Spire Healthcare Share News (SPI)

LONDON (Alliance News) - UK equity indices fell through the floor Thursday, with the FTSE 100 posting its heaviest daily loss since September, as mining- and oil-related stocks were sold off sharply.

"With copper hitting a fresh six-year nadir, and Brent Crude threatening to dip below USD45 per barrel, the FTSE plunged," said Connor Campbell, financial analyst at Spreadex, ahead of the US Energy Information Administration's latest crude oil stocks report.

Compounding the misery, the EIA's data release showed that, in the week ending November 6, US crude oil inventories increased by 4.2 million barrels from the previous week. According to FXStreet.com, economists' expectations had been for a much more modest increase of 1.0 million barrels, following an addition of 2.8 million in the previous week.

Following the data, Brent oil slipped below the USD45 a barrel level.

At the UK equity market close, Brent and West Texas Intermediate oil traded at USD44.42 a barrel and USD41.78 a barrel, respectively, having traded at USD46.13 a barrel and USD43.07 a barrel at the same time on Wednesday. Gold, meanwhile, stood at USD1,078.18 an ounce.

FTSE 100-listed oil stocks BG Group, BP and Royal Dutch Shell 'A' and 'B' shares closed down 2.7%, 2.8%, 4.4% and 4.3%, respectively, while the FTSE 350 oil and gas producers sector index as a whole closed down 3.6%.

Mining stocks suffered a similar fate with Glencore closing down 9.7%, Antofagasta closing down 4.9% and Rio Tinto closing down 3.0%. Anglo American, meanwhile, closed down 8.7% at 449.90 pence, having hit an all time low of 445.35p earlier in the day.

As a whole, the FTSE 350 mining sector index closed down 4.6%.

The FTSE 100 ended the day down 1.9% at 6,178.68, marking its biggest daily fall since it late September when concerns over the health of the Chinese economy reduced risk appetite following the release of some disappointing data from the world's second largest economy. The FTSE 250, meanwhile, closed down 1.4% at 16,869.50 Thursday and the AIM All-Share index closed down 0.8% at 736.95.

Amid speculation of a US interest rate hike in December, investors were also reacting to a raft of speeches from US Federal Reserve members Thursday.

Of note, President of the St. Louis Federal Reserve James Bullard said that there is no reason to keep interest rates at current record lows near zero, adding that the current unemployment rate of 5% is "statistically indistinguishable" from the Fed's long-term goals.

US Federal Reserve Chair Janet Yellen also spoke Thursday, as did Richmond Federal Reserve Bank President Jeffrey Lacker, Fed Vice-President Stanley Fischer and Federal Reserve Bank of Chicago President Charles Evans. Federal Reserve Bank of New York William Dudley is due to speak at 1715 GMT.

The Fed's next two-day monetary policy meeting is scheduled for December 15-16, with no meeting scheduled for November.

Speaking to the European Parliament's Economic and Monetary Affairs Committee, European Central Bank President Mario Draghi, meanwhile, signalled further monetary stimulus at the next ECB meeting on December 3.

"Signs of a sustained turnaround in core inflation have somewhat weakened," Draghi said. "While the recovery will gradually strengthen the impulse underlying the inflation process, the protracted economic weakness of the past years continues to weigh on nominal wage growth, and this could moderate price pressures as we move forward," he added.

"From today’s perspective, this suggests that a sustained normalisation of inflation could take longer than we anticipated in March when we first appraised the overall impact of our measures," the ECB chief said. "At our December monetary policy meeting, we will re-examine the degree of monetary policy accommodation," he said.

In Europe, the CAC 40 in Paris closed down 1.9%, while the DAX 30 closed down 1.2%. It was a similar story on Wall Street where, at the UK equity market close, the DJIA, NASDAQ Composite and S&P 500 all traded down between 0.5% and 0.9%.

"Mario Draghi continues to render the December ECB meeting almost meaningless, as he drops increasing hints about more QE [quantitative easing] for the eurozone," said Chris Beauchamp, senior market analyst at IG. "While this helped to push the euro down once again, it did little for stock markets on the continent, which were more in tune with the US session," he added.

In the forex market, at the UK stock market closing bell, the pound traded at USD1.5206 and the euro traded at USD1.0759, having stood at USD1.5210 and USD1.0741, respectively, at the same time on Wednesday.

At the individual UK equity level and away from mining and oil-related stocks, Rolls-Royce Holdings ended the day as the biggest loser in the FTSE 100.

Shares in the aerospace and defence engineering group closed down 21%, having dipped to its lowest level since 2010 earlier in the day, after the latest in a series of recent profit warnings. The company affirmed its 2015 guidance, but said profit will come in at the low end of expectations and downgraded its expectations for 2016 thanks to revenue mix changes and weaker margins.

Rolls-Royce also said it will review its dividend policy in light of the weak expectations for 2016, with any changes to be announced in due course, and said it will undertake a wide-ranging restructuring of the business, with plans to save around GBP150 million to GBP200 million per year.

The profit warning also weighed on Rolls-Royce's blue-chip rivals including Meggitt and GKN, which closed down 3.2% and 3.6%, respectively.

At the other end of the spectrum, BAE Systems, closing up 3.8%, was the biggest of just a handful of risers in the blue-chip index. The defence contractor said it will cut jobs in its military arm due to an anticipated reduction in Typhoon fighter jet production, though it remains confident on it current outlook even as it slightly downgraded its adjusted earnings per share guidance for 2015.

BAE said it now expects to generate adjusted earnings per share of 38.00 pence for 2015, flat year-on-year and a slight downgrade on its previous expectations for a marginal improvement. The group had said its earnings for 2015 would be weighted to the second half.

The company also said that it has continue to achieve solid growth in commercial markets in 2015 and is confident of an uptick in defence spending from both the UK and US governments given recent budget commitments made in the former and the Congressional budget approval secured in the latter.

In the FTSE 250, transport operator FirstGroup ended the day as the index's biggest riser, closing up 2.2%. The company said it swung to a pretax loss in the first half due to the impact of the loss of a rail franchise in the period, although its adjusted figures were weaker as well amid mixed trading across its operations.

It said its pretax loss for the half to the end of September was GBP7.5 million, swung from a GBP9.9 million profit a year earlier, as revenue in the half fell to GBP2.44 billion from GBP2.94 billion due to the loss of the Capital Connect and ScotRail franchises.

FirstGroup said its trading was in line with its expectations in the half, with the rest of the rail portfolio performing well and financial performance at the top end of its forecasts, underpinned by strong passenger volume growth.

Private hospital operator Spire Healthcare Group, closing down 13%, was the heaviest faller in the mid-cap index. The company lowered its guidance for full-year revenue following weak trading in the four months to end-October, particularly in the NHS Local Contract business.

Spire said total group revenue in the ten months ended October 31 grew 4.1%, while adjusted group earnings before interest, tax, depreciation and amortisation also grew 4%, but that while NHS Choose & Book revenue showed good growth, NHS Local Contract revenue declined 39% in the four months to end-October.

As a result, Spire now expects full-year revenue to show growth between 3% and 3.7%, which stands at between GBP882 million and GBP888 million, against its previous growth of between 4% and 6%, representing GBP890 million to GBP907 million.

Morgan Advanced Materials was another big loser in the FTSE 250, closing down 13%. The ceramic and carbon products manufacturer said trading conditions have weakened in the second half and its earnings for the full year are set to come in at the low end of market expectations.

Morgan said trading conditions in the second half of 2015 have weakened, with deteriorating demand particularly hitting trading in North America and China. Its overall order book has reflected this weakness, it said.

In a busy day in the data calendar Friday, there is a raft of preliminary third-quarter gross domestic product data released from around Europe. The French GDP reading is scheduled to be published at 0630 GMT, ahead of the German figures at 0700 GMT and Italy's at 0900 GMT. Figures for the the eurozone area also are expected at 0900 GMT.

Also of note from Europe, third-quarter nonfarm payrolls from France are released at 0745 GMT, with Spanish and Italian consumer price index readings for October expected at 0800 GMT and 1000 GMT, respectively.

In the US, producer price index and retail sales data for October are scheduled to be published at 1330 GMT. The preliminary reading of the Reuters/University of Michigan consumer sentiment index for November is due at 1500 GMT, at the same time as US business inventories information for September.

After the UK equity market close, Federal Reserve Bank of Cleveland President Loretta Mester is due to give a speech.

In the corporate calendar, FTSE 250-listed Auto Trader Group is scheduled to release half-year results Friday, while fellow mid-caps HellermannTyton Group and Rotork are expected to publish trading updates.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

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