LONDON MARKET MIDDAY: US Stocks Seen Lower Ahead Of Thanksgiving

LONDON (Alliance News) - Shares in London were lower midday Monday, dragged down by commodities stocks, while Wall Street was called for a negative open at the start of a shortened week in the US due to the Thanksgiving Day holiday on Thursday.

US stocks were seen slightly lower, with the Dow 30, the S&P 500 and the Nasdaq 100 indices all pointed down 0.3%.

However, IG senior market analyst Chris Beauchamp said US stock markets usually trade higher in the week leading to Thanksgiving.

"History teaches us that indices tend to rise in the week leading up to Thanksgiving, as US traders look forward to their seasonal feast, so stock market bears may find it hard to gain any real traction in coming sessions," Beauchamp said. "Having recovered plenty of lost ground in recent sessions, the question is now whether bulls can muster enough energy to extend the rally into a second week."

The New York market will be closed on Thursday, while it will be open for just a half-day on Friday.

The US earnings season continues with a third-quarter update by foods company Tyson Foods, expected before the US market open.

In the US economic calendar, the Federal Reserve Bank of Chicago's national activity index for October is scheduled to be published at 1330 GMT, shortly ahead of the US Markit manufacturing Purchasing Manager's Index reading at 1445 GMT.

There were also PMI readings from Germany, France and the eurozone.

German PMI figures showed the German manufacturing and service sector both expanded in November. The flash reading from Markit showed the service sector PMI came in at 55.6, ahead of consensus of 54.3. The manufacturing index also came ahead of forecasts, at 52.6, against consensus of 52.1.

French PMIs showed a worsening in the service sector, but an improvement in manufacturing in November. The flash Markit PMI for the services came in at 51.3, falling short of expectations of 52.6. The manufacturing index rose to 50.8 in November from 50.6 in October, also was just ahead of the consensus of 50.7.

Meanwhile, eurozone's services PMI came in at 54.6, ahead of consensus estimates of 54.0. The manufacturing PMI climbed to 52.8, with economists expecting it to come in at 52.2. The reading reached a 19-month high.

The French CAC 40 was down 0.9% and the German DAX 30 traded down 0.4% Monday midday.

In London, the FTSE 100 index was down 0.4% at 6,309.72 points, the FTSE 250 was down 0.4% at 17,125.97 and the AIM All-Share was off 0.3% at 728.74.

Commodity stocks were leading the decliners as gold and crude prices slipped. Brent oil was quoted at USD44.14 a barrel, while West Texas Intermediate was quoted at USD40.92 a barrel. Gold was also falling, quoted at USD1,070.44 an ounce.

"The commodity rout continues (copper has gapped down), sending metals and oil lower as the USD creeps north on expectations of EUR-weakening [European Central Bank] stimulus next week and a US rate rise mid-month," said Michael van Dulken, Head of Research at Accendo Markets.

As a result, oil companies were heading south with BP down 1.9%, BG Group down 1.6% and Royal Dutch Shell 'B' down 1.4%. In the FTSE 250, Nostrum Oil & Gas was down 10%, while Amec Foster Wheeler was losing 4.1%.

Meanwhile, miners Anglo American, down 3.1%, Glencore, down 2.9%, and BHP Billiton, down 2.3%, were among the biggest decliners.

At the other end of the index, Rolls-Royce Holdings and BAE Systems were the best blue-chip performers, up 2.2% and 1.2%, respectively. UK Prime Minister David Cameron is set to announced a GBP178.0 billion investment in defence equipment and support over the next decade when he outlines the findings from the Strategic Defence and Security Review later Monday.

The new budget represents a GBP12.0 billion uplift in total funding for defence equipment and will focus on investments which will help the UK "respond to diverse threats in an increasingly dangerous and uncertain world", according to a statement from the Ministry of Defence.

The UK government will make its Autumn budget statement on Wednesday. On Tuesday, Rolls-Royce is scheduled to present details of its restructuring plans.

Home Retail Group was leading the mid-cap gainers, up 7.0%. The Sunday Times reported a number of private equity firms are considering making GBP1.0 billion takeover bids for Home Retail, the owner of catalogue retailer Argos and DIY and garden centre chain Homebase

Several retail industry figures have been asked to advise on potential bids for the company in the wake of the profit warning that Home Retail issued in October, which it blamed on uncertainty around Black Friday promotions. Investment banking sources said the company may look attractive to bidders given the sharp fall in its share price during 2015, combined with a robust cash position and a large customer loan book.

In the red, outsourcing company Mitie Group was down 2.4% after it said its pretax profit rose in the first half due to restructuring charges booked a year earlier not repeating, but its headline profit was weaker due to tougher conditions for its healthcare business.

Despite this, Investec and Liberum retained Buy and Hold ratings as both brokers appreciated the performance of Mitie's facilities management division, which achieved a 100% contract retention rate, including deals with aerospace group Rolls-Royce Holdings and broadcaster Sky.

By Daniel Ruiz; danielruiz@alliancenews.com

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