London’s blue-chip stocks maintained their low-key gains from the morning session as the city prepares for the latest Federal Reserve interest rate decision.
While it is expected the Fed will wait until next year to begin hiking, some still see December as still on the table.
Michael Hewson at CMC Markets goes one further, reckoning “policymakers are probably more divided about when to raise rates than at any other time in the past few years”.
Fed chair Janet Yellen is one that may well wish to increase rates this but any hawkish commentary could send markets into a tailspin.
In futures trading, the Dow Jones is up 22 points, while the Nasdaq added around 13 and the S&P500 is up nearly four points.
Back in the UK, a mezze of company announcements meant the FTSE100 stood around 30 points at lunch to 6,397.
This was in spite of a dramatic fall for engineer Meggitt (LON:MGGT) which blamed weak demand and tough markets for its profit warning.
The component maker for the aerospace, defence and energy market said profit for the year is now expected to be “meaningfully” below forecasts of £369mln. Shares dropped almost 20% to 371p.
Also lower was Chilean copper miner Antofagasta (LON:ANTO), which cut its production target…again.
The company cut its full-year guidance for the third time this year, to 635,000 tonnes of copper from 665,000 tonnes.
Group copper production for the first nine months was 11% lower than in the same period last year, due to lower output at Los Pelambres and Centinela. Gold production was down 16.1%. Shares lost 4.4% to 520p.
Near the top of the index was British American Tobacco (LON:BATS), which gained 2.5% or 97p to 3,890p.
Although sales have been hit by currency headwinds, growth of 4.2% was higher than analysts had predicted.
The company also noted it has been hit by slower than expected global growth.
Also higher was BT Group (LON:BT.A), which gained 3.1% to 466p ahead of its interim results tomorrow.
The £12.5bn takeover of EE was approved by Britain’s competition watchdog. The review by the Competition and Markets Authority (CMA) concluded that there was limited overlap between the two companies’ business categories.
The biggest gainer was pharma giant GlaxoSmithKline (LON:GSK) shrugged off a downgrade from JP Morgan to climb 3.5% to 1,415p.
The company released earnings figures in the US ahead of the opening bell which showed rising sales but falling profits in the third quarter.
Speaking of Glaxo, Oxford Biomedica (LON:OXB) gained around 4% to 6.75p as the pharma titan exercised an option to get a non-exclusive licence for two disease indications through Oxford’s LentiVector technology patents.
Elsewhere in the small cap space, Pantheon Resources (LON:PANR) rocketed 63% to 65p as its joint venture onshore East Texas completed flow testing.
The VOBM#1 well encountered 62 feet of net pay, at a depth of 14,200 feet. Gross production from the well equates to over 1,500 boepd, the company said.
Meanwhile, Red Rock Resources (LON:RRR) announced it is to be a new partner of Northcote Energy (LON:NCT) at the Shoats Creek field, in Louisiana. Shares climbed 20% to 0.02p.
London Open
A smorgasbord of mixed earnings releases made for a tentative opening for the UK’s main index.
The FTSE100 was 20 points higher to 6,384, with BT Group (LON:BT.A) as its £12.5bn takeover of EE was approved by Britain’s competition watchdog.
The review by the Competition and Markets Authority (CMA) concluded that there was limited overlap between the two companies’ business categories.
Shares climbed 3.7%, or 17p, to 469p.
Conversely, shares in engineering firm Meggitt (LON:MGGT) plummeted as it warned weak demand in the civil and military aviation markets means profits will likely be “meaningfully” below expectations.
The company also blamed a slump in its energy operations, pushing underlying sales 1% lower in the third quarter.
Things don’t look any better in the fourth quarter, with slow growth, lower demand for spare plane parts and programme deferrals likely to continue.
Stephen Young, chief executive, called the results “very disappointing” and noted that it could lead to some 300 job cuts in an effort to trim costs. Shares dropped an eye-watering 23.9% to 351p.
Also lower was High Street bellwether Next (LON:NXT), despite being boosted by strong retail sales.
Its Directory growth slowed in the third quarter bringing the growth to 7% for the year to date, from 8.2% at the half way mark.
The company upped the lower end of its profit guidance to £310mln from £305mln but could not stop shares slipping 66p to 7,878p.
Lloyds (LON:LLOY) was another big faller, as the bank put in a mixed performance in its latest quarter ahead of the sale of the remainder of its stake by the UK government.
Profits in the three month to September rose by 28% but the bank was again forced to add another £500mln in provisions for PPI mis-selling.
It is one of the worst performing banks in terms of PPI, and shares dropped 4.4% to 73.9p.
In Europe, the big news surrounded scandal-hit Volkswagen, which released third quarter earnings results.
The results made for grim reading, according to Connor Campbell at Spreadex, as it made a loss of €3.48bn, its first loss in the quarter for 15years.
Investors weren’t shocked, however, with the firm posting healthy gains in early trading, helping the German Dax to register a 78 points gain to 10,772.
In the small cap space, Red Rock Resources (LON:RRR) is to be a new partner of Northcote Energy (LON:NCT) at the Shoats Creek field, in Louisianna.
It is set to cost Red Rock between US$500,000 and US$600,000 in aggregate. Investors backed the move, with the share price gaining 12% to 0.02p.