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FTSE 100 shares fall despite oil gains

Last updated: 17:35 12 Dec 2016 GMT, First published: 06:50 12 Dec 2016 GMT

Capita PLC
  • FTSE ends lower despite oil stock gains

  • pound up against to $1.2673

  • Sterling up against euro to €1.1947

 

The London market slid on Monday despite shares in oil companies being boosted by a jump in oil prices.

The FTSE 100 started the day higher, but by the close, the index was down 0.9% at 6,890.

The biggest faller was outsourcing specialist Capita plc (LON:CPI) down 5.3% to 454.7p, even as it was reported its CEO Andy Parker snapped up 20,000 shares in the troubled business. On 8 December, the company announced a series of self-help measures even as it lowered its full-year guidance yet again.

The fall came despite oil majors BP (LON:BP.) and Royal Dutch Shell both rising by about 1.5% after crude prices surged.

Oil prices jumped more than 4% after non-OPEC oil producing nations agreed to cut output in a deal designed to reduce oversupply and boost prices.

OPEC announced last month that it would be cutting its own production.

Shares in Sky slipped 2.8% to 972p after having surged late on Friday in London when it emerged that 21st Century Fox (NASDAQ:FOXA) had made a takeover approach for the company.

Fox offered £10.75 a share for the 61% of the business it does not already own, valuing Sky at about £18.5bn.

But Sky's shares fell 28p to 972p on Monday. Reports at the weekend suggested that some major shareholders were unhappy with the level of the offer. 21st Century Fox shares were also lower, by 7.2% to $26.16 in New York.

The FTSE 250 mid-caps ended down 0.5% at 17,641 and led by betting and gambling giant Ladbrokes Coral Group plc (LON:LCL) down 8.8% to 119.1p. That despite the stock having its “buy” rating reiterated by Goldman Sachs Group Inc. in a research note issued on Monday.

The FTSE AIM 100 Index ended up 0.08% at 3932 and the FTSE AIM All-Share Index was up 0.09% to 821.

Across the London bourse, only 27% of stocks gained while 39% lost.

 

1535 GMT - FTSE 100 lower as banks drop, but oils a salve

  • FTSE 100 off 40 points

  • Banks weak; Goldman Sachs bearish on Lloyds Banking

  • Oil stocks buck trend after non-Opec countries agree production cut

  • Broadcaster ITV a top blue chip faller

15:30 ... Banks battered; energy excited

The Footsie remained weak in late afternoon trade as a battering for banks countered a boost for energy stocks from stronger oil prices.

US stocks were mixed in early Wall Street trading, with investors nervous ahead of this week’s main focus, Wednesday’s Federal Reserve policy decision, with the first hike in US interest rates for almost exactly a year already priced-in.

Chris Beauchamp, Chief Market Analyst at IG, said: “With an-almost empty corporate and economic calendar today, investors are already looking towards Wednesday’s Fed meeting as the key event of the week

“Given the S&P 500 rallied 2.5% last week, it might seem to some that the Santa Rally has already arrived, with Janet Yellen unlikely to give investors any other presents.

“For the third time this year the market rally just grinds on, although with new highs on US exchanges at multi-year peaks, and options positioning suggesting the bears have left the building, perhaps the bulls have begun to run out of luck.”

Oil stocks were strong in London and New York after the weekend output reduction deal by non-Opec nations, produced a surge in oil prices, lifting the likes of BP PLC (LON:BP.) 1.5% higher and Royal Dutch Shell PLC (LON:RDSA) up 2.4%.

But banks and other financial stocks retreated after gains last week as they await the Fed and Bank of England monetary decisions this week, and any possible bail-out deal for under pressure Italian banks.

Global lender HSBC (LON:HSBA) stood out, shedding 2.5%.

14:50 ... Mining minnows under pressure

Shares in North River Resources PLC (LON:NRRP) dropped 10% as ithe group said that it has completed drilling on the Namib project in Namibia but it is not expecting a lift in the amount of indicated mineral resources until more drilling has been undertaken.

Another resources small cap, Amur Minerals Corp (LON:AMC) was also lower, down 9% as it said it is still considering options about how best to process the concentrate from the Kun Manie nickel, copper and sulphide project in the far east of Russia.

12.00 ... Downturn for ITV

Among the FTSE 100 fallers, ITV PLC (LON:ITV) was the worst performer, dropping 3% as traders seemed to conclude that the proposed mop-up bid by Rupert Murdoch’s 21st Century Fox for  pay-TV rival Sky PLC (LON:SKY) might not stimulate bid expectations for the commercial broadcaster.

Away from the top flight, e2v Technologies PLC (LON:E2C) soared 47% higher as the semiconductor and imaging technology company  agreed to a £619.6mln takeover bid from American industrial components supplier Teledyne Technologies.

But on the downside, metals developer Ferrum Crescent PLC (LON:FCR) dropped 10.5% after unveiling a deeply-discounted share placing at 0.2p apiece to raise £550,000 to help finance work on its two main projects in South Africa and Spain. 

11.00 ... Mortgage market competition

Leading brokerage Goldman Sachs is a ‘seller’ of stock in Lloyds Banking Group (LON:LLOY), with increasing competition in the mortgage market cited as the reason for this negative stance.

Goldman Sachs reckons Lloyds is worth just 52p a share, which is 10p below the current share price.

It said the final quarter of the current year and the opening three months of 2017 will be important for the black horse bank as “revealing the true scale of mortgage book erosion experienced during this period of intensifying competition”.

Intense rivalry could hit Lloyds’ profits hard as it price its home loans quite keenly at around half a percentage point above market rates.

“Over the medium term, we see the potential for a material reduction in Lloyds’ mortgage pricing as an important catalyst,” said Goldman in a note to clients.

Shares fell 0.8% to 61.3p.

FTSE100 was 13 points lower at 6,939 despite good gains for oil shares as another agreement was reached to cut oil production and relieve the pressure from oversupply which has dogged the market for the past few years.

After members of the influential Opec cartel agreed output reductions at the start of the month, non-Opec producers this week also pledged to cut production for the first time since 2001.

With Brent reaching its highest level since July 2015, traders were questioning whether the US$60 level could be reached before 2016 ends.

Shell (LON:RDSB) rose 3.6% too 2,262p while BP added 2.1% to 486p.

8.31am...FTSE 100 led higher by the oil stocks

As expected the oilers led the way as the FTSE 100 opened the week in positive territory after non-OPEC countries agreed production cuts.

At 8.30am the index of blue-chip shares was trading 13 points higher at 6,966.75.

As Brent crude homed in on US$60 a barrel, Royal Dutch Shell was one of the main leaders, followed by BP.

Miner BHP Billiton, which has significant petroleum assets, was also up there. Tullow (up 9%) and Cairn were among the second-string drillers to receive a boost.

Traders are betting on a very merry Christmas for Marks & Spencer in the aftermath of the busiest weekend on the High Street with retailer’s share price up 2.2% early on.

Sky, subject to a bid approach from 21st Century Fox, succumbed to a bout of profit-taking after all the furore as it lost 1.6% in opening deals.

CMC Markets was among the FTSE 250’s biggest casualties as investors assessed the impact of potential tighter regulation of the sector.

6.45am...bright start predicted 

The FTSE 100 is expected to open its weekly account in the black with the London market having more or less factored in a US interest rate hike later this week.

The index of blue-chip shares will advance 20 points to 6,974.21, according to the spread betting firms.

In Asia overnight traders were clearing the decks ahead of Wednesday’s Federal Open Markets Committee meeting with all the major bourses bar the Nikkei in negative territory.

The Fed is widely expected to hike the base rate by a quarter of a percentage point.

“There should be no surprises around this meeting, though the press conference will take on an even greater significance in the context of the signalling of Fed intentions in 2017 as regards further rate rises,” said CMC Markets analyst Michael Hewson.

“This time last year expectations were high that last year’s decision to hike rates would be the first one of many.

“This belief proved somewhat optimistic given we haven’t even seen one yet, so not only will Fed chair Janet Yellen’s tone be important, in the context of the Fed’s views about the fiscal stimulus promised by President-elect Trump, but so will the steepness of the dot plots, in terms of members expectations, of the future rate path.”

Expect the oil stocks to be in demand when the Footsie opens after non-OPEC countries agreed to cut production.

Overnight Brent crude homed in on US$59 a barrel as the spot market factored in tighter supply.

Back to the UK and looking ahead, Bellway, Dixons Carphone and Trinity Mirror have scheduled updates this week.

  • Pound worth US$1.2587.
  • Gold up US$10.40 an ounce at US$1,159.50.7

Business Headlines

  • The first global crude supply pact in 15 years has underlined the growing energy alliance between Saudi Arabia and Russia, as the depth of the two-year oil slump forces co-operation between once unlikely partners – FT.
  • The board of Monte dei Paschi di Siena is making one last-ditch attempt to raise €5bn before the end of the year and stave off a state bail-out of the world’s oldest surviving lender which will force losses on retail investors holding up to €2.4bn of bonds – FT.
  • The Bank of England has added the bonds of some of Britain’s leading universities to a list of debt it is prepared to buy as it embarks on the latest step of its £435 billion quantitative easing – Times.
  •  Tesco Bank left its customers exposed to cyber-crime by issuing sequential debit card numbers, a practice most banks avoid because it lets hackers remain undetected while working quickly through thousands of accounts, according to rival lenders – FT.
  • Boeing has agreed to sell a fleet of jets to Iran in a US$16.6bn deal that marks a new departure in attempts by the Islamic Republic to re-join the global economy – Telegraph.
  • Star hedge fund manager Sir Chris Hohn is thought to have claimed a US$196.6mln payout from his investments following an expensive divorce settlement, despite profits at his fund slumping 68% - Telegraph.

 

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