%. The lender said pretax profit surged in 2015 as it performed ahead of the wider market on core mortgages, savings and credit card growth.
In it first set of full-year results since floating in late 2014, the lender said its pretax profit for the year to the end of December increased to GBP138.0 million from GBP34.0 million a year earlier, helped by higher income and one-off costs it booked the year prior on its listing in London and the acquisition of mortgage lender Northern Rock.
Virgin Money will pay a final dividend of 3.1 pence per share, taking its total dividend payout to 4.5p.
Investec analyst Ian Gordon heaped praise on Virgin Money saying: "Today's Virgin Money results (once again) represent material outperformance versus consensus expectations and, in our view, offer clear evidence of an under-appreciated and sustainable growth story."
In economic news, British construction activity expanded at the weakest pace in ten months in February, defying economists' expectations for a modest improvement, survey data from Markit Economics and the Chartered Institute of Procurement & Supply showed.
The Markit/CIPS UK Construction Purchasing Managers' Index fell to 54.2 in February from 55.0 in the previous month. It was expected to rise to 55.5, but remained above 50 mark which indicates expansion in the sector.
The pound fell against the dollar in reaction to the data, hitting an intraday low of USD1.3912, but has since rebounded strongly to USD1.3986 at midday.
Still ahead in the economic calendar, ADP employment change data are at 1315 GMT, before the Institute of Supply Management New York index at 1445 GMT. After the London stock market close, the US Federal Reserve Beige Book is due at 1900 GMT.
By Neil Thakrar; [email protected]; @NeilThakrar1
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Related Shares:
Virgin Money HoldingsEntertainment OneDTY.LITVIntertek Group