South32 Share News (S32)

LONDON (Alliance News) - UK stocks ended lower Wednesday, with London's heavily-weighted resource sector leading declines as world commodity prices continued their slump.

Mining giant Anglo American fell 4.6%, having hit a nearly 13-year low of 804.90 pence per share during trade. Fellow miners BHP Billiton, down 4.9%, and Glencore, down 3.3%, also were amongst the heaviest decliners in the FTSE 100, while London's biggest stock, Royal Dutch Shell, also incurred heavy losses, with 'A' shares down 2.5% and 'B' shares down 2.3%.

"If this commodity calamity continues into Thursday, and gold especially looks set to suffer a bit more, then the UK's retail sales, really the only thing the country has had to offer up all week, will likely pass without much fanfare unless a spectacularly good/bad figure is announced; one suspects the mild increase expected, from 0.2% to 0.4% [month-on-month], isn’t the kind of thing the FTSE is crying out for," said Connor Campbell, financial analyst at Spreadex.

UK retail sales figures for June are due for release at 0930 BST Thursday morning.

Gold in particular has been in focus this week following the steep drop seen over the weekend to a new five-year low. Whilst the metal has not sunk below the Monday's low of USD1,073.40 an ounce, it remains under pressure and trades at USD1,092.64 an ounce at the London equities close Wednesday.

The slump in commodity prices saw the FTSE 350 Mining sector index close down 4.6%. The index hit a six-year low in intraday trade.

Oil prices also fell to notable lows after the news that US Energy Information Administration crude oil stocks increased by 2.47 million barrels in the week ended July 17, after falling 4.35 million barrels in the previous week. US benchmark West Texas Intermediate fell to a three-month low of USD49.65 a barrel, while Brent oil hit a low of USD56.14 a barrel.

Separately, BHP Billiton reported a 6% increase in iron ore production for the fourth quarter, while production of metallurgical coal grew 13%. However, following the spin-off of South32, BHP Billiton said it expects to recognise a net loss on the demerger of about USD2.1 billion post-tax as an exceptional item in the June 2015 half year.

Furthermore, for fiscal 2016, BHP Billiton forecast a 7% decline in petroleum production to 237 MMboe, a 12% decrease in copper output to 1.5 million tons, a 6% decrease in metallurgical coal production to 40 million tons, and a 2% decrease in energy coal production to 40 million tons.

The FTSE 100 closed down 1.5% at 6,667.34, the FTSE 250 down 0.6% at 17,645.65, and the AIM All-Share index down 0.6% at 753.40.

European stocks also ended lower, with the CAC 40 in Paris down 0.5% and the DAX 30 in Frankfurt down 0.7%.

On Wall Street at the London close, the Dow Jones Industrial Average was down 0.5% and the S&P 500 was down 0.3%, while the Nasdaq Composite index was down 0.8%, dragged lower by disappointing earnings from Apple.

Apple reported on Tuesday a 38% rise in profit for its third quarter driven by strong sales of the iPhone and Mac. However its forecast for its fourth quarter fell below analyst expectations, and shares in the biggest cap US stock were trading down 5.2% in the New York at the London close Wednesday.

Apple's disappointing outlook weighed on the shares of London-listed chip designer ARM Holdings, for which Apple is a major customer. ARM closed among the biggest fallers in the FTSE 100, down 4.1%.

Apple's weak outlook took the shine off of ARM's own earnings report, in which it said it expects to meet market expectations for dollar revenues in 2015 as it posted a rise in pretax profit for its first half. The company reported a pretax profit of GBP198.1 million for the half year to end-June, up from GBP146.0 million a year before, as revenue rose 22% to GBP456.0 million from GBP373.7 million. In dollar terms revenue rose 15% to USD705.2 million from USD614.8 million.

EasyJet bucked the downward trend, with its shares closing up 4.6%, easily the best performer in the FTSE 100. The budget airline said it beat its guidance for revenue per seat in the third quarter, even as its total revenue fell for the period, and said it expects its pretax profit for the full-year to grow on the back of its strong second half performance.

While overall revenue was down, driven by a series of issues the airline faced in the quarter, Chief Executive Carolyn McCall said that, with 77% of its second-half seats now booked, the company expects to post a pretax profit of GBP620 million to GBP660 million for the year to the end of September, compared to GBP581 million a year earlier.

The company said its revenue per seat was down by 5.4% in the three months to the end of June to GBP59.08, slightly better than the guidance it issued in May. The better-than-expected figure was driven by good trading in the UK and on beach routes in Europe in May and June. These bright spots partly offset the impact of French air traffic controls strikes in April.

TalkTalk Telecom Group ended as the worst performer in the FTSE 250, trading down 8.2%. The telecommunications company reiterating its guidance for its current financial year, as it reported a slowdown in revenue growth for its recent quarter and warned on softness in the broadband market.

TalkTalk said the broadband market was softer in its first quarter to end-June than it has been in previous quarters as a result of "higher promotional activity" in the sector. Competition is increasing in the telecommunications market as providers continually work towards becoming 'quad play' providers - meaning they provide fixed-line voice, broadband, mobile and television services - in an effort to hold on to customers.

Greek banks were handed more relief as the European Central Bank boosted emergency funding levels to Greek banks by EUR900 million, Bloomberg reported. The decision to raise the Emergency Liquidity Assistance for Greece was made in a teleconference, Bloomberg said, quoting official sources.

Banks in Greece re-opened on Monday for the first time in three weeks after the ECB last week approved a hike in the limit of ELA and boosted funds by EUR900 million over one week.

Greece also kicked off new bailout negotiations with its creditors on Wednesday with the aim of reaching a deal by mid-August, as the Greek Parliament prepared to vote on a second batch of reforms promised in exchange for the international aid.

The second bill avoids most controversial provisions, focusing on the adoption of a new code of civil procedure aimed at making the judicial system more efficient, and of new EU rules that require shareholders and bondholders to first take a hit if a bank collapses.

The eurozone has agreed in principle to grant the near-bankrupt country its third bailout in five years, but the two sides now have to agree on the economic measures that Greece will have to undertake in return for the rescue package.

"The negotiations of the memorandum of understanding have just started and will lead us to, I would say, the second fortnight of August," EU Economy Commissioner Pierre Moscovici said.

In another busy UK corporate calendar on Thursday, there are half-year results from Anglo-Dutch consumer goods giant Unilever and Anglo-Dutch publisher RELX, while DIY retailer Kingfisher, drinks maker SABMiller and Aberdeen Asset Management all release trading updates. In the FTSE 250, investment trust Alliance Trust, TSB Banking and kitchens and joinery products supplier Howden Joinery all report half-year results. Drinks company Britvic, Mothercare, Daily Mail & General Trust, De La Rue, Halma, and Premier Foods issue trading statements. Pharmaceutical firm Shire reports second quarter results at 1200 BST.

In the economic calendar, there are Japanese trade balances at 0050 BST and UK mortgage approvals and retail sales at 0930 BST, before the Confederation of British Industry trade survey results at 1100 BST. Later in the day are US initial and continuing jobless claims at 1330 BST, and the US Conference Board leading indicator at 1500 BST, alongside eurozone consumer confidence.

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

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