27th Jan 2015 17:03
LONDON (Alliance News) - The FTSE 100 and FTSE 250 snapped an eight day winning streak Tuesday, closing lower after UK GDP data came in lower than expected and US equity markets were hit by weak economic data and a swathe of weaker-than-expected corporate earnings.
The FTSE 100 finished down 0.6% at 6,811.61, the FTSE 250 fell 0.7% to 16,353.88 and the AIM All-Share index ended down 0.8% at 689.01.
UK fourth-quarter gross domestic product grew 0.5% on the quarter and 2.7% on the year, marginally missing economists' expectations of 0.6% and 2.8%, respectively. For all of 2014, growth was 2.6%, matching the International Monetary Fund's January forecast of 2.6% but below the UK Office for Budget Responsibility's December forecast for 3.0%. However, the 2.6% rise in 2014 was the strongest growth in the UK since 2007.
"A key question likely to be asked following today’s release is whether this marks the start of a shift to a more moderate growth path for the UK economy; our suspicion is that it does not. Indeed, we suspect the services and construction sectors are set for respectable performances," said Investec analyst Victoria Clarke.
In Europe, the CAC 40 in Paris closed down 1.1%, and Frankfurt's DAX 30 ended down 1.6%. At the close of London equity trade, the DJIA was down 1.9%, while the S&P 500 was down 1.4% and Nasdaq Composite was down 1.8%.
A negative reaction to a batch of earnings from several big-name companies contributed to the initial sell-off on Wall Street. Shares of Microsoft showed a particularly steep drop after the software giant reported second quarter earnings that matched analyst estimates but provided disappointing guidance. Caterpillar, DuPont and Procter & Gamble have also come under pressure after reporting their quarterly results.
In the US, new orders for manufactured durable goods showed a substantial decrease in the month of December, according to a report released by the Commerce Department. The report said durable goods orders tumbled by 3.4% in December following a revised 2.1% decrease in November. Economists had expected durable goods orders to increase by 0.5% compared to the 0.7% drop originally reported for the previous month.
The FTSE 100 recovered slightly for a short time after the release of US Consumer confidence data, which saw the confidence index rise to its highest level in over seven years in January. The report from the Conference Board said its consumer confidence index surged up to 102.9 in January from an upwardly revised 93.1 in December. Economists had expected the index to climb to 96.0 from the 92.6 originally reported for the previous month.
In London, precious metals miners were lifted by a rise in the price of gold. At the London close, the yellow metal was up 1.1% on the day at USD1,293.69 an ounce.
Randgold Resources was amongst the best performers in the FTSE 100, closing up 2.7%, while Fresnillo ended up 1.5%. FTSE 250-listed Centamin rose 5.2%.
International Consolidated Airlines Group was one of the best performers in FTSE 100, ending up 2.4%, after Aer Lingus said its board has indicated to IAG that it would be willing to recommend the British Airways owners' EUR1.36 billion bid for the Irish airline. Aer Lingus ended up 2.2%.
Shares in low-cost airline EasyJet ended up 1.9% after it said it expects to report a smaller first-half loss in its current financial year, as revenue rose on the back of strong demand from business and leisure travellers and fuel costs fell in the first quarter. The company said it expects to report a pretax loss of between GBP10 million and GBP30 million in the first half of its financial year, narrower than the GBP53 million loss it reported in the first half of last year.
United Utilities Group ended up 1.7% after the utility company matched rival SSE by saying it is targeting dividend growth of at least inflation as measured by the Retail Price Index in coming years, as it also accepted the price controls enforced the UK water regulator Ofwat. The group said its expected total dividend for its 2014/15 financial year us 37.7 pence, and it targeting growth of at least RPI inflation from that base each year through to 2019/20.
Dixons Carphone was one of the biggest fallers in the FTSE 100, down 2.4%. The electronics retailer was cut to Underweight by Morgan Stanley, according to traders
In the FTSE 250, Afren lost 72% of its value, closing at 5.00 pence, a new 52-week and all-time low. The stock's 52-week high was 166.60p. The oil and gas explorer said it has entered talks with a committee of bondholders, warning that it will require equity funding beyond its market capitalisation if its debt structure remains as it is.
Britvic was one of the best performing stocks in the mid-cap index, closing up 6.4%. The soft drinks company said revenue dipped by 0.4% in the first quarter, citing "challenging trading conditions" in the UK and internationally, where volumes fell and selling prices remained flat. However, Shore Capital said Britvic's first-quarter financial result was slightly better than expectations, with a subdued UK market improving after a slow start and a successful Christmas campaign which helped Pepsi and fruit carbonates brands.
In the economic calendar Wednesday, German Gfk consumer confidence survey data is due at 0700 GMT, and US MBA Mortgage applications is at 1200 GMT. After the European stock market close, the US Federal Reserve will announce its monetary policy decision at 1900 GMT.
In the corporate calendar, Frenillo will release a fourth quarter production report, as will as FTSE 100-listed miners Anglo American and Antofagasta. Specialty chemicals company Johnson Matthey will publish an interim management statement along with Brewin Dolphin Holdings and Intermediate Capital Group. Scottish soft-drinks maker AG Barr will issue a trading statement.
By Daniel Ruiz; [email protected];
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