23rd Oct 2014 16:14
LONDON (Alliance News) - UK shares closed Thursday mixed, boosted by strong third-quarter earnings from blue-chip US companies and by positive purchasing managers' index data from the eurozone and Germany, but with British grocer Tesco once again weighing upon the FTSE 100.
The FTSE 100 closed the day up 0.3% at 6,419.15, while the FTSE 250 ended down 0.2% at 15,135.99, and the AIM All-Share index closed down 0.1% at 708.88.
European stocks outperformed London, with the CAC 40 in Paris closing up 1.3%, and the DAX in Frankfurt up 1.2%. US stock markets also were posting strong gains at the European close, with the DJIA up 1.5%, the S&P 500 up 1.4% and the Nasdaq Composite up 1.7%.
Positive earnings from major US companies supported UK and US share prices.
Mining and agricultural equipment maker Caterpillar Inc reported higher third-quarter profit, as revenues rose and beat analysts' estimates. The firm also lifted its earnings per share outlook for all of 2014. Diversified manufacturer 3M and auto giant General Motors also unveiled better-than-expected third quarter earnings.
The FTSE 100 had fallen 1.0% after the open Thursday following a worse-than-expected French PMI reading. However, the UK index recovered after eurozone and German PMI data came in better than expected, easing some investor concerns about the state of the continent.
A host of UK domestic data released later in the morning came in short of expectations, weighing on London stocks. Retail sales for September showed a 2.7% rise, year-on-year, fractionally missing economists' forecast of a 2.8% increase. Furthermore, BBA mortgage approvals for September increased by 39,300 missing the consensus for a 41,500 increase.
Tesco closed as the worst performing stock in the FTSE 100, declining 6.6%, having weighed on the index throughout the entire day. Chairman Richard Broadbent said he will step down once the new management team has settled in. Broadbent asserted the Tesco board was "well governed" even though the company admitted Thursday its recent profit overstatement was worse than first thought, and the issues that caused it had been going on before the first half of this year.
The struggling retailer said Deloitte had completed its investigation into the overstatement of its half-year profit expectation and confirmed an impact of GBP263 million, slightly more than the GBP250 million impact the retailer had announced last month. It said GBP118 million related to this year's first-half trading profit, about GBP70 million to the last financial year and about GBP75 million to years before that, although it did not say just how far back the issues went. The whole figure has been included in this year's first-half results. Tesco reported a trading profit of just GBP937 million for the 26 weeks to August 23, down 41% on the GBP1.59 billion trading profit it reported a year earlier.
Fellow FTSE 100-listed supermarkets Wm Morrison Supermarkets, down 3.0%, and J Sainsbury, down 1.8%, were both undercut by the Tesco update, and were amongst the worst performing stocks in the blue-chip index.
Tullow Oil shares fell 4.2% after the oil and gas producer said that it encountered hydrocarbon shows at the Kodos-1 wildcat exploration well in the Kerio Basin onshore Kenya, indicating the presence of an active petroleum system, but that the well nonetheless will be plugged and abandoned.
Unilever shares fell 3.2% after the Anglo-Dutch consumer goods giant reported a further weakening in trading, as market growth continued to slow in emerging markets, particularly in China, and its European markets continued to be hit by volume and price declines.
In the FTSE 250, Foxtons Group shares declined 16%, making it the heaviest falling mid-cap stock. The estate agency said its third-quarter performance had been hit by a sharp slowdown in London property sales volumes over the period, adding that its expectation that market volumes will remain constrained for the second half has forced it to downgrade its earnings forecast for the year.
The Foxtons news, together with the latest mortgage data, meant that Countrywide, down 3.9%, and Zoopla Property Group, down 2.8%, also were amongst the worst performers in the mid-cap index.
Friday's economic calendar kicks off with Chinese house price data and the Conference Board leading economic index for China, both for September, to be released at 0230 BST and 0300 BST, respectively.
The highlight of the day will be the preliminary release of UK third quarter GDP at 0930 BST. The expectation is for the reading to show a year-on-year rise of 3.0%, slowing from a 3.2% rise in the second quarter. At 1400 BST is US new home sales figures for September.
In the corporate calendar, interim management statements will be released from FTSE 250 stocks TSB Banking Group, instrumentation and controls company Spectris, engineering group Vesuvius, and veterinary business Dechra Pharmaceuticals. Third quarter results will be released from FTSE 100 drugmaker Shire, its first full business update since being left at the alter by the US's AbbVie Inc.
By Neil Thakrar; [email protected]
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