10th Mar 2015 10:50
LONDON (Alliance News) - UK stocks are trading broadly lower Tuesday mid-morning with mining and oil-related stocks leading FTSE 100 decliners, as oil prices weaken and following mixed Chinese consumer and producer price inflation reports.
The FTSE 100 is trading down 0.6% at 6,835,17, while FTSE 250 is down 0.3% at 17,119.48. The AIM All-Share is down 0.2% at 714,91.
Tullow Oil is the biggest faller in the blue-chip index, down 5.4%, followed by BG Group, down 3.7%, and BHP Billiton down 2.8%. Royal Dutch Shell 'A' and 'B' are both down 2.5%.
Brent crude was trading down at USD57.74 per barrel, while West Texas Intermediate was down at USD49.61, after Goldman Sachs said Monday that WTI oil prices could reach USD40.00 a barrel, saying it expects Brent oil prices and timespreads to reverse their recent strength.
Life insurer Prudential took the corporate stage centre Tuesday morning after it reported a big increase in profit for 2014, helped by growth in its key Asian markets, the UK and the US. But the results were overshadowed by news that Chief Executive Tidjane Thiam will leave to become the new CEO of Swiss bank Credit Suisse AG. Credit Suisse confirmed media reports that its current Chief Executive Brady Dougan is to step down and will be replaced by Thiam in June.
However, his replacement is yet to be confirmed, despite reports that Mike Wells, an executive director and the CEO of its Jackson National Life Insurance Company, is to succeed him at the helm.
"We are fortunate to have a very strong management team across the group and we have identified a successor and expect to be able to announce a new CEO once the regulatory approval process has been completed," Paul Manduca, chairman, said in a statement.
Although Nomura analyst Fahad Changazi thinks Thiam's departure to be "incrementally negative" for the stock, he thinks the company is in good hands. "We do not envisage any significant change to strategy or growth trajectory for the group," Nomura's Changazi says.
Prudential reported a net profit of GBP2.22 billion for 2014, up from 1.35 billion in 2013, while its closely-watched operating profit rose 14% at constant exchange rates to GBP3.19 billion. Prudential raised its full-year dividend by 10% To 36.93 pence a share.
Prudential is trading among the worst performers in the blue-chip index, down 1.8% at 437.6 pence.
Eurozone finance ministers urged Greece to speed up reforms to successfully conclude the review and reinforced that there will be no rolling-back on measures previously agreed.
"The discussions between the Greek authorities and the institutions must and will start as from Wednesday," Eurogroup Chairman Jeroen Dijsselbloem said Monday after the conclusion of the Eurogroup meeting of finance ministers. "Athens will receive remaining bailout funds of around EUR 7 billion only if it delivers agreed reforms."
European indices also are trading lower Tuesday, with the French CAC 40 down 0.3% and the German DAX 30 down 0.4%.
Industrial production figures from Italy and France came in mixed. Italian industrial production declined for the first time in four months in January, the statistical office Istat reported Tuesday. Industrial output registered an unexpected decline of 0.7% on a monthly basis, reversing a 0.4% rise in December. Economists had forecast a 0.2% rise for January. This was the first fall in four months.
Meanwhile, French industrial production grew unexpectedly in January from the prior month, data from the statistical office Insee revealed Tuesday. Industrial production rose 0.4% month-on-month, defying expectations for a 0.3% fall. This was the second consecutive rise in output. Nonetheless, the rate of growth was weaker than the revised 1.4% expansion seen in December.
China's consumer inflation accelerated by more than expected from a five-year low in February but producer prices declined the most since late 2009 underscoring the persistent risk of deflation. Consumer inflation rose to 1.4% in February from 0.8% in the prior month, data published by the National Bureau of Statistics showed Tuesday. It was forecast to increase moderately to 1%. Month-on-month, inflation accelerated to 1.2% from 0.3% in January.
In a separate statement, the NBS said Chinese producer prices declined for the 36th consecutive month in February weighing heavily on profit margins of companies. Industrial producer prices were down 4.8% from last year, which was bigger than a 4.3% fall seen a month ago. Economists had forecast prices to fall again by 4.3%. This was the biggest fall since October 2009. On a monthly basis, producer prices slid 0.7% after declining 1.1% in January.
In London, G4S is the best performer in the FTSE 100 Tuesday mid-morning, up 2.4%. The group said it swung to a pretax profit in 2014 after 2013 was hit by hundreds of millions of pounds of charges and restructuring costs related to issues with UK government contracts, but Chief Executive Ashley Almanza admitted the company has a lot more to do before it's fully back on track.
The company reported a pretax profit of GBP148 million for 2014, compared with a restated GBP190 million pretax loss in 2013 when it had booked GBP386 million in charges and restructuring costs in the wake of the issues with some UK government contracts.
In the economic calendar, Bank of England Governor Mark Carney appears before the House of Lords Economic Affairs Committee for an annual evidence session starting at 1435 GMT. In the US, the Redbook index index is due at 1255 GMT, while JOLTS Job openings and wholesale inventories are at 1400 GMT.
US futures point to a mixed open, with the Nasdaq 100 pointed up 0.2%, and the DJIA and the S&P 500 pointed down 0.5%.
By Daniel Ruiz; [email protected]
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