LONDON MARKET CLOSE: Oil, Gold Stocks Boost UK Shares Ahead Of Fed

LONDON (Alliance News) - UK main stock indices ended up Wednesday, with gold miners and oil-related stocks pushing higher, and also boosted by a positive open in the US ahead of the US Federal Reserve's monetary policy decision due at 1800 GMT.

The FTSE 100 index closed up 1.1% at 6,437.80 points, while the FTSE 250 rose 0.6% at 17,143.95 and the AIM All-Share ended down 0.1% at 742.29. European major indices also finished higher, with the CAC 40 index in Paris up 1.0% and the DAX 30 in Frankfurt up 1.4%.

Stocks in Europe were spurred by the gains seen in the US. At the London close, the Dow 30 was up 0.6%, the S&P 500w was up 0.7%, and the Nasdaq Composite was up 0.8%.

Shares in US technology giants Apple and Twitter were trading in opposite directions, after both companies reported results Tuesday after the US market close.

Apple was up 2.6% after it said it raked in USD11.1 billion in net profit in the fourth quarter, thanks to the world's continuing appetite for the iPhone. Apple sold 48 million iPhones worldwide in the fourth quarter, a 22% increase on sales in the same quarter in 2014. The quarter reflects initial sales of the iPhone 6s and 6s Plus, the new model that the California-based company introduced in September.

Twitter's third quarter financial results beat expectations, but its shares were down 3.7% as stagnant user growth and a weak forecast showed the microblog's new chief executive may not have a magic bullet for the company's woes.

The US earnings season continues Wednesday with third-quarter results from online payment system company Paypal expected after the European market close.

Fawad Razaqzada, analyst at FOREX.com said that, though the Fed is likely to leave rates unchanged at 0-0.25% at its Wednesday's meeting, there is a risk that it will deliver a more dovish message, following the recent softness in US economic data and the European Central Bank's "unexpectedly dovish" press conference last week.

"This would signal to the market that the Fed may delay raising rates until at least the first quarter of 2016, leading to a sharp drop in the US dollar and a rally in buck-denominated assets like gold and silver," said Razaqzada. "After all, the Fed will not want the US dollar to appreciate significantly more against the euro than it already has."

However, the analyst believes that if the Fed shows some sign that a 2015 "lift-off" is still on the cards at the December meeting, then the dollar would likely remain supported.

Ahead of the Fed decision, the pound was higher against the greenback at USD1.5320, having touched a low of USD1.5276 earlier in the day. The euro was slightly higher against the dollar at USD1.1071, recovering from an intraday low of USD1,1025.

Crude oil prices rose sharply after data from the US Energy Information Administration showed that crude stockpiles in the US increased less than expected in the week ended October 23. The report said US crude oil inventories lifted by 3.37 million barrels last week, with economists expecting an increase of 3.41 million barrels. The data comes after a previous reading for the week to October 16 which showed a rise of 8.0 million barrels.

At the London close, Brent Oil price was at USD48.96 a barrel, having touched a low of USD46.59 a barrel earlier in the day. Meanwhile, West Texas Intermediate was at USD45.69 a barrel, after touching an intraday low of USD43.05 a barrel.

As a result, shares in UK oil-related companies were in demand, with BP ending up 2.9%, Royal Dutch Shell 'A' up 1.7% and BG Group up 0.7%. Mid-caps Premier Oil and Tullow Oil also were in favour, up 7.5% and 6.8%, respectively. Shell is expected to release its third-quarter results on Thursday before the market open.

Gold miners Fresnillo, up 4.6%, and Randgold Resources, up 3.8%, benefited from a rise in the metal price. At the London close, Gold was at USD1,178.78 an ounce, rising from an intraday low of USD1,165.20 an ounce.

Outside commodities, GlaxoSmithKline ended up 3.9%. A strong performance from its vaccines franchise helped the drugmaker to outpace market expectations for the third quarter. The group reiterated its guidance for 2015 and indicated a positive outlook for 2016.

The FTSE-100 listed pharmaceutical giant reported a pretax profit of GBP867 million for the quarter to end-September, up from GBP548 million a year before, as revenue rose to GBP6.13 billion from GBP5.65 billion. Revenue in the quarter to the end of September was driven by 32% growth in vaccines and 55% growth in consumer health, which offset a decline of 7% in the company's pharmaceuticals business.

Peers Hikma Pharmaceuticals and Astrazeneca also ended in the green, up 3.3% and 2.6%, respectively.

BT Group finished up 3.7% after the company said the UK Competition and Markets Authority has provisionally cleared its proposed GBP12.5 billion acquisition of mobile operator EE. The clearance from the UK antitrust regulator has been given without any remedies required to gain approval.

The CMA said it has provisionally decided the deal "is not expected to result in a substantial lessening of competition in any market in the UK". BT said this includes the supply of retail mobile, wholesale mobile, mobile backhaul, wholesale broadband and retail fixed broadband services. BT is due to release its half-year results on Thursday.

At the other end of the index, aerospace and defence components manufacturer Meggitt took a hit, down 23%, after issuing a profit warning. The group said trading in the third quarter of 2015 had been below its expectations, with little optimism for any relief in the fourth quarter.

Meggitt said there was a "marked deterioration" in trading in September, with organic growth in its civil original equipment sales more than offset by weaker-than-anticipated trading in the civil aftermarket, military and particularly energy markets, the latter hit hard by the downturn in spending from oil and gas customers.

In the FTSE 250, Petra Diamonds ended down 10%, even though the diamond miner said production reached record levels in the first quarter of the financial year and the weakening of the South African rand is mitigating the steep fall in diamond prices. Although production has reached record levels, the company did not book any revenue in the first quarter of 2015, compared to USD100.8 million a year earlier.

Elsewhere on the UK corporate calendar Thursday, Barclays and Aviva issue third-quarter interim management statements, while Smith & Nephew releases third-quarter results. Playtech and Henderson Group issue a third-quarter trading statements, and Kaz Minerals and National Express Group publish third-quarter interim Management statements.

In the economic calendar, UK Nationwide housing prices are due at 0700 GMT, while UK mortgage approvals and consumer credit data are expected at 0930 GMT. Eurozone economic sentiment indicator is due at 1000 GMT. Germany's consumer price index is due at 1300 GMT.

In the US, Initial jobless claims are due at 1230 GMT, alongside the third-quarter reading of US gross domestic product. Pending home sales are due at 1400 GMT, while EIA Natural gas storage data is at 1430 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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