LONDON (Alliance News) - UK shares opened lower Thursday morning, with oil stocks and Wm Morrisons Supermarkets pushing lower, but with AstraZeneca leading blue-chip gainers after the drug maker upgraded its revenue guidance the full year.
Investors also will keep a close eye on the Bank of England's "Super Thursday", which will see the release of the central bank's monetary policy decision, MPC meeting minutes and Inflation Report, followed by a press conference with Governor Mark Carney.
The FTSE 100 index opened down 0.5% at 6,380.82 points, the FTSE 250 was down 0.4% at 17,110.61 and the AIM-All Share was down 0.2% at 745.85. In Europe, the French CAC 40 index was up 0.2% and the German DAX was up 0.1%.
Morrison Supermarkets was among the biggest fallers at the open, down 1.5%, after it said sales fell in the third quarter of its financial year as it continued to invest in price cuts amid a deflationary UK grocery market.
The FTSE 100-listed food-store chain said total sales excluding fuel were down 2% in the 13 weeks to November 1, on the same period the year before, or down 4.6% including fuel. Like-for-like sales declined 2.6% excluding fuel, and 5.1% including fuel.
Despite this, Morrisons said that there was good progress during the quarter against many aspects of its plan, and that it is continuing to invest in lower prices.
Oil stocks were giving back the gains made at the start of the week, when they had benefited from a rise in oil prices. Brent oil, quoted at USD48.80 a barrel Thursday morning, remained lower after having fallen to USD48.68 at the London close on Wednesday.
BP was down 3.1%, Royal Dutch Shell 'A' down 1.3% and BG Group down 0.7%. In the FTSE 250, Premier Oil was down 5.5%, Ophir Energy down 4.1% and Tullow Oil down 4.0%.
Amec Foster Wheeler shares lost 20% at the open. The oil and gas engineering services company warned on its outlook for the remainder of the year and into 2016 as it said margin deterioration will hit its second-half results and said it will slash its dividend in half in order to cope with the tough conditions.
It said its underlying revenue for the full year has been in line with expectations in the first nine months of 2015, but said that due to the ongoing weakness in oil and gas markets, its second half margins will be weaker than the first due to continued pricing pressures and an adverse revenue mix.
Firmly in the green, AstraZeneca was the best blue-chip performer, up 2.9%, after it said its operating profit increased in the third quarter and was ahead for the year to date, as AstraZeneca upgraded its revenue guidance for 2015 in constant currencies. The pharmaceutical giant said its operating profit for the third quarter to the end of September rose to USD137.0 million from USD116.0 million a year earlier, helped by an improvement in margins in the half.
AstraZeneca upgraded its revenue guidance for the full year in constant currencies to expectations for a broadly flat performance against 2014, having previously guided to a low-single-digit percentage decline.
UK blue-chips Barclays and Admiral Group were joined by mid-caps Ashmore Group, Laird and Morgan Advanced Materials, amongst others, in going ex-dividend Thursday, meaning new buyers no longer qualify for the latest dividend payout.
Analysts do not expect the Bank of England to make changes to its monetary policy at its meeting, but some believe the central bank will send the message that UK interest rates will start rising sooner than market participants are currently pricing.
This week will mark the second "Super Thursday" of data releases from the central bank, when it will publish the minutes of its Monetary Policy Committee meeting and its inflation report, in addition to its interest rate decision. The MPC meeting notes are due at 1100 GMT, while the inflation report will be released at 0930 GMT. It all will be followed by a press conference with Governor Mark Carney scheduled for 1245 GMT.
Lloyds Bank senior economist Michael Sawicki said that "against a backdrop of softer global activity and some recent ebbing of domestic momentum, the MPC will need to re-examine its previous assumptions of ongoing relative UK economic strength leading to firmer cost pressures."
"Policy is universally expected to remain unchanged, but we expect the MPC's communications overall to paint the prospect of an eventual but unhurried tightening," added Sawicki. "In terms of the vote split, we look for one MPC member, more likely [Kristin] Forbes than [Martin] Weale, to join [Ian] McCafferty in voting for higher rates. An unchanged 8-1 vote split would render more likely a move later in 2016 than our current expectation of February 2016."
Forbes said in August that waiting "too long" for a rate hike would risk undermining the UK economy recovery.
The last time a split vote from the MPC was other than 8-1, with McCafferty being the only member voting for a rate hike, was in December 2014 with Martin Weale also voting for raising rates.
In Asia on Thursday, the Shanghai Composite index finished up 1.8%, while the Hang Seng in Hong Kong ended flat. The Japanese Nikkei 225 index closed up 1.0%, as it continues to benefit from the positive reaction to the listing of shares of state-owned Japan Post Holdings.
Members of the Bank of Japan's monetary policy board said that the country's economic recovery continues to move forward, minutes from the bank's October 6-7 meeting revealed on Thursday. The board conceded that exports and production have been affected by a slowdown in many of the emerging economies. The members added that inflation is expected to remain close to flat for the foreseeable future because of weak energy prices.
Meanwhile, the US Federal Reserve could begin the long-awaited tightening of monetary policy as early as December, central bank chief Janet Yellen said Wednesday.
In testimony before a congressional committee, Yellen reiterated the Fed's October statement that the bank's monetary policy committee expects the US economy to continue to grow "at a pace that's sufficient to generate further improvements in the labour market and to return inflation to our 2% target over the medium term."
Wall Street ended lower Wednesday. The DJIA closed down 0.3%, the S&P 500 ended down 0.4% and the Nasdaq Composite finished down 0.1%.
In the data calendar Thursday, eurozone retail sales data for September is at 1000 GMT, while ECB President Draghi is expected to give a speech at 1145 GMT. In the US, jobs data and non-farm productivity data are due to be published at 1330 GMT. Federal Reserve Bank of Atlanta President Dennis Lockhart will give a speech after the UK equity market close at 1730 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
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