LONDON (Alliance News) - Stocks in the UK closed mixed Monday, with mining and oil stocks weighing down the FTSE 100, following the weakest Chinese GDP reading since the beginning of the financial crisis.
Gross domestic product in the world's second largest economy grew 6.9% year-on-year in the third quarter of 2015, slightly slower than the 7% government target and the expansion seen in each of the first two quarters, the National Bureau of Statistics said. The growth rate was also the slowest since 2009, but it came in ahead of economist expectations of a slow down to 6.8%.
Paul Donovan, economist at UBS, said that there are concerns about the reliability of the Chinese data as the country does not have an independent statistical agency to calculate GDP growth, which raises the question of political bias alongside the more universal questions of accuracy.
IG market analyst David Madden shared the sentiment, saying that some traders are "yet to be convinced by the official figures from Beijing as contradictions between the independent surveys and government conducted in the past play on their minds."
Chinese retail sales topped expectations in September with an annual rise of 10.9%, up from 10.8% in August. However, industrial output, which rose 5.7% year-on-year in September, missed forecasts for 6.0% growth and was down from a 6.1% rise in August.
Mining stocks were the worst affected by the data and dominated the biggest fallers in the FTSE 100. Anglo American closed as the worst performer in the index, down 6.7%, while Glencore ended down 5.0% and Antofagasta closed down 3.4%.
Precious metals miners were also hit with Randgold Resources down 1.8%, and Fresnillo closing down 0.9%. The price of gold was USD1,170.76 an ounce at the London close, while silver was quoted at USD15.79 an ounce.
The Chinese data also hit oil prices, with Brent oil way off its highs by the London close at USD48.83 a barrel, while West Texas Intermediate was at USD46.15 a barrel. Sentiment around oil further deteriorated after Iran said it doesn't expect the Organisation of the Petroleum Exporting Countries to change output policy, the Wall Street Journal reported.
Both blue-chip and mid-cap oil companies were hit, with both BP and Royal Dutch Shell 'A' shares down 2.0%. In the FTSE 250, Nostrum Oil & Gas closed as the worst performer, down 11%, while Premier Oil, down 6.2% and Tullow Oil, down 6.1%, were also heavy fallers.
The FTSE 100 index closed down 0.4% at 6,352.33, the FTSE 250 closed up 0.2% at 16,917.34 and the AIM All-Share index ended up 0.3% at 743.45.
In Europe, the CAC 40 in Paris ended flat, while the DAX 30 in Frankfurt ended up 0.6%.
The pound traded the dollar at USD1.5489 and the euro traded the dollar at USD1.1322.
On Wall Street at the London close, the Dow Jones Industrial Average was down 0.1%, as was the S&P 500 index. The Nasdaq Composite was up 0.4%.
Shares in Morgan Stanley were down 5.4% after it said its earnings fell to USD0.74 billion, or USD0.34 per share. This was down from USD1.56 billion, or USD0.64 per share, in last year's third quarter. Analysts had expected the company to earn USD0.63 per share, according figures compiled by Thomson Reuters.
In UK corporate news, shares in Shire went from amongst the worst performers in the FTSE 100 during the day to closing as one of the biggest risers, up 1.1%. The Irish drug company said the US Food and Drug Administration has requested an additional clinical study be undertaken as part of its complete response letter to the new drug application made for Shire's lifitegrast drug for treating signs and symptoms of dry eye disease.
The FDA also requested more information on the product quality, Shire said. The company said it recently completed a phase 3 study on lifitegrast which, if positive, will form the basis of its response to the US regulator's letter.
UTV Media closed up 6.1%, the best performer on the FTSE All-Share after the broadcast and radio company struck a GBP100.0 million deal to sell its television assets to ITV. Under the deal, ITV will buy UTV's television unit, including its UTV Northern Ireland and recently launched UTV Ireland businesses, in order to strengthen its free-to-air business and allow it to run a more efficient network, ITV said.
"Having successfully extended the reach of our television business with the launch of UTV Ireland, I believe that shareholder value can be maximised through our television interests becoming part of ITV's global broadcast and content business," said Richard Huntingford, UTV's chairman.
ITV shares closed down 0.3%.
Tribal Group was the biggest faller in the FTSE All-Share, down 37%, after the education and services company issued a profit warning.
Tribal said that while it has been successful in winning larger contracts, this has hit its pipeline of medium and smaller deals to complement the larger wins. In addition, it has been hit by contract delays which has resulted in deferred revenue and higher costs. Due to this, Tribal now expects its 2015 revenue to fall year-on-year and said its operating profit will be significantly lower than its previous expectations.
In the economic calendar Tuesday, German producer price index is at 0700 BST, eurozone current account is at 0900 BST and US housing starts and building permits are both at 1330 BST.
The focus for the day is most likely to be on US central banker speeches ahead of the Federal Open Market Committee's monetary policy meeting next week. Starting the day is FOMC Governor Jerome Powell, speaking in New York at 1415 BST, then New York Fed President William Dudley is at 1430 BST. Fed Chair Janet Yellen will make her speech in Washington at 1600 BST.
In the UK corporate calendar, there are interim results from hotel and coffee shop operator Whitbread, third quarter results from British Airways owner International Consolidated Airline Group and a third quarter interim management statement from InterContinental Hotels Group. Outside of the FTSE 100, there are interim management statements from publishing and business intelligence company Informa and transport operator Go-Ahead Group, while online fashion retailer ASOS reports full-year results. Polymetal International reports third quarter production results.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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11 Jul 2014 15:12
