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LONDON (Alliance News) - UK shares ended lower on Wednesday, with the London-listed miners and supermarkets weighing on the FTSE 100, while shares in London Stock Exchange Group dropped heavily after Intercontinental Exchange said it will not bid for the stock operator.
The FTSE 100 ended down 1.2%, or 73.57 points, at 6,112.02, hitting its lowest level since early April.
Atlanta-based ICE said it doesn't plan to crash LSE's agreed GBP20 billion merger with Frankfurt-based Deutsche Boerse. In a statement, ICE said it has "no current intention" to make an offer for LSE, having revealed its interest in such a move back in early March.
"Following due diligence on the information made available, ICE determined that there was insufficient engagement to confirm the potential market and shareholder benefits of a strategic combination," ICE said in a statement.
Jonathan Goslin, an analyst at Numis, told Alliance News that ICE's withdrawal probably means it is down to a "one-horse race" that will be determined by whether Deutsche Boerse is able to win approval from regulators and other authorities for the deal.
Shares in LSE ended down 4.2%, whereas in Frankfurt, shares Deutsche Boerse closed up 4.8%.
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 fell another 4.2% on Wednesday.
Gold was at USD1,280.54 an ounce at the London equities close on Wednesday, 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.
Meanwhile, Brent oil was quoted at USD44.81 a barrel Wednesday at the close, against to USD44.82 a barrel on Tuesday. The North Sea benchmark has declined heavily in the last couple of days, having reached its highest level of 2016 on Friday at USD48.25 a barrel.
FOREX.com analyst Fawad Razaqzada said the decline was due to some profit-taking. "Oil prices have also been absorbing a lot of negative news lately and completely ignoring the fact the markets remain oversupplied with US crude oil inventories being at and record-high levels. So, the pressure for a squeeze was building anyway," Razaqzada said.
Randgold Resources lost 12% after revealing operational difficulties at two of its gold mines, but the gold miner's flagship operation continued to deliver a robust performance and the company's profit increased. Despite first quarter pretax profit rising 39% year-on-year and increasing by over 21% from the previous quarter, the stock ended in the red, though after having risen by 43% so far in 2016.
Shares in BHP Billiton ended down 5.8%, after the miner confirmed media reports that the Federal Public Prosecution Service of Brazil has filed a USD43.00 billion civil lawsuit against the Samarco joint venture over the fatal disaster caused by the failure of the Fundao tailings dam.
Meanwhile, oil major Royal Dutch Shell 'A' shares dropped 2.5%. 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 its acquisition of BG Group.
Supermarkets also weighed on the blue-chip index, with J Sainbury down 6.3%, Tesco down 5.4% and Wm Morrison Supermarkets down 2.0%, after the latest 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's warned that a tough deflationary grocery market is set to continue, but said it is confident it is performing ahead of its competitors, despite posting a fall in underlying profit and in sales in its recently-ended financial year. It said its underlying pretax profit, which excludes charges relating to property impairments and other exceptional costs, fell to GBP587 million in the year ended March 12 from GBP681 million the year before, as revenue slipped to GBP23.51 billion from GBP23.78 billion.
Meanwhile, clothing and homewares retailer Next ended as the best blue-chip performer, up 3.5%, despite 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 fell 0.4%, or 70.65 points, to 16,659.44 and the AIM All-Share declined 0.3%, or 2.04 points, to 723.86.
Mid-cap private equity firm Electra Private Equity rose 4.2% after reporting 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.
International Personal Finance dropped 2.7%. 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 ended down 1.1%, while the DAX 30 in Frankfurt finished down 1.0%.
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 a 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.
At the London equities close, the euro traded the dollar at USD1.1475, compared to USD1.1511 at the equities close Tuesday. The pound was at USD1.4476, against USD1.4538 late Tuesday.
Shares in New York were lower at the London close, with the Dow 30 down 0.5%, the S&P 500 down 0.6% and the Nasdaq Composite down 0.7%.
ADP private sector jobs growth in the US slowed more than expected in April, raising worries that sluggish global growth may have weighed on hiring. ADP said the private sector added 156,000 jobs in April following an increase of 194,000 jobs in March. Economists had expected the addition of 193,000 jobs for the month.
Meanwhile, the Institute for Supply Management said its non-manufacturing index for the US climbed to 55.7 in April from 54.5 in March. Economists had expected the index to inch up to 54.7. The bigger than expected increase by the headline index was partly due to a notable acceleration in new orders growth, as the new orders index jumped to 59.9 in April from 56.7 in March.
In the economic calendar Thursday, China's Caixin services PMI is due at 0245 BST, while the UK's Markit services PMI is at 0930 BST. In the US, initial and continuing jobless claims are due at 1330 BST. The Tokyo market will be closed due to Children's Day.
In the UK corporate calendar, BT Group releases full-year results, while Sage Group publishes half-year results. EasyJet releases its April traffic statistics. RSA Insurance Group, WM Morrison Supermarkets, Rolls Royce Holdings, Smith & Nephew, Esure Group, Provident Financial, Beazley, IMI and Trinity Mirror release trading statements.
Inmarsat, Lancashire Holdings and Millennium & Copthorne Hotels release first-quarter results. Meanwhile, Derwent London and Kennedy Wilson Europe Real Estate release first-quarter business updates. GW Pharmaceuticals publishes its half-year results at 1200 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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