Last checked at LONDON (Alliance News) - The recent FTSE 100 rally finally ran out of steam Wednesday, as traders took profits after a strong run in London's blue-chip index, while late gains in oil prices were not enough to push stocks higher.
The FTSE 100 index closed down 0.1%, or 5.82 points, at 6,147.06, marking its first lower close since Wednesday last week. Nevertheless, the index has risen by 4.8% since its last session in the red.
"Selling pressures have dominated European trading today, with the FTSE in particular exhibiting a day of relative consistency as traders take profits from a blockbuster three weeks which has seen the index rally over 11%," said IG market analyst Joshua Mahony.
The blue-chip index climbed from an intraday low of 6,097.77 to nearly close higher following a late rebound in oil prices. The commodity was initially hit after the US Energy Information Administration said its crude oil stocks for the week ending February 26 rose by 10.4 million barrels, higher than the 3.5 million addition expected by economists.
The bigger-than-expected increase in stocks added to concerns of a supply glut and caused oil prices to dip. Brent fell to a low of USD36.07 a barrel, while West Texas Intermediate fell to USD33.53 a barrel.
However, towards the close of play on the London stock market, oil prices surged higher. At the London close Brent traded at USD37.17 a barrel, above the USD36.47 seen at the close on Tuesday. WTI was at USD34.79 a barrel at the close Wednesday, higher than the USD33.95 at the same time on Tuesday.
Meanwhile, the price of gold edged higher to USD1,237.02 an ounce at the end of London equity trade on Wednesday against USD1,233.30 at the corresponding time on Tuesday.
The FTSE 250 ended down 0.4%, or 60.52 points, at 16,728.97 and the AIM All-Share was down 0.17 points, at 696.68. European stocks were more resilient. The CAC 40 in Paris closed up 0.4% and the DAX 30 in Frankfurt ended up 0.6%.
On Wall Street at the London stock market close, the Dow Jones Industrial Average and the S&P 500 were both up 0.1% while the Nasdaq Composite was down 0.2%.
Data from payroll processor ADP showed private sector employment jumped by 214,000 jobs in February following an increase of 193,000 jobs in January, cementing expectations for an interest rate hike by the US Federal Reserve at some point this year. Economists had expected employment to rise by about 185,000 jobs.
The ADP data is a key gauge to Friday's non-farm payrolls report, which could shed more insights about labor market.
"Despite a better than expected ADP non-farm figure the Dow alternated between a near 50 point drop and a less alarming 10 point fall after the bell, suggesting a potentially negative reception for Friday's jobs report if things look too perky," said Connor Campbell, financial analyst at Spreadex.
The dollar rose on the back of the data and at the London close, the euro traded the greenback at USD1.0831, lower than the USD1.0851 at the close on Tuesday.
The pound however, moved higher against the dollar, quoted at USD1.4055 at the close Wednesday versus USD1.3928 at the same time on Tuesday.
On the London Stock Exchange, ITV ended down 3.5%, despite reporting results ahead of expectations for 2015, and increasing its payout to shareholders. The FTSE 100 broadcaster guided to a weak first quarter of 2016 in advertising as concerns linger over the television broadcaster's falling ratings.
The company expects its net advertising revenue to be flat in the first quarter, marginally behind the market, compared to 12% growth in the first quarter of 2015. The guidance was worse than the 2.5% growth expected by analysts at Numis.
ITV attributed this weaker first quarter to the timing of major sporting events during the year. This will improve in the second quarter, however, as a result of the UEFA Euro 2016 football championship.
Despite the glum broader market prospects for the first quarter, ITV expects to outperform the UK television advertising market, and Chief Executive Adam Crozier told journalists that "everything points to a positive year" in advertising for 2016 as a whole.
Intertek Group closed down 4.6%. The inspection and certification services company booked a big impairment charge in its 2015 results related to the weakness of the oil and gas industry, causing the company to swing to a significant loss.
Intertek reported a pretax loss of GBP307.7 million for the year to the end of December, versus a GBP252.2 million profit a year earlier. The loss was driven by a GBP577.0 million non-cash impairment charge the group booked on past acquisitions as a result of the continued difficulties facing its oil and gas-related businesses.
In the FTSE 250, Entertainment One shares dropped 13%, the worst performer in the index. The film and television content producer said trading was in line with expectations in the first nine months of its financial year.
Underlying earnings before interest, tax, depreciation and amortisation was 15% higher in the nine months to December 31, year-on-year, reflecting a strong performance in Television and from acquisitions, partly offset by weaker trading in Film.
Entertainment One's revenue, however, was down 3% in the period, as 39% growth in Television was offset by a 14% decline in Film.
Virgin Money shares were rose 7.0%. The lender said pretax profit surged in 2015 as it performed ahead of the wider market on core mortgages, savings and credit card growth.
In it first set of full-year results since floating in late 2014, the lender said its pretax profit for the year to the end of December increased to GBP138.0 million from GBP34.0 million a year earlier, helped by higher income and one-off costs it booked the year prior on its listing in London and the acquisition of mortgage lender Northern Rock.
Virgin Money will pay a final dividend of 3.1 pence per share, taking its total dividend payout to 4.5p.
In the economic calendar for Thursday, the focus before the European equity market open will be Caixin's services purchasing managers' index for China at 0145 GMT and French ILO unemployment at 0630 GMT.
Investors will then look forward to Markit services and composite PMI readings from a number of countries. France is at 0850 GMT, Germany at 0855 GMT, the eurozone as a whole at 0900 GMT and the US at 1445 GMT. UK services PMI is at 0930 GMT and ISM non-manufacturing PMI for the US is at 1500 GMT.
There are also eurozone retail sales at 1000 GMT, US initial and continuing jobless claims at 1330 GMT at the same time as nonfarm productivity and unit labor costs data. US factory orders are at 1500 GMT and the energy information administration's natural gas storage is at 1530 GMT.
The FTSE 100 companies reporting full-year results on Thursday are building material company CRH, motor insurer Admiral Group, fund manager Schroders, satellite company Inmarsat and builders' merchant Travis Perkins.
Elsewhere in the UK corporate calendar there are full-year results from pizza delivery company Domino's Pizza Group, challenger bank Shawbrook Group, construction and support services company Carillion, molten flow engineer Vesuvius, aircraft services provider BBA Aviation, industrial group Melrose Industries, temporary power supplier Aggreko, defence and aerospace company Cobham, and Spirax-Sarco Engineering.
Traffic statistics for February are due from International Consolidated Airlines Group. In addition, there will be trading statements from Costa Coffee and Premier Inn owner Whitbread, and retirement housebuilder McCarthy & Stone.
FTSE Russell will release the result of its quarterly FTSE index review after the London equities close. Paddy Power Betfair and Mediclinic International are set to join the FTSE 100 after growing bigger from their recent mergers.
The betting firm and the hospital operator are expected to be joined by business-information publisher Informa and Wm Morrison Supermarkets, the latter of which bounces back into the blue-chip index having just been relegated in the last FTSE index review in December.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
Copyright 2016 Alliance News Limited. All Rights Reserved.
25 May 2022 10:13
Intertek notes robust start to 2022 on demand for quality assurance
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