17th Mar 2015 10:49
LONDON (Alliance News) - UK stocks are trading mixed mid-morning Tuesday, led by oil-related stocks as the ZEW survey results for Germany and the Eurozone came in mixed.
The FTSE 100 trades up 0.2% at 6,817.89, while the FTSE 250 is down 0.5% at 17,119.23, and the AIM All-Share is up 0.1% at 716.43.
European stocks are trading lower after posting strong gains on Monday. The CAC 40 in Paris is down 0.3%, and the DAX 30 in Frankfurt is down 1.0%.
The ZEW indicator of economic sentiment for Germany increased for the fifth consecutive time in March to 54.8 from 53.0 in February, marking the index's highest reading since February 2014. However, the number missed estimates for a rise to 58.2.
"Economic sentiment in Germany remains at a high level. In particular, the continuing positive development of the domestic economy confirms the expectations of the experts. At the same time, limited progress is being made with regard to solving the Ukraine conflict and the sovereign debt crisis in Greece. This has a dampening effect on sentiment," said ZEW President Clemens Fuest.
The ZEW indicator of economic sentiment for the eurozone surpassed expectations in March. The reading came in at 62.4, above the 58.9 forecast and 52.7 reading in February.
Eurozone consumer prices remained negative for the third month in February, meeting initial estimates according to the final report from Eurostat. The harmonized index of consumer prices fell 0.3% in February from last year, slower than January's 0.6% decline. The annual decrease came in line with the flash estimate published on March 2.
Oil related companies are the biggest gainers in the FTSE 100 despite the price of oil remaining under pressure. Brent currently trades at USD53.03 a barrel, which is an improvement from Monday's low of USD52.64 but is still down 1.9% on the day. West Texas Intermediate trades at USD43.04, which is also higher than Monday's six year low of USD42.83 a barrel, but still down 1.8% on the day.
In a monthly note to clients, UBS analyst Jon Rigby sees more volatility ahead for oil prices.
"We remain cautious regarding price volatility and expect downward moment in 2Q15 as 'call on OPEC' declines to 28.1 [million barrels per day] while OPEC production has continued to remain above quota (30 mb/d) for 10 successive months likely implying continued stock builds," Rigby says.
The call on OPEC is the difference between the global demand for oil and the total supply of non-OPEC oil plus the non-crude oil supply from OPEC.
Tullow Oil, up 5.3% is the biggest gainer in the FTSE 100, after closing as the largest decliner Monday when it fell 5.7%. BG Group, up 2.1%, and Royal Dutch Shell 'B', up 1.8% also are gainers.
In the FTSE 250, Premier Oil is up 7.7%, Hunting is up 5.0%, and Petrofac is up 2.4%.
Antofagasta is the biggest faller in the index, down 3.9%. The miner reported lower 2014 earnings, as expected, as revenue was hit by a drop in copper prices and higher cash costs. It cautioned that copper prices are set to remain volatile this year, and it is keeping its dividend policy under review while it tries to resolve issues at the Los Pelambres mine in Chile.
Antofagasta reported a pretax profit of USD1.57 billion for 2014, down from USD2.08 billion in 2013, as revenue declined by 11% to USD5.29 billion, from USD5.97 billion, largely on the back of an 8.5% decline in realised copper prices, a 7.1% decline in gold prices, and a small decline in sales volumes.
Although revenue was in line with analyst expectations, pretax profit was below the analyst consensus of USD1.66 billion, as the company booked a USD88.3 million increase in depreciation at its Centinela and Michilla operations in Chile.
J Sainsbury is one of the best blue-chip performers, up 1.2%. The UK's third-largest supermarket chain by market share reported a drop in sales in the fourth quarter of its financial year, despite price reductions and a volume increase across the business. The company said total retail sales were down 0.3% excluding fuel in the 10 weeks to March 14, and down 2.7% including fuel.
Like-for-like sales were down 1.9% excluding fuel, and down 3.9% including fuel for the fourth quarter. Cantor Fitzgerald notes the 1.9% decline was better than consensus estimates of a 2.3% drop and also ahead of management's guidance of a decline of 2.1%.
In the FTSE 250, Lonmin is the best performer up 7.7%. The miner said it has appointed Ben Moolman as its permanent chief operating officer with immediate effect. Moolman rejoined Lonmin in August 2014, having previously worked at the company in a number of operational management roles, including as vice-president of mining. In addition, Lonmin was also raised to Buy from Neutral by Citigroup.
Still ahead in the economic calendar is US building permits and housing starts both at 1230 GMT, and US Redbook index at 1255 GMT.
Futures indicate Wall Street for a lower opening, with the DJIA and Nasdaq 100 both pointed down 0.1% and the S&P 500 down 0.2%.
By Neil Thakrar; [email protected]; @NeilThakrar1
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