20th Oct 2014 16:05
LONDON (Alliance News) - The FTSE 100 closed lower Monday, failing to build on the recovery made late last week, with oil stocks again amongst the worst performers as the oil price fell.
The FTSE 100 closed down 0.7% at 6,267.07, the FTSE 250 closed flat at 14,755.97 and the AIM All-Share outperformed to close up 0.5% at 692.44.
The main European indices fared worse than London, with the CAC 40 ending the day down 1.0% and the DAX down 1.5%. US equities, meanwhile, were trading mixed at the London close, with the DJIA trading down 0.1%, while the S&P was up 0.5% and the Nasdaq Composite up 0.7%.
The price of gold rose during the day to trade at USD1244.47 per ounce at the European close, as investors continued to support the price of the asset perceived as a safe haven.
Oil stocks weighed on the blue-chip and mid-cap indices, as the price of Brent oil fell to USD84.39 per barrel. Stocks such as BG Group, down 3.8%, Tullow Oil, down 2.6%, and Royal Dutch Shell 'A', down 2.3%, were amongst the top fallers in the FTSE 100, while the FTSE 350 oil and gas producers index closed down 2.3%, making it the biggest falling sector index.
Afren bucked the trend, ending up 0.2% on the FTSE 250, after the Daily Telegraph reported over the weekend that filings revealed a company founded by a former Nigerian general has amassed a significant shareholding in the business, prompting speculation the oil and gas producer could become a takeover target.
Airlines performed well, boosted by the low oil price and a positive note from Liberum, which said there are opportunities for investors in the European airlines sector as long as the Ebola virus is contained away from main traffic areas. International Consolidated Airlines Group closed up 3.1%, Ryanair up 1.8%, and easyJet up 1.6%.
Tesco also closed amongst the best performing stocks of the FTSE 100, closing up 2.7%, ahead of its first-half results on Thursday. Analysts believe that the company now has a better handle on its recent issues, after The Sunday Times reported that the investigation into the company's GBP250 million profit overstatement has found evidence of a cover-up as the commercial team at the company struggled to meet targets in the final months of the tenure of former chief executive Philip Clarke. The company is expected to say on Thursday that the review found patterns of "inappropriate" behaviour by staff, but that it will not have to restate its results for previous years, the paper said.
The latest grocery market share figures from Kantar Worldpanel, for the 12 weeks ending October 12, will be released on Tuesday at 0930 BST.
Third quarter earnings from US-listed International Business Machines Corp weighed on the DJIA. The company reported a sharp decline in profit for the third quarter, hurt by a charge related to the sale of its Microelectronics business to Globalfoundries. IBM had separately said it would pay USD1.5 billion to Globalfoundries, an investment arm of the government of Abu Dhabi, to take the chip business of its hands. It booked a USD3.4 billion net loss from discontinued operations in its third-quarter results. IBM shares were down 6.6% in New York.
The biggest economic release on Tuesday will occur before the London open, with a host of Chinese data releases at 0300 BST, most importantly GDP estimates for the third quarter. Japanese all industry activity index for August will be released at 0530 BST.
UK public sector net borrowing for September will be released at 0930 BST, before the US Redbook index for the week ending October 17 at 1355 BST and existing home sales change for September at 1500 BST.
The corporate calendar is fairly busy and includes half-year results from Premier Inns hotels and Costa coffee chain operator Whitbread, interim management statements from FTSE 100-listed companies GKN, ARM Holdings, Reckitt Benckiser and InterContinental Hotels Group. AIM-listed ASOS will also be reporting full-year results. Apple will be reporting its third-quarter earnings after the US close Tuesday.
By Neil Thakrar; [email protected]
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