LONDON MARKETS: FTSE 100 Turns Lower As Oil, Mining Shares Struggle
July 25 2016 - 11:35AM
Dow Jones News
By Carla Mozee, MarketWatch
U.K. stocks fell Monday, with losses for commodity shares
pulling the benchmark FTSE 100 away from a positive start for a
week that will be loaded with corporate earnings reports as well as
global economic commentary from the Federal Reserve and the Bank of
Japan.
The FTSE 100 turned down 0.5% to 6,700.86 after it logged modest
gains earlier in the session. The index on Friday closed up 0.5%
(http://www.marketwatch.com/story/ftse-100-sags-as-downgrades-weigh-following-global-markets-lead-2016-07-22),
lifted after poor economic data sent the pound sharply lower while
it spurred expectations for monetary stimulus by the Bank of
England when it meets on Aug. 4.
But no such boost in equities came Monday following a fresh
snapshot of industrial trends from the Confederation of British
Industry. Its gauge of business optimism slid to minus 47% in the
past quarter, the lowest since a January 2009 reading of minus
64%.
"Manufacturers picked up the pace over the second quarter, with
output growing solidly. We're also seeing encouraging signs of a
boost to export competitiveness from a weaker sterling," CBI Chief
Economist Rain Newton-Smith said in a statement.
"But it's clear that a cloud of uncertainty is hovering over
[the] industry, post-Brexit. We see this in weak expectations for
new orders, a sharp fall in optimism and a scaling back of
investment plans," she wrote.
Investors this week will look to see if any uncertainty
surrounding Brexit, or the U.K.'s pending exit from the European
Union, will have been a factor in monetary policy decisions by the
Fed and the Bank of Japan. The Fed will release its decision on
Wednesday and the Bank of Japan will announce on Friday.
Commodity shares: Losses for the blue-chips benchmark started to
pick up pace in afternoon trade as prices for West Texas
Intermediate oil
(http://www.marketwatch.com/story/crude-prices-slip-as-market-pessimism-over-supply-persists-2016-07-25)
and Brent crude fell by 2%. The move extended Friday's drop that
left oil futures at their lowest level in about 11 weeks
(http://www.marketwatch.com/story/crude-prices-struggle-after-a-week-of-losses-2016-07-22),
hurt part by another rise in weekly rise U.S. drilling activity
Shares of oil majors BP PLC (BP.LN) (BP.LN) and Royal Dutch
Shell PLC (RDSB.LN) (RDSB.LN) each dropped 2.6%. BP's
second-quarter earnings report is due on Tuesday, with analysts
polled by FactSet looking for a slip in per-share earnings to 4
cents a share on a pullback in revenue to $38.66 billion.
Shell's second-quarter report is due on Thursday.
For oil, a "more compelling bearish fundamental surprise here
remains the uptrend in OPEC production that is postponing the
anticipated rebalancing of the global market, something the market
still seems reluctant to acknowledge," wrote Tim Evans, an energy
futures specialist at Citi, in a Monday note.
Meanwhile, mining shares have worsented over Monday's session.
Randgold Resources Ltd. (RRS.LN) dropped 4.1% as the miner said
difficulties at its Tongon gold mine
(http://www.marketwatch.com/story/randgold-sees-improved-results-at-ivory-cost-mine-2016-07-25)
in Ivory Coast will hurt production for the year. Repairs at the
mine have been completed.
Shares of rivals Fresnillo PLC (FRES.LN) and Antofagasta PLC
(ANTO.LN) were off 2.9% and 1%, respectively, with metals prices
trading lower. Shares of iron ore heavyweight BHP Billiton (BLT.LN)
(BHP.AU) (BHP.AU) lost grip of earlier gains and fell 1.1%.
Other movers: On the midcap FTSE 250 index , shares of William
Hill PLC (WMH.LN) jumped 5.7% as a consortium made up of gaming
companies 888 Holdings PLC (888.LN) and Rank Group PLC (RNK.LN)said
they're considering a potential takeover offer
(http://www.marketwatch.com/story/888-rank-group-may-make-an-offer-for-william-hill-2016-07-25)
for William Hill.
In the financial group, shares of Aberdeen Asset Management PLC
(ADN.LN) turned up by 1%. The company said assets under management
rose
(http://www.marketwatch.com/story/aberdeens-quarterly-assets-under-management-rise-2016-07-25)during
the third quarter by 2.9%. A net outflow of GBP8.9 billion during
the period was offset by GBP17.5 billion in asset appreciation,
said Aberdeen.
Bank shares were mostly lower, with Lloyds Banking Group PLC
(LLOY.LN)(LLOY.LN) turning down 1.2% and Barclays PLC (BCS) losing
0.5%. But Standard Chartered PLC (STAN.LN) edged up 0.1%.
There's a "degree of concern seemingly mounting over the outcome
of EU stress tests for the sector, which are due later this week.
The London-listed constituents may well pass, but it's going to be
exposure to others in Europe that could end up proving costly for
shareholders," said Tony Cross, market analyst at Trustnet Direct,
in a note.
The pound on Monday was trading at $1.3123 after dropping to
$1.3096 late Friday. It fell below $1.32 on Friday after the
Markit's PMI reading showed contraction for the U.K. services and
manufacturing sectors in July.
Read: U.K. economy in 'dramatic downturn' after Brexit vote,
data show
(http://www.marketwatch.com/story/uk-economy-in-dramatic-downturn-after-brexit-vote-data-show-2016-07-22)
(END) Dow Jones Newswires
July 25, 2016 11:20 ET (15:20 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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