LONDON (Alliance News) - UK stock markets managed to cling onto gains Monday, despite pressure from London's mining sector which fell on weak commodity prices.
The FTSE 100 closed up 0.2% at 6788.69, while the FTSE 250 edged up 0.1% at 17,781.42 and the AIM All-Share rose 0.2% at 758.01.
Stocks in mainland Europe managed to outperform London with the CAC 40 in Paris up 0.4% and the DAX 30 in Frankfurt up 0.5%.
On Wall Street at the London close, the DJIA and the Nasdaq Composite were both up 0.2%, while the S&P 500 was up 0.1%. Earnings season in the US is in full-swing, with investment bank Morgan Stanley being one of the big companies which reported Monday.
The bank said profit in its second quarter declined 9% from last year, reflecting higher income tax provisions and an absence of prior year tax benefits. Revenues recorded a double-digit growth, amid continued strength in equity sales and trading, and both adjusted earnings per share and quarterly revenues topped analysts' expectations. The company also declared a quarterly dividend of USD0.15 per share.
There are some heavy hitters reporting on Tuesday in the US, including Apple, Microsoft Corp and Yahoo.
On stock markets Monday, there was little in the economic calendar to drive sentiment, so attention was focused on the gold price which collapsed to five-year lows overnight and remained weak throughout the trading session. Gold fell to a low of USD1,073.40 an ounce, its lowest price since February 2010. At the London close it was trading at USD1,109.70 an ounce.
The decline in the metal price came amid speculation that the Federal Reserve will hike interest rates by year's end. Fed Chair Janet Yellen told Congress last week that the economy is improving at a pace that should allow the central bank to begin normalizing rates in the next few months.
Also weighing on gold prices is the disclosure of lower-than-expected gold reserves held by China. The People's Bank of China on Friday said gold reserves in the country reached a record 1,658 tons as of June 2015, up a near 60% from 1,054 tons in April 2009. However, the surge was below analysts' expectations, dragging gold prices down sharply as Chinese holders sold big quantities of the precious metal in the Asian session.
The fall in the price of gold saw precious metals miners lead the fallers list in both the FTSE 100 and FTSE 250. Randgold Resources fell 4.7% and Fresnillo closed down 4.4%. In the FTSE 250, Acacia Mining shares ended down 14%, Centamin fell 9.1% and Lonmin dropped 5.2%.
Other commodities such as copper also saw losses and dragged down other miners as well. The FTSE 350 mining index closed down 0.9%.
Shares in publisher Pearson were given a boost after Bloomberg reported that the company is exploring the potential sale of the Financial Times after receiving interest from potential buyers.
A sale may value the business at as much as GBP1 billion, the report said. Whilst no formal process is under way, according to Bloomberg's sources, the Financial Times might draw interest from the likes of Alex Springer SE, as well as investors in Europe, the Middle East and Asia.
Before the news, Pearson shares were trading at an intraday low of 1,234.00 pence and shot to an intraday high of 1,299.00p after the report. However, at the close the company ended down 1.6% on the day at 1,255.00p.
AVEVA Group shares spent the day atop of the FTSE 250 gainers list, closing up 27% at 2,256.00p. The engineering software company said it has struck a deal with French energy group Schneider Electric to acquire industrial software assets from Schneider in a GBP1.3 billion reverse takeover.
Under the terms of the deal, AVEVA will acquire Schneider Software on a debt-free, cash-free basis and will receive GBP550 million in cash from Schneider Electric for AVEVA shares. The overall deal will give Schneider a 53.5% stake in AVEVA. AVEVA said that based on its share price before the market open - shares in the company closed at 1,770 pence last Friday - around 74.0 million shares will be issued to Schneider Electric having a market value of around GBP1.3 billion.
Tullow Oil closed down 5.2% after it said gas exports from the Jubilee field to the Ghana gas plant at Atuabo have been suspended due to technical issues which will continue to impact exports until mid-August.
The gas exports were suspended on July 3 due to technical issues with gas compression systems on the floating production, storage and offloading Kwame Nkrumah vessel. Oil production is currently constrained to 65,000 barrels of oil per day, but the company said there has been no affect on the field's reserves or resources.
Greece made quick work of its EUR7.16 billion bridging loan, which was approved by Eurogroup last week, by making its payments to the European Central Bank and International Monetary Fund. A Greek government official said earlier Monday that the process of making payments to the ECB and IMF has begun and should be completed by the close of business Monday.
Greece owes EUR3.5 billion to the ECB and eurozone national central banks on government bonds that have matured, including EUR0.7 billion in interest that bring the payment to EUR4.2 billion. The payment due to the IMF comes to approximately EUR2.04 billion.
The IMF has since confirmed that it has received the repayment of the outstanding sum Greece owes.
"I can confirm that Greece today repaid the totality of its arrears to the IMF, equivalent to SDR1.6 billion (about EUR2.0 billion). Greece is therefore no longer in arrears to the IMF," spokesman Gerry Rice said. The IMF is ready to offer Greece continued assistance, he added.
In the economic calendar Tuesday, there is UK public sector net borrowing at 0930 BST and US Redbook index at 1355 BST.
In a busier UK corporate calendar, there are half-year results from IG Group Holdings, Croda International and full-year results from PZ Cussons. Royal Mail, Victrex, Cable & Wireless, and AO World all issue trading statements.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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13 May 2016 16:04
