Insurers fail to lift the FTSE as investors await US results
BRITAIN’S leading shares closed lower yesterday as falls in oil majors and food retailers offset gains in insurers as investors waited for the start of the earnings seasons in the US to give a fresh direction.
The FTSE 100 closed down 29.08 points, or 0.6 per cent, at 5,108.90, after ending 2.3 per cent higher on Tuesday on growing confidence over the outlook for the global economy.
Oil majors took the most points off the index, with BP, BG Group, Royal Dutch Shell and Tullow Oil off 1.2 to 2.9 per cent as investors took profits in the sector.
Trading on Wall Street was mixed ahead of the start of the earnings season, which US aluminium giant Alcoa was due to kick off after markets closed yesterday.
The FTSE 100 has risen 48 per cent since hitting a floor in March on hopes of a recovery in the economy and analysts predict that the rally may still have some fuel to push higher after raking in hefty gains in the third quarter of the year.
“With the FTSE continuing to trade above the 5,000 mark, it seems that investors are willing to let this latest bout of recovery continue before hitting the sell button,” said Anthony Grech, a market strategist at IG Index.
Food retailers dipped as J Sainsbury fell 3.3 percent after releasing its second-quarter trading update, which met forecasts with a slight slowdown in quarterly sales growth. Peers WM Morrison lost 0.8 per cent, while Tesco, which posted its first-half results on Tuesday, shed 2.3 percent.
Among other individual stocks, Vodafone dipped 2 per cent, dented by a fall in India telecom stocks and the possibility of a tariff war.
Hip and knee specialist Smith & Nephew fell 2.7 per cent as UBS downgraded its recommendation on the stock to “neutral” from “buy”, citing caution over the growth of the orthopaedic market.
Aviva, which rose 3.8 per cent, led life insurers higher. The company announced plans for a secondary listing on the New York Stock Exchange on October 20.
The sector has been high on investors’ wanted list recently due to M&A speculation. Standard Life, Prudential and Old Mutual gained 1.4 to 2 per cent.
Intercontinental Hotels rose 3.3 percent, supported by an upgrade by Citigroup to “buy” from “hold”.
Banks were mixed. HSBC and Barclays rose 0.6 and 0.1 per cent, respectively, while Royal Bank of Scotland, Lloyds Banking Group and Standard Chartered shed 0.9 to 2 per cent.
HSBC, Europe’s largest bank, said it would be forced to delay raising its dividend if new capital rules were applied too heavily or quickly, the Times reported the bank’s head of investment bank as saying.
Kingfisher rose 1.9 per cent after UBS upgraded its recommendation on Europe’s largest home improvement retailer to “buy” from “neutral” and Morgan Stanley upped its stance to “equal-weight” from “underweight”.