BP Share News (BP.)

LONDON (Alliance News) - UK equities and US futures were trading lower midday Tuesday ahead of the start of the US Federal Open Market Committee's two-day policy meeting and a number of high-profile US earnings reports including from tech heavyweight Apple.

Meanwhile, the pound depreciated against other major currencies after UK economic growth slowed by more than expected in the third quarter, preliminary estimates from the Office for National Statistics showed. Gross domestic product rose 0.5% from the second quarter, when it grew 0.7%. Economists were looking for 0.6% economic expansion quarter-on-quarter.

Year-on-year, GDP increased 2.3% in the third quarter, which was slightly less than economists expectations and the second quarter reading of 2.4% growth.

Bank of America Merrill Lynch's UK economist Robert Wood said that even though the GDP figure was slightly less than expected, it shows the UK economy has a good degree of insulation to the global economic slowdown.

"The UK exports relatively little to China and emerging markets so, absent a really hard landing there, the fall-out from any slowdown should be mild for the UK economy as a whole in our view. Indeed, despite manufacturing contracting for three consecutive quarters the economy continued to expand at a decent clip," Wood said.

The pound fell sharply immediately after the data, reaching a low against the dollar USD1.5308, but recovered soon after to trade at USD1.5339 at midday.

The FTSE 100 index was down 0.3% at 6,397.73 points, the FTSE 250 was down 0.4% at 17,110.14, and the AIM All-Share was down 0.7% at 743.35.

European stock prices also were lower, with the CAC 40 in Paris down 0.5% and the DAX 30 in Frankfurt down 0.4%.

Futures were slightly lower in the US ahead of the Wall Street open. The Dow 30, S&P 500 and Nasdaq 100 indices all were pointed down 0.1%. A number of US companies have reported ahead of the open, with social media company Twitter and Apple expected after the close.

Chinese e-commerce company Alibaba Group said its net income attributable to ordinary shareholders for the second-quarter ended September 30 was RMB22.75 billion, more than seven times the RMB2.98 billion it posted in the same quarter of 2014. The company was trading up 9.4% in pre-market activity.

Ford Motor Co said its third quarter pretax profit from continuing operations increased to USD2.86 billion from USD1.02 billion, a year ago. Net income attributable to Ford was USD1.91 billion compared to USD835 million in the prior year. Ford was down 3.6% in the pre-market.

Pharmaceutical company Pfizer reported that its net income attributable to the company for the third-quarter fell 20% from last year. However, adjusted net income rose to USD3.73 billion or USD0.60 per share from USD3.66 billion, or USD0.57 per share last year. Pfizer was up 2.6% in pre-market trading.

Investors were treading cautiously as the FOMC begins its two-day meeting ahead of its monetary policy decision after the London close on Wednesday. Analysts overwhelmingly expect the Fed to make no policy changes in the October meeting but will be interested to see whether the US central bank leaves the door open for an interest rate hike in its next meeting on December 15-16.

No press conference is scheduled for after the Fed announcement, further reducing the likelihood of a policy change.

In the FTSE 100, shares in Shire shot up 5.4%, making it the best FTSE 100 performer, after it said in the late morning that its Lifitegrast treatment for dry eye disease has met the primary and secondary endpoints in a phase-3 study of the drug.

The Irish pharmaceuticals group said the study showed Lifitegrast significantly reduced patient-reported symptoms for dry eye disease and supports the re-submission of the treatment to the US Food and Drug Administration in the first quarter. Plans are therefore on track for a potential 2016 launch of the treatment, Shire said.

BP shares were up 0.9% after it reported a steep drop in earnings and revenue in the third quarter of the year as a result of lower world oil prices, but BP also said it is committed to sustaining its dividend and plans to have "balanced cashflows" by 2017.

The oil and gas giant reported a replacement cost profit of USD1.23 billion in the third quarter of 2015, a steep fall from the USD2.38 billion profit reported a year earlier as revenue fell to USD55.87 billion from USD94.76 billion. Revenue fell due to the drop in oil prices, which offset a 4.4% year-on-year rise in production during the quarter, which ended September 30.

Other oil companies were trading lower Tuesday as the price of oil continued to slide. West Texas Intermediate hit a low of USD43.25 a barrel during the day, its lowest price since the beginning of September. Brent oil hit a low of USD47.03 a barrel.

In the FTSE 100, BG Group was down 2.0%, and Royal Dutch Shell 'A' was down 1.6%. Among midcaps, Tullow Oil traded down 6.7%, Nostrum Oil was down 6.0%, and Premier Oil was down 5.7%.

In addition Nostrum lowered its full-year production guidance due to unexpected repair work and reported a fall in production during the first nine months of 2015 that also will see revenue almost halve.

The oil and gas company reported a fall in production in the first nine months of 2015, averaging 44,042 barrels of oil equivalent per day compared to 45,204 barrels per day a year earlier. For the first nine months of 2015, Nostrum is expecting revenue to be "in excess" of USD370.0 million, compared to around USD620.0 million a year earlier, reflecting lower production levels and lower oil prices.

FTSE 100 wealth manager St James's Place said its net inflow of funds under management improved year-on-year in the third quarter, as the group continues to grow its business. The company said its net inflow of funds under management in the quarter to the end of September was GBP1.48 billion, up from GBP1.26 billion in inflows a year earlier. Total funds under management for the company increased to GBP54.5 billion at the end of the quarter, up from GBP49.1 billion a year earlier. Shares in the company were up 0.9%.

TalkTalk Telecom Group led FTSE 250 gainers, up 10%, having fallen heavily in recent sessions following a cyber-attack on its website. A 15-year-old boy was arrested on Monday in Northern Ireland over the attack on the telecommunications company last week.

The company said the investigation conducted so far into the cyber-attack has shown that sensitive financial information, including credit and debit card numbers, were protected, though it said bank account numbers and sort codes have been accessed. Without more information, however, TalkTalk said criminals will not be able to take money from customers' bank accounts and, even with more information, the risks are "very small indeed".

Chemring Group was the worst performer in the FTSE All-Share, down 32%. The countermeasures, sensors and electronics maker warned on its profit outlook for the full year after saying there is potential for revenue from the 40mm ammunition contract it announced in September to be delayed. It said there is now a "realistic prospect" that its underlying operating profit for the year to the end of October could fall by around GBP16.0 million to about GBP33.0 million.

Chemring has now entered talks with debt providers to negotiate amendments to its debt covenants and the waiver of any default that could arise from a delay to the contract revenue and will launch a GBP90.0 million rights issue to ease its debt problems.

Still ahead in the economic calendar, US durable goods data are scheduled for 1230 GMT, with the latest Redbook index figures and S&P/Case-Shiller home prices indices data expected shortly after at 1255 GMT and 1300 GMT, respectively. US Markit services and composite purchasing managers' index readings are expected at 1345 GMT, followed by US consumer confidence data at 1400 GMT.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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