29th Jan 2015 10:56
LONDON (Alliance News) - London stocks are broadly lower Thursday, as further weakness in crude oil and commodity prices and the US Federal Reserve's decision to leave interest rates unchanged and remain "patient" reignited concerns about economic growth.
The FTSE 100 is down 0.6% at 6,785.65, the FTSE 250 is 0.6% lower at 16,322.29, and the AIM All-Share is off 0.4% at 687.96.
"With Brent crude giving up its USD49 per barrel level following another high US crude oil inventories, and copper on its third day of losses and hovering precariously near the lows seen in mid-January, the FTSE is once again being squeezed by its energy and mining stocks," says Connor Campbell at Spreadex.
In Europe, markets are faring better, with the CAC 40 in Paris flat and Germany's DAX 30 down 0.2% after euro area consumer confidence improved slightly in January rising to minus 8.5, from minus 10 in December, still indicating net pessimism.
Wall Street is forecast to open mixed after shares fell on Wednesday, following the Federal Reserve's pledge to remain "patient" on raising interest rates amid unusually low inflation that could derail the US economic recovery, suggesting the central bank is unlikely to raise interest rates until at least June, but probably later.
The next major indication of the health of the US economy is due on Friday with fourth quarter GDP at 1330 GMT.
The DJIA is called to open up 0.2% Thursday, the S&P 500 forecast to be flat and the Nasdaq 100 down 0.1%, with earnings due later from Alibaba, Amazon, ConocoPhillips, Dow Chemicals, Ford and Visa.
"Futures are pointing to no change in direction this afternoon; however a strong unemployment claims figure and pending home sales data may provide reason for a turnaround later in the day," Spreadex's Campbell adds.
Weekly jobless claim are due at 1330 GMT Thursday and pending home sales for December at 1500 GMT.
Brent crude is quoted at around USD48.92 a barrel Thursday, and West Texas Intermediate is quoted at USD44.58 a barrel. The US benchmark dipped to a new six-year low of USD43.89 overnight after the weekly inventories report from the US Energy Information Administration showed crude oil stockpiles in the US surged by more than expected last week.
US crude oil inventories to jumped 8.9 million barrels in the week ended January 23, while analysts expected an increase of 3.5 million barrels. As a result, US crude oil inventories surged to 406.7 million barrels as of the end of last week.
Gold is steady, quoted Thursday morning at USD1,276.57 an ounce.
Germany's unemployment rate declined to a record low in January, the Federal Labor Agency reported, dropping to a seasonally adjusted 6.5% from a revised 6.6% in December. The rate came in line with expectations. German inflation for January is due at 1300 GMT.
In Asia, Japan's Nikkei closed down 1.1% at 17,606.22 Thursday. The Hang Seng in Hong closed 1.1% lower at 24,595.85, and the Shanghai Composite ended down 1.3% at 3,262.305.
Among UK companies, Royal Dutch Shell shares are the worst performers in the FTSE 100 index, after the company said it will slash a further USD15 billion in spending over the next three years reflecting the slump in oil prices.
Shell, the first of the world's four oil majors to report earnings, said fourth quarter profit on a current cost of supplies basis, which excludes price changes in inventories, was USD4.2 billion compared with USD2.2 billion for the same quarter a year earlier, giving full year 2014 earnings of USD19.0 billion compared with USD16.7 billion in 2013. Full year 2014 oil and gas production was 3.08 million barrels of oil equivalent a day, a decrease of 4% compared with 2013. Royal Dutch Shell B shares are down 4.3% and A shares down 4%. BP shares are down 2.6%
The slide in commodity prices is also affecting the heavily weighted mining sector. Copper miner Antofagasta is down 3.2%, precious metals producer Fresnillo is 3.2% lower and Randgold Resources is down 2.7%.
Diageo tops the FTSE 100 leaderboard after the world's largest distiller declared a 9% increase in its interim dividend as six-month net sales were broadly flat. Sales fell fractionally to GBP5.9 billion and organic volumes dropped 1.9%, though the company said performance improved in the second quarter to December 31.
By Ian Edmondson; [email protected]
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