UK and European stocks edged lower on Tuesday, trimming more off the huge gains seen last week.
With central banks dominating the news, and a number of companies reporting later on in the week, Jasper Lawler at CMC Markets said “risk avoidance is still reining supreme”.
Data did little to entice investors into buying, with third quarter GDP figures growing by only 0.5%.
Expectations had been for between 0.6% and 0.7%, and while this is “solid” according to Lawler, slower levels of production and a worrying decline in construction were causes for concern.
The pound, took a tumble against the dollar and the euro as the chances of a Bank of England interest rate rise receded.
The results had little effect on the FTSE100, which slipped back slightly during the morning session to stand 37 points lower to 6,379 at lunch.
The commodity sector led the way lower as manufacturing contracted by 0.3% in the GDP figures.
Connor Campbell at Spreadex said widening declines for the commodity sector were duty to “another hit to George Osborne’s (death) march of the makers”.
Ben Bettrell, at Hargreaves Lansdown, said: “The manufacturing sector, which represents 10% of the economy, is battling twin headwinds of a stronger pound and weaker demand from abroad as the global economy falters”.
Anglo American (LON:AAL) dropped around 33p, or 5.5%, to 558p while BHP Billiton (LON:BLT) lowered 3.2% to 1,106p and Antofagasta (LON:ANTO) rounded out the top three, falling 3.3% to 548p.
It was just as bleak for oil firms, which saw the price of a barrel of Brent crude fall 1.8% to US$46.67 and a barrel of West Texas Intermediate slide 2.7% to US$42.82.
Shell (LON:RDSB) spilled 2.3% to 1,710p while even BP (LON:BP.), which had been 1% higher this morning, swung to sit 1.7% lower to 378p at lunch.
BP had reported profits of US$1.8bn for the third quarter, almost half of the US$3bn for the comparative period of 2014, but ahead of expectations.
It wasn’t all doom and gloom, however, as pharma giant Shire (LON:SHP) reported trial results for lifitegrast, its treatment for dry eye disease, showed it met its primary and secondary targets.
Shire is looking to resubmit an application to the US Food and Drug Administration early next year. Shares jumped 5% to 4,839p.
In the mid-cap space, TalkTalk (LON:TALK) rebounded today on reports that the police have arrested a 15 year old in Northern Ireland in connection with the cyber-attack last week.
“We know this has been a worrying time for customers and we are grateful for the swift response and hard work of the police” a spokesperson said. Shares rose 13.2% to 255p.
To the tiddlers, and Shoe Zone (LON:SHOE) was higher as it said it expects sales to be slightly below last year as it continues to cull its loss-making stores, but pre-tax profit is in line with market expectations. Shares gained 5.5% to 194p.
Conversely, shares in Amino Technologies (LON:AMO) plummeted 28.4% to 112p today as it blamed poor sales and delays in orders for a new high tech TV for a profit warning.
Munitions maker Chemring (LON:CHG) led the day’s fallers, dropping 31.5% to 155p.
It will launch a heavy rights issue after delays to a Middle East contract put it in danger of a loan covenant breach.
London Open
Investors took a dim view of this morning’s news, with London’s blue-chips struggling early on.
The UK’s third quarter GDP figures will attract headlines this morning, with analysts expecting the figure to fall to 0.6% from 0.7% in the first and second quarter.
Later this today, the Federal Open Market Committee (FOMC) meets to discuss interest rates, though investors have pushed back expectations of a rate hike to next year.
Early deals were dominated by corporate news, with BP (LON:BP.) reporting a US$1.8bn profit for the third quarter, which is almost half of the US$3bn for the comparative period of 2014.
Connor Campbell, at Spreadex, said the results were “better than expected”, preventing the firm “from sinking into the gutter alongside its commodity peers”.
Analysts had expected profit to fall to US$1.2bn, while further capex cuts were well received, sending shares 2.5p higher to 387p.
It could not prevent the FTSE100 slipping, however, as falling miners sent the index 27 points, or 0.4%, lower to 6,390.
Key indices in Asia were mostly lower overnight. Japan’s Nikkei was down 0.9% at 18,777, but there were small gains for Hong Kong’s Hang Seng, up 0.1% to 23,143 and the Shanghai composite.
Anglo American (LON:AAL) dropped around 25 to 579p while BHP Billiton (LON:BLT) lowered 2.1% to 1,106p and Rio Tinto (LON:RIO) rounded out the top three, falling 1.2% to 29p.
In the mid-cap space, TalkTalk (LON:TALK) rebounded today on reports that the police have arrested a 15 year old in Northern Ireland in connection with the cyber-attack last week.
“We know this has been a worrying time for customers and we are grateful for the swift response and hard work of the police” a spokesperson said. Shares rose 7% to 241p.
Meanwhile, Nostrum Oil & Gas (LON:NOG) slashed its production guidance for the year after repairs had to be made to its pipeline. Shares spilled 5% to 455p.
In the small cap world, munitions maker Chemring (LON:CHG) will launch a big rights issue after delays to a big Middle East contract put it in danger of a loan covenant breach.
Shares slumped 36% on the news of the share issue, which will raise £90mln in the first quarter of 2016.
Elsewhere, Amino Technologies (LON:AMO) was 26.5% lower to 115p after the firm issued a profit warning due to a shortfall in revenue in its core business caused by an unsatisfactory sales effort.
On a more positive note, Strat Aero (LON:AERO) soared 12% to 5.9p.
Geocurve Holdings its UAV inspection and surveying division, and Barhale, a civil engineering firm, are close to inking a £1.3mln contract for Geocurve’s services over five years.
Meanwhile, Baron Oil (LON:BOIL) rose 5.2% to 0.4p as the seismic programme planned for Block XXI onshore Peru is now expected to start in or around November 10.
Some equipment was delayed from Mexico but has not been damaged and will leave for Peru later this week.