27th Jan 2015 10:49
LONDON (Alliance News) - London equities are trading mostly lower Tuesday, as investors react to slower-than-expected growth in UK economic output amid lingering worries over Greece's future in the euro zone.
The FTSE 100 is down 0.3% at 6,832.09, the FTSE 250 is up a fraction at 16,482.3 and the AIM All-Share is down 0.4%.
UK fourth-quarter gross domestic product grew 0.5% on the quarter and 2.7% on the year, marginally missing economist 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%.
The pound is quoted at USD1.5074, down from a high of USD1.5117.
"The UK?s GDP data this morning came in mixed as full year 2014 was its strongest since 2007 whilst still seeing a fall in the final quarter," says Connor Campbell at Spreadex. "The overall picture is positive, but the final quarter slowdown is not the greatest sign for 2015, especially since this figure should have theoretically been aided by the current low oil prices."
The French CAC 40 is down 0.6%, and the DAX 30 is down 0.5% as concerns over Greece persist.
"Markets remain preoccupied with what the new government will do next, conscious that a stern test of the eurozone's commitment to stay together could be just round the corner," says Alastair McCaig at IG Group.
Meanwhile in another blow to Russia's economy, Standard & Poor's Ratings Services on Monday downgraded Russia's long-term foreign currency rating to a junk grade for the first time in more than a decade, saying the country's monetary policy flexibility has become more limited and its economic growth prospects have weakened. The outlook on the rating is negative.
Wall Street is forecast to open slightly lower. Travel bans were issued in several states in the densely populated north-eastern US including New York City, as a storm forecast to dump up to 60 to 75 centimetres of snow closed in on the region.
The DJIA is called to open down 0.4%, the S&P 500 forecast down 0.2% and the Nasdaq 100 down 0.4%, with Microsoft shares in focus after its earnings released late Monday disappointed, with an 11% drop in second-quarter profit to USD5.9 billion, or USD0.71 a share.
"A lower outlook for PC software sales at Microsoft is expected to send shares lower at the open and act as a drag on US markets as the Fed begins its two-day meeting ahead of earnings from tech giants Apple and Yahoo! after the US close," says Jasper Lawler at CMC Markets.
Other US earnings later on Tuesday include DJIA constituents 3M, AT&T, Caterpillar, DuPont, Pfizer, Procter & Gamble and United Technologies, as well as American Airlines and Bristol-Myers Squibb.
US durable goods orders for December are due Tuesday at 1330 GMT and US consumer confidence for January is expected at 1500 GMT. The Federal Reserve begins its two-day policy meeting, with traders likely to pay close attention to any changes to the accompanying statement due Wednesday.
"The December durable goods release will provide one of the final key reports ahead of the fourth-quarter GDP print on Friday," says Lloyds Bank. "Following November?s 0.9% decline, orders are expected to have stabilised last month and we forecast a 0.9% rise." US GDP numbers are due at 1330 GMT on Friday.
In Asia, Japan's Nikkei closed up 1.7% at 17,768.3.52 Tuesday, buoyed by a weaker yen. The Hang Seng in Hong Kong ended down 0.4% at 24,807.28 and the Shanghai Composite finished 0.9% lower at 3,352.96.
Brent crude is quoted at around USD48.20 a barrel Tuesday, and US benchmark West Texas Intermediate is quoted at USD44.87 a barrel. Gold is steady, quoted Tuesday morning at USD1,280.35 an ounce.
In UK corporate news, International Consolidated Airlines Group is up 1.6% after the board of Irish carrier Aer Lingus said it will give its recommendation to a EUR1.36 billion takeover offer from the owner of British Airways and Spain's Iberia and Vueling. IAG also needs the support of shareholders Ryanair and the Irish Minister for Finance for its EUR2.55-a-share bid. Aer Lingus shares are up 1.6% at EUR2.41.
Low-cost carrier easyJet is the best performing stock in the FTSE 100, up 3.4%. The carrier said it expects to report a smaller first-half loss in its current financial year 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. Revenue in the three months to December 31 rose to GBP931 million as passenger numbers increased to 14.9 million.
Soft drinks maker Britvic is up 5.3%, after its revenue beat forecasts, falling 0.4% to GBP304.3 million. Volumes fell 0.3% in the 12 weeks to December 21, reflecting challenging trading conditions in its main markets, but the company said it remains confident of delivering earnings before interest and taxes of between GBP164 million and GBP173 million, underpinned by cost savings.
Shares in oil and gas explorer Afren lurched to another low, losing more than half their value after the company said it has entered into 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. Shares are down 59%.
By Ian Edmondson; [email protected]
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