LONDON MARKET MIDDAY: Mining Stocks Gains Limit FTSE 100 Decline

LONDON (Alliance News) - Stock prices in London were mostly lower Wednesday midday, with gains in the mining sector trimming the losses in the FTSE 100, while shares in blue-chips TUI Group and Experian were sold after reporting earnings.

The FTSE 100 was down 0.2%, or 12.38 points, at 6,144.27. The FTSE 250 index was down 0.2% at 16,696.87, but the AIM All-Share was up 0.2% at 725.61.

The FTSE 350 Mining Sector index was up 2.2% at midday, adding to a 1.8% gain on Tuesday, as the index continues its recovery from the heavy losses suffered on Monday, when it dropped 7.9% following weak trade data from China.

Anglo American was the best blue-chip performer, up 4.5%. Gold miners Randgold Resources, up 3.2%, and Fresnillo, up 1.8%, got additional support from a rise in the gold price. The precious metal was at USD1,274.98 an ounce at midday, having stood at USD1,259.09 an ounce at the London equities close on Tuesday.

Compass Group, up 0.5%, reported growth in profit in the first half of its financial year and said it has positive expectations for the full year. The catering and support services business said pretax profit in the six months ended March 31 grew to GBP666 million from GBP621 million in the same period the year before, as revenue rose to GBP9.54 billion from GBP8.94 billion.

Compass Group said it achieved growth in each of the regions in which it operates, comprising North America, Europe and rest of world. The company will pay an interim dividend of 10.6 pence, which is up 8.2% year-on-year.

Meanwhile, data and analytics group Experian, down 1.7%, and travel company TUI Group, down 2.2%, were among the worst blue-chip performers.

TUI reported a wider loss in the first half of its financial year but said trading so far in the summer season is in line with expectations. The travel company said its group loss in the six months ended March 31 widened to EUR394.9 million from EUR218.7 million, as revenue grew slightly to EUR6.79 billion from EUR6.61 billion.

TUI said results were hit by negative movements in foreign exchange rates. The tour operator said summer 2016 trading remains in line with expectations with source-market booked revenue up 2%, a strong performance by Western Mediterranean and long-haul hotels, and continued growth in cruises

Meanwhile, shares in Experian were down, even though it increased its annual dividend, reported higher pretax profit at actual exchange rates, and said it expects to make share repurchases amounting to USD400 million in its new financial year.

Pretax profit rose to USD1.03 billion in the financial year ended March 31, from USD1.01 billion a year earlier, on revenue from continuing activities of USD4.47 billion, with both total and organic revenue at constant exchange rates up 5%. At actual exchange rates, total revenue from continuing activities fell by 4% due to foreign exchange headwinds during the period.

In the FTSE 250, Renishaw was up 3.6%. The British engineering company said revenue and profit fell in the first nine months of its current financial year, but said it still expects to deliver results in line with its guidance. It said revenue in the first nine months of the financial year ending June 30 dropped to GBP308.1 million from GBP369.7 million the corresponding period a year earlier, dragging the company's pretax profit down to GBP46.3 million from GBP109.8 million.

Despite the decreases, Renishaw said it still expects to deliver full-year revenue in the range of GBP420.0 to GBP440.0 million and a pretax profit of GBP67.0 to GBP83.0 million. In financial 2015, Renishaw's statutory pretax profit was GPB144.2 million on revenue of GBP494.7 million.

Shares in property adviser Savills were up 2.1%. The company said it has maintained a significant market share in the prime UK investment and leasing markets, though activity in this segment has slowed in the run up to the referendum on the UK's membership of the European Union, set for June 23.

Savills said the UK prime residential market has performed ahead of expectations, driven by a spike in activity ahead of the introduction of a new stamp duty levy on buy-to-let properties and second homes on April 1. Since then, in line with the investment and leasing markets, activity has slowed amid Brexit uncertainty.

At the other end of the mid-cap index, William Hill was off 4.8%. The bookie said net revenue was down in the 17 weeks to April 26 year-on-year, but said trading remains in line with its previous full-year operating profit guidance.

William Hill said group net revenue was down by 3% in the 17-week period, as gross win margins benefited from English Premier League football results but were harmed by unfavourable European football results and a "disappointing" Cheltenham festival.

OneSavings Bank shares also were being sold, down 2.1%, despite the lender saying it is confident in the outlook for 2016, as it reported that net loans and advances grew by GBP460 million during the first quarter. The increase in loans and advances was driven by originating loans and accelerating acquisitions of first and second charge residential mortgage portfolios totalling GBP131 million.

Margins on GBP627 million of organic origination in the quarter remained strong, OneSavings said. Net interest margin in the first quarter was in line with its expectations, prompting the bank to say it remains confident in its guidance of around 300 basis points for the full year.

Data from the Office for National Statistics showed UK industrial production grew 0.3% month-on-month in March, slower than the 0.5% rise forecast by economists. In February, the industrial output declined 0.2%. Similarly, manufacturing output gained 0.1%, in contrast to a 0.9% decline in February. Economists had forecast a 0.3% increase.

On a yearly basis, both industrial and manufacturing output contracted in March. Industrial output slid 0.2%, offsetting the 0.1% increase in February but slower than the expected 0.4% decrease. Year-on-year, manufacturing production fell 1.9%, in line with consensus, following a 1.8% decline in February.

The data didn't have much impact on the pound, with sterling trading at USD1.4420 at midday, compared to USD1.4430 before the release of the data at 0930 GMT. The pound stood at USD1.4457 at the London equities close Tuesday.

Still in the economic calendar Wednesday, the NIESR UK GDP estimate is due at 1500 BST, while US Energy Information Administration crude oil stocks are at 1530 BST.

In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were down 0.9% and 0.7%, respectively.

Stocks in New York were expected to give back some of the strong gains seen on Tuesday, when the Dow 30, the S&P 500 and the Nasdaq Composite all ended up 1.3%. On Wednesday, the Dow was called down 0.3%, while the S&P and the Nasdaq 100 were both pointed down 0.2%.

Media and entertainment giant The Walt Disney Co late Tuesday reported an increase in profit for the second quarter, driven by a strong performance of animation movie "Zootopia" and the continued contribution of "Star Wars: The Force Awakens." Nevertheless, both earnings and revenues of Disney fell short of Wall Street estimates, sending its shares down by 5.1% in the extended trading session Tuesday.

In Asia on Wednesday, the Japanese Nikkei 225 index ended up 0.1%. In China, the Shanghai Composite rose 0.2%, while the Hang Seng index in Hong Kong fell 0.9%.

By Daniel Ruiz; danielruiz@alliancenews.com

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