Energy firms drag down the FTSE as BG fails to deliver
Britain’s top shares fell yesterday, dragged lower by energy stocks after BG Group reported its quarterly results, and weak US data knocked sentiment.
The FTSE 100 index closed down 45.99 points at 5,319.68, having gained almost 4.5 per cent over the last five days, and falling away from the psychologically important 5,400 level.
“The near-term outlook for equities is very uncertain and you would not want to be taking major risks at this stage of the cycle,” said Peter Dixon, an economist at Commerzbank.
Integrated oils was the worst performing sector, with BG Group down 2.2 per cent after its second-quarter numbers failed to excite.
“Although BG’s second-quarter figures were above consensus, we do not see any strong drivers of near-term share price performance in the results,” said Collins Stewart in a note.
Peer BP shed 0.9 per cent as the oil major prepared to sell assets to cover the $30bn costs of its Gulf of Mexico oil spill.
Royal Dutch Shell shed 1.9 per cent, with crude prices also lower.
Tullow Oil, however, bucked the trend, rising 0.9 per cent after revealing its Ngiri-2
appraisal well found over 40 metres of net oil bearing reservoir in two zones.
London’s blue chips echoed falls on Wall Street after data showed orders for US durable goods unexpectedly fell in June, their largest decline since August, further evidence economic growth cooled in the second quarter.
Meanwhile, Boeing 2010 profit outlook was beneath analyst’s consensus forecast.
“To a large degree the UK market is following the US trend, which clearly does not look
too healthy at the moment,” Dixon said.
In the UK, investors digested a deluge of other corporate earnings news yesterday.
Invensys dropped 4.7 per cent after the engineer’s trading update raised concern over its Rail division’s performance for Nomura, which cut its estimates for the firm.
Beverage-can maker Rexam shed 3.7 per cent as the firm said visibility remained low and the global economic outlook remained uncertain after posting an above-forecast rise in underlying first-half pretax profits. Scottish & Southern Energy fell 5.4 per cent, also traded without its dividend.
Banks, which have been at the forefront of the recent rally, lost momentum, with Lloyds Banking Group the biggest faller, down 3.4 per cent.
The bank has shelved plans to sell off its 60 per cent stake in mid-cap wealth manager St James’s Place Capital, which rose 6.6 per cent.
On the upside, BSkyB topped the FTSE 100 risers list, up 1.3 per cent ahead of results due out today, with Daniel Stewart raising its target price ahead of the numbers.
AstraZeneca added 0.4 per cent as the drugmaker urged US advisors to back its new blood thinner Brilinta drug ahead of second-quarter results today.