LONDON (Alliance News) - UK equities posted another strong open Wednesday, with blue-chip mining and oil stocks picking up from where they left off on Tuesday, but a number of smaller cap companies were in focus after issuing pre-Christmas profit warnings.
Resource companies have struggled throughout 2015, with weaknesses in Chinese demand and excess market supply weighing on commodity prices, but at the tail end of the year, stock market investors appear to be in the hunt for a bargain.
Miner Anglo American was the best performer in the FTSE 100, up 4.8%, and joined by peers Glencore, up 4.2%, and Antofagasta, up 3.5%.
Oil and gas company BG Group was up 2.6%, while Royal Dutch Shell 'B' shares traded up 1.9%. The price of Brent oil remained stable, trading at USD36.44 a barrel, compared to USD36.39 a barrel at the close Monday. Brent hit parity with US benchmark West Texas Intermediate on Tuesday. WTI traded at USD36.45 a barrel Wednesday morning.
Shell said Tuesday afternoon it expects 2016 capital investment by the combined Shell and BG Group to be around USD33 billion in current market conditions, USD2 billion lower than previous guidance of USD35 billion.
It marked a reduction of around 30% from what Shell and BG spent separately in 2014, which on a combined group basis was USD47 billion. Shell's operating costs are expected to fall by USD4 billion in 2015, a reduction of around 10% from 2014 levels of USD45 billion.
Another trading session of thin volumes is expected on the London Stock Exchange, with many traders already on their Christmas holidays. Just after the open, the FTSE 100 traded up 1.4% at 6,166.55, the FTSE 250 was up 0.7% at 17,288.90 and the AIM All-Share was down 0.1% at 723.17.
In Europe, the French CAC 40 traded up 1.5%, while the German DAX 30 was up 1.8%.
Asian equities closed mixed, with the Shanghai Composite ending down 0.4% and the Hang Seng up 1.0%. The Tokyo stock market was closed for the Emperor's Birthday holiday.
GAME Digital was by far the worst performer in the FTSE All-Share, down 35%. The gaming retailer said it now expects its adjusted earnings for its first half to be down from the previous year, citing "disappointing" sales since the start of the school Christmas holidays, and recent trends in the UK console and video games market.
The company said its total group gross transaction value for the 21 weeks to Saturday was down 6.7%, mostly as a result of a 20% fall in low-margin console sales.
GAME Digital said that trading conditions in the UK retail market have been challenging, with total sales for the video games market down 13.5% year on year for the period.
Panmure Gordon & Co was down 23%, the worst performer in the AIM All-Share, after it said tough market conditions have continued into the second half of the year, leaving it looking robust going into 2016 but with revenue set to miss expectations in 2015.
The stockbroker and investment bank said a decline in capital market transactions has been seen in the second half of 2015, with a number of transactions pushed into 2016. Due to this, it will make a post-tax loss of GBP4.0 million to GBP4.5 million for all of 2015, which would compared to a GBP1.5 million profit a year earlier.
Leather goods manufacturer Pittards said its profit for 2015 will be "materially below current market expectations", as suppressed demand continued to hits its volumes.
However, the company said that it still expects its full-year results to show a "reasonable level of profit". According to broker forecasts provided by Morningstar, WH Ireland expects Pittards to report a pretax profit of GBP1.6 million for the year. The company traded down 11%.
Meanwhile, chemical, polymer, food and mineral industries logistics provider InterBulk Group said it has agreed to be taken over by Dutch logistics company Den Hartogh Holding, as its annual pretax profit declined.
InterBulk said it would be acquired by Den Hartogh for 9.00 pence per share, more than double its closing price on Tuesday of 4.00p. The agreement values InterBulk at GBP42.1 million in total. On Wednesday morning, the company's share price rose to 8.25p.
InterBulk said its board of directors has unanimously recommended the takeover offer and expects the deal to complete in the first quarter of 2016.
In the economic calendar, the final reading of third quarter UK GDP is at 0930 GMT, as are UK total business investment, index of services and current account figures.
The focus then shifts to the US, with MBA mortgage applications at 1200 GMT, personal consumption expenditures, income and spending data at 1330 GMT and durable goods orders, also at 1330 GMT. The Reuters/Michigan Consumer Sentiment index is at 1500 GMT, the same time as new home sales, and Energy Information Administration's crude oil stocks are at 1530 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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