LONDON (Alliance News) - Stock prices in London were lower midday Wednesday, with blue-chip miners on the back foot amid weak commodities prices, joined by supermarkets after the latest Kantar Worldpanel survey revealed a decline in sales for all four of the big grocers in the UK.
Investors were flooded with company updates and economic data releases Wednesday morning, with eurozone retail sales and services and composite Purchasing Manager's Index readings, as well as UK construction PMI.
The FTSE 100 index was down 1.2%, or 72.92 points, at 6,112.67.
London-listed mining stocks were adding to the losses seen on Tuesday, when data had shown that activity in China's manufacturing sector unexpectedly declined further in April despite government stimulus.
The FTSE 350 Mining sector index fell 6.8% on Tuesday, and was down another 4.1% Wednesday midday. Some resurgence in the dollar also hit stocks in the sector, due to weakness in commodities prices.
Brent oil has not recovered from losses seen on from Tuesday. The North Sea benchmark was at USD44.95 a barrel at midday Wednesday, having stood at USD44.82 a barrel at the London equities close on Tuesday. Gold was at USD1,275.86 an ounce compared to USD1,286.52 on Tuesday. The precious metal had touched a high on Monday of USD1,303.59 an ounce, its highest level since January 2015.
The euro traded the dollar at USD1.1475 at midday, compared to USD1.1511 at the equities close Tuesday. The pound was at USD1.4476, against USD1.4538 late Tuesday.
BHP Billiton was the worst performing stock in the FTSE 100, down 6.9%. Brazilian prosecutors have filed a USD43 billion civil lawsuit against iron miner Samarco Mineracao, and its owners BHP and Vale for social, environmental and economic compensation in relation to the failure of the Fundao tailings dam at the Samarco iron ore operation in Minas Gerais, Brazil in November 2015.
The lawsuit follows the collapse of a dam they owned that caused a huge mudslide, polluted a river, and killed 19 people. BHP Billiton said it has not received formal notice of the claim.
Meanwhile, Randgold Resources was down 6.9%, despite the gold miner saying its profit increased during the first three months of the year as its flagship operation put in a good performance to cushion the negative impact of technical issues at some of its other gold mines.
Oil major Royal Dutch Shell 'A' shares were among the worst performers, down 1.6%. The oil giant said earnings plummeted in the first quarter of the year and warned earnings will fall even further in the next quarter as all of its divisions will suffer from reduced production, while exceptional costs will rise thanks to the BG Group acquisition.
However, Shell also said its full-year expenditure is likely to be considerably lower than previously guided. Shell said its current cost of supply earnings dropped to USD814.0 million in the first quarter of 2016 from the USD4.80 billion reported a year earlier. Before exceptional items, CCS earnings halved to USD1.60 billion from USD3.70 billion.
Supermarkets were in the red, with J Sainbury down 4.9%, Tesco down 2.8% and Wm Morrison Supermarkets down 2.1%. UK grocery market data released by Kantar Worldpanel showed sales fell for all four of the big grocers, the first time all four have seen sales fall in a year.
In the 12 weeks ended April 24, UK supermarket sales increased by only 0.1% year-on-year, slowing down from the 1.1% growth reported in April, which had been boosted by an earlier Easter.
Sainsbury's posted the smallest sales fall out of the big four grocers, according to Kantar, although this is the first time the supermarket's revenue has dipped into decline since July last year. In the 12 weeks, Sainsbury's sales fell by 0.4%, but its market share remained flat at 16.5%.
Tesco saw sales fall 1.3%, as its market share also slipped to 28.0% from 28.4%. Wm Morrison Supermarkets sales fell 2.6%, as its market share slipped to 10.6% from 10.9%.
In addition, Sainsbury said it made a pretax profit of GBP548 million in the financial year ended March 12, having suffered a GBP72 million pretax loss the prior year, when it booked property writedowns and impairments.
Revenue slipped to GBP23.51 billion from GBP23.78 billion, while like-for-like sales fell by 0.9%, which Sainsbury's said was due to ongoing pricing pressures and food price deflation. Sainsbury's cut its dividend for the year by 8.3% to 12.1 pence from 13.2p the year before.
Among the few blue-chip gainers Wednesday, Next was the best performer, up 4.4%, despite the clothing and homewares retailer saying sales fell in the first quarter of its financial year, as unseasonably cold weather led to a reduced demand for spring clothing, leading it to lower its full-price sales guidance for the full year.
However, Cantor Fitzgerald said the stock had been oversold ahead of the update. "Although these figures came in below market expectations, they were probably not as bad as feared," said Cantor's Freddie George.
The FTSE 250 was down 0.3% at 16,677.71 points and the AIM All-Share was down 0.2% at 724.44.
Electra Private Equity was the biggest gainer, up 5.4% after the private equity firm reported a net asset value total return of 15% in the first half of its financial year, beating the 4% return of the FTSE All-Share. Electra declared an interim dividend of 44 pence per share for the six months ended March 31, up 16% from a year earlier, in line with its policy of returning to shareholders a targeted 3% of NAV per annum.
At the other end of the index, International Personal Finance was down 7.4%. The lender said it added more customers and issued more credit in the first quarter of 2016, but analysts were disappointed by the performance of IPF's Mexican business.
The growth of credit issued in Mexico of 4% during the quarter was slower than expected, IPF said, citing "largely operational" factors. The company said it has "a clear plan" to address those issues and return to higher rates of growth.
In Paris, the CAC 40 was down 0.8%, as was the DAX 30 in Frankfurt.
Data from Markit showed the eurozone services PMI remained unchanged at 53.1, but below the flash score of 53.2. The composite output index dropped marginally to 53.0 in April, in line with flash estimate, from 53.1 in March. Among major economies, Germany registered a further solid increase in activity but the pace of expansion eased in April, and the French economy expanded for the first time in three months.
Eurozone retail sales slid 0.5% month-on-month in March, reversing a revised 0.3% rise in February. Economists had forecast a marginal 0.1% fall for March. Sales dropped for the first time since last October. On a yearly basis, retail sales growth eased to 2.1% from revised 2.7% in February. A similar slower growth was last seen in November 2015. Economists had forecast sales to expand 2.7% in March.
Meanwhile, data from Markit and Chartered Institute of Procurement & Supply showed that the seasonally adjusted UK Construction PMI registered 52.0 in April, down from a 54.2 reading in March and below economists expectations of 54.0.
Still ahead in a busy economic calendar, US ADP unemployment data are due at 1315 BST. US factory orders are at 1500 BST and the Energy Information Administration's crude oil stocks are at 1530 BST.
Stocks in New York were called for a negative open, with the Dow 30 and S&P 500 indices seen down 0.7% and the Nasdaq 100 pointed down 0.8%.
In the US corporate calendar, media company Time Warner releases first-quarter results before the Wall Street open, while food company Kraft Heinz publishes the same after the US equities close, as does Tesla Motors.
By Daniel Ruiz; danielruiz@alliancenews.com
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21 Jan 2016 12:13
