LONDON (Alliance News) - UK stocks were mixed Wednesday midday, while shares in New York were called for a positive open, ahead of the US Federal Reserve's monetary policy decision due after the London close.
The FTSE 100 index was up 0.4% at 6,391.70 points, the FTSE 250 was flat at 17,054.29 and the AIM All-Share was down 0.1% at 742.10. In Europe, the French CAC 40 index was up 0.4% and the German DAX 30 was up 0.7%.
Asian stocks closed mixed, with the Japanese Nikkei 225 up 0.7%, the Hang Seng index in Hong Kong down 0.8% and the Shanghai Composite down 1.7%.
US stock futures were pointing higher, with the Dow 30 and the S&P 500 up 0.2% and the Nasdaq 100 up 0.3%. US stocks closed lower on Tuesday. The Dow lost 0.2%, the S&P 500 0.3% and the Nasdaq Composite 0.1%.
Analysts largely expect the Federal Open Market Committee to hold US interest rates steady at this meeting, but market participants will closely inspect the policy statement for any indication of whether a rate hike in December is still on the table.
Craig Erlam, senior market analyst at Oanda, said that for months the Fed has repeatedly stated that it remains committed to raising rates this year and yet it has failed to properly communicate that to the markets, which have priced in only a 35% chance that it will happen this year.
Meanwhile, IG senior market analyst Alastair McCaig said: "Fed Chair Janet Yellen may well wish to increase rates prior to year's end, but most recent US data have made a move look much less likely. With only the statement and no press conference tonight, this decision could be 'much ado about nothing'."
The Fed will announce its policy decision at 1800 GMT.
The US earnings season continues Wednesday with third-quarter results from online payment system company Paypal expected after the European market close.
On Tuesday, Apple said it raked in USD11.1 billion in net profit in the fourth quarter, thanks to the world's continuing appetite for the iPhone. Apple sold 48 million iPhones worldwide in the fourth quarter, a 22% increase on sales in the same quarter in 2014. The quarter reflects initial sales of the iPhone 6s and 6s Plus, the new model that the California-based company introduced in September.
Twitter's third quarter financial results beat expectations, but its stock price tumbled anyway, as stagnant user growth and a weak forecast showed the microblog's new chief executive may not have a magic bullet for the company's woes.
Still ahead in the US economic calendar, aside from the Fed decision, there are Energy Information Administration crude oil stocks at 1430 GMT.
Among UK stocks, BT Group was leading blue-chip gainers, up 3.1%, after the company said the UK Competition and Markets Authority has provisionally cleared its proposed GBP12.5 billion acquisition of mobile operator EE. The clearance from the UK antitrust regulator has been given without any remedies required to gain approval.
The CMA said it has provisionally decided the deal "is not expected to result in a substantial lessening of competition in any market in the UK". BT said this includes the supply of retail mobile, wholesale mobile, mobile backhaul, wholesale broadband and retail fixed broadband services.
British American Tobacco was up 2.2%. The tobacco company said revenue in the nine months ended September 30 declined 6.5%, although it would have risen 4.2% if foreign exchange rates had remained constant.
Nomura said the constant currency figure was ahead of the broker's estimates of a 3.5% rise, and consensus for a 3.1% growth. The broker said BAT's medium-term outlook is "one of the best" and "with less risk", saying the Reynolds deal also will support earnings over the next few years.
Aerospace and defence components manufacturer Meggitt was the top faller, down 19%, after issuing a profit warning. The group said trading in the third quarter of 2015 had been below its expectations, with little optimism for any relief in the fourth quarter.
Meggitt said there was a "marked deterioration" in trading in September, with organic growth in its civil original equipment sales more than offset by weaker-than-anticipated trading in civil aftermarket, military and particularly energy markets, the latter hit hard by the downturn in spending from oil and gas customers.
Meanwhile, Lloyds Banking Group was down 4.7%. The bank reported higher third-quarter pretax profit, even as it booked a further GBP500 million in relation to compensating customers who were mis-sold insurance products in the past. This new charge for payment protection insurance means Lloyds has now set aside GBP13.9 billion over the scandal.
The bank's pretax profit rose to GBP958 million in the quarter to September 30, compared with GBP751 million in the corresponding three months the prior year. Underlying profit, which excludes charges taken on asset sales and provisions for payment protection insurance claims, slipped to GBP1.97 billion from GBP2.04 billion.
Chilean copper miner Antofagasta was down 3.2% after it lowered its full-year production guidance, reported falls in copper, gold and molybdenum production and said its cash costs have risen throughout 2015 whilst commodity prices have plummeted.
Copper production was broadly flat in the third quarter from the previous quarter despite lower grades and lower recoveries at the Centinela mine. That has pushed year-to-date production to 460,400 tonnes, which is down 11% from a year earlier, while the company cut its full-year guidance to 635,000 tonnes of copper from its original guidance of 665,000 tonnes.
In the FTSE 250, Bwin.Party Digital Entertainment was up 2.0%. The online gaming company reported a fall in revenue in the first nine months of 2015 as it said it faced a tough comparative period while being hit by VAT charges from the European Union.
However, Davy Research said the good news for Bwin.Party was that the betting company reached its cost-savings target for the year.
"The real positive from today's statement is that the original target of EUR15 million in cost savings for the full year has already been met at the end of the third quarter," said Davy analyst David Jennings, noting that the company expects further savings to be achieved in the fourth quarter.
Petra Diamonds was down 8.6%, even though the diamond miner said production reached record levels in the first quarter of the financial year and said the weakening of the South African rand is mitigating the steep fall in diamond prices. Although production has reached record levels, the company did not book any revenue in the first quarter of 2015, compared to USD100.8 million a year earlier.
In AIM, Pantheon Resources was the top performer, up 44%. The US-focused oil and gas company said testing has been completed on the VOBM 1 well at the Polk County project in Texas and that oil has been found. Pantheon, which owns a 50% working interest in the Polk project, said the well encountered 62 feet of net pay, at a depth of 14,200 feet, in the primary target.
Also in the green, Prime People was up 22%, after the recruitment company said its pretax profit in the six months ended September 30 rose to GBP1.1 million from GBP640,000 in the same period the year before, as revenue increased to GBP10.2 million from GBP8.0 million. It said growth was generated from its permanent business, which represents 92% of net fee income.
By Daniel Ruiz; danielruiz@alliancenews.com
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2 Feb 2016 08:52
