LONDON MARKETS: FTSE 100 Logs A Modest Gain; BP Loses Ground
July 26 2016 - 11:35AM
Dow Jones News
By Carla Mozee and Victor Reklaitis, MarketWatch
BOE policy maker says more monetary stimulus may be needed
U.K. stocks ended modestly higher Tuesday, but BP PLC shares
dropped following the major oil company's financial results.
Meanwhile, BT Group PLC logged its best gain in nearly a month
after comments about its business from the country's telecom
regulator.
The FTSE 100 rose 0.2% to 6,724.03, with gains coming from
miners and industrial shares, while oil and gas and consumer
services shares sagged. The index on Monday ended lower by 0.3%.
(http://www.marketwatch.com/story/ftse-100-clings-to-thin-gain-as-banks-drift-lower-2016-07-25)
Investors had plenty of corporate updates to assess Tuesday.
Among them, SABMiller (SAB.JO) received an increased takeover bid
from Anheuser-Busch InBev NV
(http://www.marketwatch.com/story/ab-inbev-increases-offer-for-sabmiller-2016-07-26-3485537)(ABI.BT)(ABI.BT),
to GBP45 a share ($58.85) from GBP44 a share. The shares lost grip
of earlier gains and ended lower by 0.7% at GBP44.10.
InBev's new offer, which values SABMiller at about GBP79 billion
($104 billion), comes as the British pound has slid in the wake of
the June 23 Brexit vote that will lead the U.K. out of the European
Union.
A preliminary estimate of second-quarter U.K. gross domestic
product, due Wednesday, will "indicate whether we are entering the
implementation of a Brexit from a position of strength, or as seems
more likely, a position of weakness," wrote Laith Khalaf, senior
analyst at Hargreaves Lansdown, in an note.
The data will arrive ahead of the Bank of England's policy
decision and quarterly inflation report on Aug. 4. "The
markets...are currently pricing in a 95% chance of a rate cut,
though don't forget they got it badly wrong last time around," he
wrote. "Predicting the voting intentions of nine people is a roll
of the dice at the best of times, but it's even more unpredictable
so close to the referendum."
In terms of fiscal policy, "[i]f we get a nasty surprise
tomorrow, this could help put a nail in the coffin of austerity,"
Khalaf added. "However it currently looks like we are going to have
to wait until the Autumn statement, probably in November, before we
get a full picture of the government's plans for spending and
expenditure."
Analysts polled by FactSet expect second-quarter growth of 0.4%
and year-over-year growth of 1.9%.
Movers: BP PLC shares (BP.LN) (BP.LN) fell 1.3% after the major
oil-and-gas company posted quarterly underlying earnings of $720
million
(http://www.marketwatch.com/story/bp-posts-replacement-cost-of-225-billion-2016-07-26),
falling short of analysts' consensus of $839 million.
BP's second-quarter replacement cost loss--analogous to the net
income that U.S. oil companies report--was $2.25 billion as it
booked a multibillion-dollar charge relating to its 2010 Gulf of
Mexico rig blowout and oil spill.
Shares of rival oil major Royal Dutch Shell PLC (RDSB.LN)
(RDSB.LN) were up 0.9%. Shell's financial results are due on
Thursday.
Oil prices
(http://www.marketwatch.com/story/oil-futures-fall-again-after-settling-at-3-month-low-2016-07-26)
remained under pressure Tuesday, driving down toward their lowest
settlements since April.
But BT Group PLC (BT.A.LN) popped up 3.2%. Their best session
since June 26 came as Ofcom, the U.K.'s telecommunications
regulator, called for BT's Openreach network business to have its
own structure, but stopped short of calling for a full separation
of the businesses
(http://www.marketwatch.com/story/bt-arm-should-have-separate-structure-regulator-2016-07-26).
BT later rejected Ofcom's determination
(http://www.marketwatch.com/story/bt-rejects-call-for-separation-of-openreach-unit-2016-07-26).
Provident Financial PLC (PFG.LN) shares topped the FTSE 100 by
rising 5.7% after the credit issuer raised its dividend
(http://www.marketwatch.com/story/provident-financial-pretax-profit-climbs-49-2016-07-26),
posted a 49% surge in first-half pretax profit and forecast good
quality growth for the full year.
(http://www.marketwatch.com/story/bt-arm-should-have-separate-structure-regulator-2016-07-26)Sterling:
The pound bought $1.3185 in late European trade, recovering from an
intraday low of $1.3058. The pound had been hit after Bank of
England policy maker Martin Weale, in a Financial Times interview
published Tuesday
(http://www.ft.com/cms/s/0/03c877ce-5272-11e6-9664-e0bdc13c3bef.html#axzz4FV4zBQoH),
indicated he's now supportive of further stimulus measures by the
central bank to aid the British economy in the wake of the Brexit
vote. The pound late Monday traded at $1.3140.
Weale's view was formed in part after Markit's PMI report,
released Friday, showed contraction in the manufacturing and
services sectors
(http://www.marketwatch.com/story/uk-economy-in-dramatic-downturn-after-brexit-vote-data-show-2016-07-22)
in July.
(END) Dow Jones Newswires
July 26, 2016 12:20 ET (16:20 GMT)
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