LONDON (Alliance News) - London stocks ended mixed Monday, with heavyweight miners and oil producers dragging on the FTSE 100, as investors focus on a busy UK corporate calendar this week and await policy decisions from the US Federal Reserve and the Bank of Japan.
The FTSE 100 ended down 0.8%, or 49.52 points, at 6,260.92, closing in the red for a third consecutive session, having rallied since mid-February to a peak of 6,427.32 on Thursday last week.
The FTSE 250 index of mid-caps ended up 0.6%, or 94.22 points, at 16,965.68 and the AIM All-Share added 0.1%, or 0.64 points, at 731.72.
"Overall, it looks like the risk-off atmosphere which characterised the end of last week has been turned up a notch today, helped along by a sparse macro calendar and some unease regarding US earnings, ahead of reports from key firms later in the week," said IG analyst Chris Beauchamp.
"'No news is good news', runs the saying, and it appears that a much busier calendar for the rest of the week could provide the excuse for yet more selling," Beauchamp said.
The FTSE 350 Mining sector index was the main drag, down 4.6%. The index had supported the FTSE 100 rally since the start of 2016, last week reaching its highest level since August 2015. However, the recent rally in miners appears to be running out of steam, accumulating three consecutive sessions of losses.
Anglo American dropped 7.3%, BHP Billiton fell 5.8% and Rio Tinto ended down 4.2%. In the FTSE 250, Vedanta Resources fell 4.0%.
Vedanta's Cairn India subsidiary late Friday said its fourth-quarter net loss widened year on year, and it swung to a loss for the full financial year ended March 31. Vedanta holds a 59.8% stake in Cairn India.
Oil companies BP, down 2.2%, and Royal Dutch Shell 'A' shares, down 3.0%, also ended among the worst performers in the FTSE 100. BP reports its first-quarter results on Tuesday.
Through most of 2016, crude producers have benefited from an increase in oil prices, with Brent having recovered strongly from the multi-year lows of around USD27 touched in January. However, the rally in the North Sea benchmark stalled Monday, with Brent standing at USD44.79 a barrel at the London equities close, lower than the USD45.56 a barrel at the same time Friday.
Oil prices were boosted by expectations of a freeze in output prior to last week's long-awaited OPEC and non-OPEC producers meeting in Doha failing to result in an agreement on the matter.
"Curiously, oil prices continued on an upward trend through the week. One reason for the increase in oil prices is that market dynamics reversed in 2016, and money managers took a more bullish stance on oil in anticipation of a production freeze," JPMorgan Asset Management said in a weekly market recap.
JPMorgan Asset Management said that another reason was news that the International Energy Agency expects the supply glut in the oil market will rebalance by 2017, "causing markets to look past the failed agreement and price in tighter balances in the future".
Decreasing US oil production is a "key assumption" for a balanced oil market in the coming year, JPMorgan Asset Management said, and "production has begun to roll over with lower oil prices".
"The adjustment to lower oil prices remains a headwind for the energy sectors of the economy and the market. However, if balance in an oversupplied oil market leads to a sustainable oil price rather than a sharp increase, it could cause a great sigh of relief across the sector," JPMorgan said.
Meanwhile, Gold was at USD1,240.50 at the London close Monday, compared to USD1,240.70 at the close on Friday.
Stocks in New York were lower at the London equities close, with the Dow 30 and the S&P 500 down 0.6% and the Nasdaq Composite down 0.5%.
New home sales in the US unexpectedly decreased in March, data from the Commerce Department revealed. The report said new home sales fell 1.5% to an annual rate of 511,000 in March from a revised rate of 519,000 in February. The decrease surprised economists, who had expected new home sales to climb to a rate of 522,000 from the 512,000 originally reported for February.
The US Federal Reserve monetary policy decision will be the main focus on Wednesday, when the two-day meeting of the Federal Open Market Committee is scheduled to finish. After that, the Bank of Japan also will attract market attention with the release of its monetary policy decision on Thursday.
The Japanese Nikkei 225 index closed down 0.8% Monday, as did the Hang Seng in Hong Kong, whilst the Shanghai Composite slipped 0.4%.
Japan's leading index declined more than estimated to its lowest level since early 2010 in February, final data from the Cabinet Office showed. The leading index, which reflects the future economic activity, dropped to 96.8 from 101.2 in January. This was the lowest since February 2010, when the score was 96.0.
European indices also ended lower Monday, with the CAC 40 in Paris down 0.5% and the DAX 30 in Frankfurt down 0.8%.
German business sentiment weakened slightly in April, survey results from the Ifo Institute showed. The Ifo Business Climate indicator dropped to 106.6 in April, while economists expected it to rise to 107.0 from the score of 106.7 in March. The current situation measure of the survey slid to 113.2 from 113.8. Economists had expected the score to remain at 113.8. Meanwhile, the expectations index of the survey rose to 100.4 in April from 100 in March. It was forecast to rise to 100.6.
The euro stood at USD1.1271 at the close Monday, against USD1.1242 at the same time Friday. Meanwhile, the pound was quoted at USD1.4492 at the close, higher than the USD1.4381 on Friday.
Elsewhere on the London Stock Exchange, Imperial Brands, formerly Imperial Tobacco, ended up 2.2%, benefiting from an upgrade to Buy from Neutral by Goldman Sachs.
Ashtead Group rose 3.5%, supported by a double upgrade to Buy from Underperform from Bank of America Merrill Lynch, as the broker believes the equipment rental company's market outlook is improving, whilst it says a Brexit will be beneficial for the company.
"We view the binary outcome as neutral in the event of 'Bremain', but a net positive in the event of 'Brexit'," said BofA analyst Andy Murphy. "This is because lower potential demand in Ashtead's modest UK business would be more than offset by increases to forecasts driven by sterling weakness versus the US dollar".
Standard Chartered ended down 6.4%, ahead of the release of first-quarter results on Tuesday at 0915 BST. The emerging markets bank will be the first in the sector to issue an update. Barclays, down 0.7%, will publish the same on Wednesday, while Lloyds Banking Group, up 0.1%, will do on Thursday, followed by fellow state-backed lender Royal Bank of Scotland Group, down 1.4%, on Friday.
Meanwhile, Ted Baker added 6.4% in the FTSE 250, up 5.4%, after the fashion retailer was upgraded to Buy from Hold by Jefferies.
In the Main Market, marketing services company St Ives dropped 48% after saying it expects its underling pretax profit for its current financial year to be "materially below" its current expectations, and warned the following year would also be hit.
St Ives said its trading overall in the eight months to the beginning of April had continued to be "broadly in line" with its expectations, with revenue up 5% compared to the previous year. However, its outlook for the final quarter to end-July and following financial year has deteriorated. Global economic uncertainty has led to significant projects being deferred or cancelled, the group said.
In the UK corporate calendar Tuesday, Informa, Whitbread, British American Tobacco, Carpetright, Countrywide and Jardine Lloyd Thompson Group. St James's Place publishes first-quarter results, while AB Dynamics and Redefine International release half-year results. Cambian Group, Horizon Discovery Group, Avocet Mining, RedT Energy, Redefine International and Boohoo.com Group publish full-year results.
In the economic calendar, UK's BBA mortgage approvals data are due at 0930 BST. In the US, durable goods data are due at 1330 BST. The Redbook index is due at 1355 BST, while Markit's US services Purchasing Manager's Index is due at 1445 BST. US consumer confidence data are due at 1500 BST, as well as the Richmond Fed manufacturing index.
By Daniel Ruiz; danielruiz@alliancenews.com
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