26th Nov 2013 16:53
LONDON (Alliance News) - The markets Tuesday unwound all the moves made Monday on the back of the Iran nuclear sanctions deal, with the FTSE 100 and other global blue-chip indices falling, while oil prices moved higher and the dollar fell against most other major currencies.
The unwinding started from the beginning of trade, but accelerated after US consumer confidence figures came in worse that expected.
The FTSE 100 closed down 0.9% at 6,636.22, the FTSE 250 closed up 0.04% at 15,306.13, helped by a string of positive earnings reports, while the AIM All-Share closed up 0.1% at 819.30. Brent oil, which fell to a low of USD108.03 a barrel on Monday following the announcement of the Iranian deal, was back up to USD110.60 a barrel by the close of European equity markets.
"If you spent yesterday in bed, ignoring the market reaction to the Iranian sanctions-lifting deal, you made the right choice", said Societe Generale Senior Strategist Kit Juckes.
The biggest shock to the market came from the US consumer confidence reading, which came in at 70.4 for November, much lower than the 72.9 that had been expected and also down from the reading of 72.4 in October.
The downside surprise knocked the dollar broadly lower against other majors and provided a small boost to US equities as poor consumer confidence makes tapering of asset purchases less likely.
After the European market close, the pound and the euro are both slightly higher against the dollar, at USD1.6180 and USD1.3555 respectively. US equities are also trading slightly higher, but showing little momentum ahead of the US thanksgiving holiday on Thursday. The DJIA and the S&P500 are both trading about 0.1% higher.
A morning data calendar empty of market drivers put politics in focus, with Scotland's First Minister Alex Salmond launching his government's independence blueprint, calling it a "mission statement" for Scotland's future. The paper, which is nearly 700 pages long, pledged to put social issues at the centre of policy and kick the UK's nuclear deterrent out of the country. It promises reforms to housing benefit and thirty hours of childcare per week for all three- and four-year-olds.
However, it also admits that keeping the pound would be in an independent Scotland's best interests, and the Bank of England would continue as its lender of last resort.
Former UK chancellor Alistair Darling, who leads Better Together, the official campaign to keep the Union, called the white paper a "work of fiction, full of meaningless assertions".
A two-way market on the outcome of the referendum created by spreadbetters IG indicates that just 16% of IG customers currently think there will be a "yes" at the referendum.
Bank of England Governor Mark Carney is to review the full set of powers that it needs to limit the debt level of banks. In an earlier than expected move, Chancellor George Osborne wrote to Carney on Tuesday saying now is an appropriate time for the Financial Policy Committee to consider whether and when it needs any additional powers over bank leverage ratios.
The news came at the same time that Carney faced probing questions from the Treasury Select Committee after delivering his latest inflation report. As well as once again backing his forward guidance measures on the basis that "there is still a lot of slack in this market", the Governor strongly rebuffed a suggestion from Labour committee member John Mann that he is too close George Osborne, saying he was "more than mildly offended by the thrust of the question".
Within UK equities, the FTSE 250 was kept just in the black by positive corporate announcements.
Healthcare company BTG closed at the top of the index, up 14% after it announced that it had received approval from the US Food and Drug Administration for its varicose vein treatment Varithena. The healthcare company will launch the project commercially in the US during the second quarter of 2014.
Currency printing company De La Rue closed up 10% after posting a pretax profit of GBP28.4 million, up from GBP23.8 million in the previous year, thanks largely to GBP10 million of cost cuts.
Mitchells & Butlers gained 4.1% after also reporting a jump in profits. The UK operator of managed pubs and restaurants, whose brands include All Bar One and O'Neill's, reported a jump in profits for the 52 weeks ended September 28, boosted by new site openings, stronger food sales, and higher prices.
Britvic, another FTSE 250 listed company, closed up 2.8% after also reporting higher profits and revenues. The soft drinks maker increased prices and market share over its full year ended September 29. The company said sales were boosted by the hot summer weather in the UK this year.
A more healthy looking data calendar awaits on Wednesday. UK economic growth will provide the morning focus, with the Office of National Statistics releasing its second estimate of third-quarter GDP at 0930 GMT. In the afternoon US initial jobless claims will provide the main interest before the US market closes for the Thanksgiving holiday on Thursday.
A relatively quiet day ahead in the corporate calendar but interim results from Royal Mail are sure to provide interest, being the first indication of company performance since it's controversial floatation. Also reporting Wednesday are Compass Group, United Utilities and Punch Taverns.
By Jon Darby; [email protected]; @jondarby100
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