LONDON (Alliance News) - A rebound in commodity stocks was not enough to stop UK shares from ending lower on Wednesday, as miners experienced sharp gyrations before ending higher and oil companies closed among the best performers despite crude remaining around its lowest level in seven years.
The FTSE 100 index ended down 0.1% at 6,126.68 points, the FTSE 250 down 0.3% at 17,139.85, while the AIM All-Share finished down 0.3% at 734.56. In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt ended down 1.0% and 0.8%, respectively.
Wall Street was also mixed at the London close, with the Dow Jones Industrial Average up 0.4%, the S&P 500 flat, and the Nasdaq Composite down 0.6%.
At the London close the pound was at USD1.5172, while the euro was at USD1.0979. Meanwhile, the gold price was at USD1,073.10.
London's FTSE 350 mining sector index ended as the best performing sector, up 3.2%, with almost all of its constituents in the green.
The recovery comes a day after the mining sector index fell to its lowest level since August 2004, partially due to Anglo American's announcement of a radical restructuring plan and suspension of its dividend and partially because of lower commodity prices.
Anglo American itself was one of the few miners ending in the red Wednesday, down 5.4% at 306.27 pence. Nevertheless, the stock recovered some of its earlier losses, having touched a new record low at 277.60p. Anglo had closed down 12% on Tuesday, as the market reacted badly to its announcements. The stock also was downgraded to Underperform from Hold by Jefferies.
Following sharp moves in their share prices, Glencore eventually ended up 3.7%, BHP Billiton up 2.4%, Randgold Resources up 2.0% and Antofagasta up 1.1%.
Oil stocks also ended among the best performers in the FTSE 100, as oil prices remain around seven-year lows. Nevertheless, Brent crude appears to have found firm ground at around USD40, having somewhat stopped its recent fall after hitting a seven-year low of USD39.80 on Tuesday. Brent was at USD40.38 at the London close.
Meanwhile, West Texas Intermediate was trading at USD37.67 a barrel at the London close, compared to its low of USD36.61 on Tuesday.
Crude oil briefly spiked higher after data from the US Energy Information Administration showed that crude stockpiles in the US declined sharply in the week ended December 4. The report said US crude oil inventories dropped by 3.5 million barrels last week, with economists expecting a modest increase of 252,000 barrels.
London-listed oil stocks ended higher, with Royal Dutch Shell 'A' shares up 1.6% and 'B' shares up 0.4%. BG Group ended up 3.2% and BP added 0.5%.
The FTSE 350 oil & gas producers sector ended higher for the first time in four sessions, up 1.5%.
Outside commodity-related stocks, at the top of the FTSE 100 finished Ashtead Group, up 7.9%. Shares in the industrial equipment rental company surged higher after the group delivered a big increase in pretax profit both in the second quarter and the first half, with growth continuing apace in both its UK and US arms and prompting the group to hike its dividend payout by 33%.
Ashtead's total revenue for the first half to the end of October rose to GBP1.27 billion, up from GBP987.3 billion, driven by strong underlying rental revenue growth but also by the translation benefits from the strong dollar. This helped first-half pretax profit rise to GBP331.9 million from GBP259.2 million, a 20% rise.
The company's underlying, constant currency rental revenue grew 17% in the first half, driven by a further strong performance from its Sunbelt unit in the US, where rental revenue increased 22%, despite the group facing some challenge from the slowdown in oil and gas markets, which will continue into the third quarter.
Entertainment One was the best performer in the FTSE 250, up 11% at 156.01p. The stock benefited from an upgrade to Buy from Reduce by Peel Hunt, following the recent decline in the company's shares, which saw stock fall to a three-year low of 134.00p on Tuesday.
The television and film production company reiterated confidence in its target of doubling the size of its business by 2020 through "strong organic growth" and carefully targeted acquisitions.
The company recently priced its GBP285 million offering of 6.875% senior secured notes, using the proceeds to refinance its existing credit facilities in full. It noted that its refinancing provides it with greater flexibility when undertaking acquisitions and other corporate activity. However, some analysts have expressed concern about the issue's pricey coupon.
Transport stocks travelled in opposite directions, with Stagecoach Group by far the worst mid-cap performer and Go-Ahead Group also in the red, while FirstGroup ended higher.
Stagecoach dropped 14% after giving a cautious outlook for the second half of its financial year, blaming fears arising after the Paris terror attacks for slowing revenue growth in its rail and inter-city coach services in the UK and Continental Europe and saying its UK regional bus services have performed below expectations.
The company said its pretax profit for the half to the end of October fell to GBP90.8 million from GBP98.3 million, mainly due to higher one-off financing charges in the half. Stripping out the one-offs, pretax profit rose to GBP121.5 million from GBP108.6 million.
However, Stagecoach said it is cautious on its outlook for the second half, with recent revenue from its regional bus business in the UK coming in softer than expected and as rail and inter-city coach revenue growth slowed in the UK and Europe since mid-November. This has resulted in Stagecoach "modestly" downgrading its adjusted earnings per share guidance for the full year.
Go-Ahead ended down 4.9%. The transport operator lost on the TransPennine Express and Northern rail franchises in the UK. The TransPennine contract was given to rival FirstGroup, ending up 1.0%, while the Northern franchise went to Arriva.
FirstGroup, announcing its contract win, said more than GBP500.0 million will be invested in the franchise, including a large increase in the number of carriages which will drive capacity up by around 80% at peak times.
In the economic calendar Thursday, UK RICS housing price balance data are due at 0001 GMT, while France's nonfarm payrolls are due at 0630 GMT. UK goods trade balance is due at 0930 GMT. In the US, initial and continuing jobless claims are due at 1300 GMT, while US import and export price indices are due at 1330 GMT.
The Bank of England releases its interest rates decision and the minutes from its Monetary Policy Committee meeting at 1200 GMT.
As the US and European central banks head in opposite directions on monetary policy, analysts expect the BoE to remain in the middle, making no changes to monetary policy at its regular meeting on Thursday. That would mean holding interest rates at 0.5%, the same level they have been at since 2009, and the asset purchase programme at GBP375.0 billion
However, some observers think Governor Mark Carney will try to "rein in" market expectations that there will be no UK interest rate increase until 2017, as a hike still could come in 2016.
"If the MPC agrees with us, there is therefore at least some chance that the minutes will nudge back a little against the dovish interpretation of the [November] Inflation Report," noted Investec analyst Chris Hare.
The market understood the November Inflation Report as dovish, after the BoE lowered its inflation and growth expectations for 2015 and 2016, in comparison with the forecasts in the August Inflation Report. That supported the case for interest rates in the UK to remain at record lows for some time to come.
In the corporate calendar, Centrica and Whitbread issue trading statements, while Sports Direct International releases half-year results. Micro Focus International published half-year results, while Go-Ahead Group, Ocado Group, John Wood Group, Marshalls and PZ Cussons, all release trading statements. Mulberry Group, Photo-Me International and Darty publish half-year results.
By Daniel Ruiz; danielruiz@alliancenews.com
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