RDSA.L Share News (RDSA)

LONDON (Alliance News) - Stocks in the UK closed lower Tuesday as investors traded cautiously amid a wave of negative US economic data ahead of the Federal Reserve's policy announcement on Wednesday.

The FTSE 100 closed down 0.8% at 6,365.27 points, the FTSE 250 closed down 0.8% at 17,045.17 and the AIM All-Share closed down 0.7% at 742.88. European stocks closed lower as well, with the French CAC 40 and German DAX both ending down 1.0%.

In New York at the London close, the Dow Jones Industrial Average and Nasdaq Composite were trading down 0.2%, the S&P 500 was down 0.4%.

There was a number of negative US economic updates beginning with another fall in US durable goods orders in September. The US Commerce Department said durable goods orders slid by 1.2% month-on-month in September following a revised 3.0% decrease in August. Economists had expected durable goods orders to fall by about 1.0% compared to the 2.3% drop that had been reported for the previous month.

To add to this, the Conference Board released a report showing that confidence pulled back rather sharply in the month of October. It said its consumer confidence index tumbled to 97.6 in October from a downwardly revised 102.6 in September. Economists forecast a dip to 102.5 from the 103.0 originally reported for the previous month.

Lynn Franco, Director of Economic Indicators at the Conference Board said, "consumers were less positive in their assessment of present-day conditions, in particular the job market, and were moderately less optimistic about the short-term outlook."

"Despite the decline, consumers still rate current conditions favourably, but they do not anticipate the economy strengthening much in the near-term," she added.

While there is no more significant US economic data during the rest of the day investors will be keenly awaiting fourth quarter earnings from technology giant Apple after the Wall Street close. Connor Campbell, financial analyst at Spreadex said that Apple's update is arguable the main event of the week, saying that investors will focus on the company's iPhone sales in China.

Chinese e-commerce company Alibaba Group said earlier Tuesday that its net income attributable to ordinary shareholders for the second-quarter ended September 30 was CNY22.75 billion, more than seven times the CNY2.98 billion it posted in the same quarter of 2014. The company was traded up 2.7%.

In the UK, the pound depreciated against other major currencies after UK economic growth slowed by more than expected in the third quarter, preliminary estimates from the Office for National Statistics showed. Gross domestic product rose 0.5% from the second quarter, when it grew 0.7%. Economists were looking for 0.6% economic expansion quarter-on-quarter.

Year-on-year, GDP increased 2.3% in the third quarter, which was slightly less than economists expectations and the second quarter reading of 2.4% growth.

The pound fell sharply immediately after the data, reaching a low against the dollar USD1.5308. Sterling continued lower towards the close of the London equity session and traded at USD1.5308 at the close.

Elsewhere in the FX space, the euro traded the dollar at USD1.1040.

In commodities, oil prices slid on Tuesday, sending shares in oil-related companies lower. US benchmark West Texas Intermediate fell to its lowest price since the end of August at USD42.57 a barrel, and was quoted at USD42.95 at the London close. Brent oil hit a low of USD46.39 a barrel and was at USD46.70 at the London close.

BG Group closed down 2.1% and Royal Dutch Shell 'B' ended down 1.4%. In the FTSE 250, oil services company Hunting ended down 7.1%, Premier Oil ended down 6.9% and Nostrum Oil & Gas closed down 6.1%.

In addition Nostrum lowered its full-year production guidance due to unexpected repair work and reported a fall in production during the first nine months of 2015 that will also see revenue almost halve in the same period.

The oil and gas company reported a fall in production in the first nine months of 2015, averaging 44,042 barrels of oil equivalent per day compared to 45,204 barrels per day a year earlier. For the first nine months of 2015, Nostrum is expecting revenue to be "in excess" of USD370.0 million, compared to around USD620.0 million a year earlier, reflecting lower production levels and lower oil prices.

Oil major BP was one of the best performers in the FTSE 100 throughout the day but ended down 1.1%. The company reported a steep drop in earnings and revenue in the third quarter of the year as a result of lower world oil prices, but BP also said it is committed to sustaining its dividend and plans to have "balanced cashflows" by 2017.

The oil and gas giant reported a replacement cost profit of USD1.23 billion in the third quarter of 2015, a steep fall from the USD2.38 billion profit reported a year earlier as revenue fell to USD55.87 billion from USD94.76 billion. Revenue fell due to the drop in oil prices, which offset a 4.4% year-on-year rise in production during the quarter.

Gold prices were more resilient than oil, ending higher on the day at USD1,166.10, but other metals such as aluminium, copper and zinc were all lower on the London Metal Exchange. This weighed on miners, which dominated the worst performers in the FTSE 100. Glencore was the worst performer, down 3.0%, BHP Billiton closed down 2.8%, Antofagasta ended down 2.6%, and Anglo American closed down 2.4%.

Shire was the outperformer in the blue-chip index, up 4.5% after it said in the late morning that its Lifitegrast treatment for dry eye disease has met the primary and secondary endpoints in a phase-3 study of the drug.

The Irish pharmaceuticals group said the study showed Lifitegrast significantly reduced patient-reported symptoms for dry eye disease and supports the re-submission of the treatment to the US Food and Drug Administration in the first quarter. Plans are therefore on track for a potential 2016 launch of the treatment, Shire said.

TalkTalk Telecom Group led the FTSE 250 gainers, up 16%, having fallen heavily in recent sessions following a cyber-attack on its website. A 15-year-old boy was arrested on Monday in Northern Ireland over the attack on the telecommunications company last week.

The company said the investigation conducted so far into the cyber-attack has shown that sensitive financial information, including credit and debit card numbers, were protected, though it said bank account numbers and sort codes have been accessed. Without more information, however, TalkTalk said criminals will not be able to take money from customers' bank accounts and, even with more information, the risks are "very small indeed".

Chemring Group was the worst performer in the FTSE All-Share, down 23%. The countermeasures, sensors and electronics maker warned on its profit outlook for the full year after saying there is potential for revenue from the 40mm ammunition contract it announced in September to be delayed. It said there is now a "realistic prospect" that its underlying operating profit for the year to the end of October could fall by around GBP16.0 million to about GBP33.0 million.

Chemring has now entered talks with debt providers to negotiate amendments to its debt covenants and the waiver of any default that could arise from a delay to the contract revenue and will launch a GBP90.0 million rights issue to ease its debt problems.

In the economic calendar Wednesday, there is Gfk consumer confidence survey for Germany at 0700 GMT, US MBA mortgage applications is at 1100 GMT and Energy Information Administration crude oil stocks is at 1430 GMT. After the London close, the US Federal Reserve will announce its policy decision at 1800 GMT.

In the UK corporate calendar, there are a number of updates from big name FTSE 100 companies. British American Tobacco, savings and investments company Standard Life, fashion retailer Next, Lloyds Banking Group and miner Antofagasta have third quarter updates, whilst pharmaceutical giant GlaxoSmithKline reports third quarter results at midday. FTSE 250-listed real estate investor Redefine International will be reporting full-year results.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

Copyright 2015 Alliance News Limited. All Rights Reserved.