Profits halve at BP, Weir lowers its full-year expectations

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The FTSE 100 is expected to open 19 points lower on Tuesday, after closing down 0.6% at 6,954.22 on Monday.

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Underlying third-quarter profits halved at BP compared to last year but the fall was not as bad as feared. Although down 49% on last year, underlying replacement cost profits of $933m in the three months to the end of September were well ahead of the consensus forecast of $720m, as production decreased 2%.

Weir Group posted its interim management statement for the third quarter to 31 October on Tuesday, with aftermarket orders stable during the period, though overall order input was down 7%. The FTSE 250 firm said full year profits were now anticipated to be slightly lower than current market expectations, although continued strong cash generation was still expected in 2016. It said its disposal programme was on track to deliver up to £100m by year-end, with £79m achieved by end of October.

FTSE 250 transport operator Go-Ahead said its expectations for the full year remain unchanged, as it reported “robust” trading in the first quarter despite a series of Southern rail strikes. In a trading update for 3 July to the end of October, the group said it remains in a good financial position, with strong cash generation and a robust balance sheet.

Newspaper round-up

Rolls-Royce, Britain’s leading manufacturing multinational, hired a network of agents to help it land lucrative contracts in at least 12 different countries around the world, sometimes allegedly using bribes. An investigation by the Guardian and the BBC has uncovered leaked documents and testimony from insiders that suggest that Rolls-Royce may have benefited from the use of illicit payments to boost profits for years.

Investors reacted positively to news that Mark Carney will stay on as Governor of the Bank of England for an extra one year until mid-2019, despite questions remaining as to why he will not stay for an extra three year term as expected. Sterling popped to an intra-day high against the dollar of $1.2240 shortly after the announcement was made at 6pm, and up 0.2pc against the euro at €1.114. - Telegraph

Barclays, Royal Bank of Scotland and HSBC have been linked with an investigation in the United States into alleged impropriety in the market for trading interest rate swaps. The Commodity Futures Trading Commission, the watchdog for the US derivatives market, is investigating several banks that are named in a court case filed in America this year, sources said. - The Times

The Bank of Japan says it will not reach 2 percent inflation before the end of Haruhiko Kuroda’s term as governor in a stark illustration of its struggle to escape the country’s entrenched deflation. Releasing its new economic forecasts, the BoJ said it now expected to hit its inflation target “around fiscal 2018”, the year starting from April 2018. Mr Kuroda’s five year term ends that month. - Financial Times

Major energy suppliers have scrapped controversial tariffs that denied their existing customers their cheapest prices, amid speculation over a political crackdown on the sector. Four of the “Big Six” suppliers - E.ON, SSE, EDF and Npower - and the leading independent supplier, First Utility, all offered their best tariffs exclusively to new customers at certain points during the last month. - Telegraph

US close

US stocks finished slightly lower on Monday as strong personal spending data was offset by a drop in oil prices and uncertainty ahead of the presidential elections.

The Dow Jones Industrial Average closed down 0.10% to 18,142.42 points, the S&P 500 shed 0.01% to 2,126.15 points and the Nasdaq fell 0.02% to 5,189.13 points.

Oil prices fell amid doubts major producers will agree a deal to curb production, with West Texas Intermediate down 3.9% to $46.84 per barrel and Brent down 2.8% to $48.32 per barrel at 2030 GMT.

On a positive note for markets, US consumer spending - which accounts for 70% of economic activity in the nation – rose 0.5% in September after falling 0.1% in August. Economists had expected a 0.4% increase. Personal income grew 0.3% in September, compared to a 0.2% gain in August and forecasts for a 0.4% rise.

The core personal consumption expenditures price index, the Federal Reserve’s preferred measure of inflation, edged up 0.1% month-on-month in September after a 0.2% rise in August, as expected by analysts. Compared to September 2015, the core PCE climbed 1.7%, the same rate of annualised growth as August and in line with forecasts. The Fed, which is targeting 2% inflation, had also expected a 1.7% increase in PCE.