London midday: Stocks slide ahead of OPEC meeting, Italy referendum
London stocks fell on Wednesday as traders erred on the side of caution ahead of an OPEC meeting and Italy’s referendum.
By midday the FTSE 100 had dropped 0.55% to 6,761.79 points.
Oil prices retreated on doubts OPEC will reach a deal to curb production at its meeting in Vienna on Wednesday. Indonesia’s energy minister told reporters in Vienna that he’s “not optimistic” that the cartel will agree a deal.
“It is somewhat laughable that after having their fingers burned so many times by OPEC that investors are still willing to send the black stuff higher and lower on the back of these bare-bones soundbites,” said Connor Campbell, financial analyst at Spreadex.
Brent crude declined 1.6% to $47.45 per barrel and West Texas Intermediate slumped 1.7% to $46.26 per barrel.
Meanwhile, investors were looking ahead to Italy’s referendum on Sunday. Italians will be asked to decide whether to accept a package of constitutional reforms put forward by centre-left Prime Minister Matteo Renzi, who has said he would resign if the proposals are rejected.
Market participants are concerned that if this results in a 'no' vote, political uncertainty will ensue, making the task of sorting out non-performing loan issues at the country’s banks even more difficult.
In economic data, UK mortgage approvals and levels of unsecured consumer credit rose more than expected in October, according to the Bank of England.
The BoE said that 67,518 mortgages for house purchases had been approved last month, up from 63,594 in the preceding month and August's 18-month low of 61,381, as well as topping the 65,000 consensus forecast. Total consumer credit rose to £1.62bn in October, from £1.48bn the month before and above the £1.50bn consensus estimate.
In the eurozone, the European Commission’s headline economic sentiment index edged up to 106.5 in November from a revised 106.4 in October, missing economists’ expectations for a reading of 107.0.
The EC said the virtually unchanged sentiment resulted from a mild deterioration in industry confidence and stable readings in services, which offset more upbeat assessments of construction and retail trade managers, as well as consumers.
In corporate news, oil producers were under pressure on the drop in crude prices including BHP Billiton, BP and Royal Dutch Shell.
BT Group recovered from earlier losses arising from Ofcom's ruling that it must legally separate from its Openreach infrastructure arm due to its failure to satisfy the regulator's competition concerns.
BT made a move late on Monday to try and prevent the enforced spin-off with the appointment of a former director of the telecoms regulator, Mike McTighe, as chairman of Openreach.
Merlin Entertainment was on the back foot after saying it expects to report "good profit growth" for the full year in line with expectations, revealing a strong Halloween for its resort parks but hinting at continued tougher trading at some other segments.
FTSE 250 real estate investment trust Shaftesbury slipped after it posted a drop in profit for the year to the end of September but a rise in revenue, and expressed confidence in its outlook.
On the upside, housebuilders rallied on the back of the positive BoE data on mortgage approvals. Shares in Persimmon and Barratt Developments gained.
Pork and poultry producer Cranswick advanced after reporting a jump in first-half pre-tax profit and revenue.
Market Movers
FTSE 100 (UKX) 6,761.79 -0.55%
FTSE 250 (MCX) 17,523.70 0.03%
techMARK (TASX) 3,269.07 -0.23%
FTSE 100 - Risers
Barratt Developments (BDEV) 477.30p 2.56%
Persimmon (PSN) 1,725.00p 2.13%
Next (NXT) 4,919.00p 2.07%
Royal Mail (RMG) 462.30p 1.51%
ITV (ITV) 169.20p 1.50%
Morrison (Wm) Supermarkets (MRW) 220.60p 1.28%
International Consolidated Airlines Group SA (CDI) (IAG) 442.00p 1.19%
BT Group (BT.A) 355.30p 1.18%
Micro Focus International (MCRO) 2,104.00p 1.15%
Barclays (BARC) 214.15p 1.09%
FTSE 100 - Fallers
Fresnillo (FRES) 1,240.00p -2.97%
Antofagasta (ANTO) 706.50p -2.88%
Randgold Resources Ltd. (RRS) 5,830.00p -2.10%
BHP Billiton (BLT) 1,328.00p -1.99%
Mediclinic International (MDC) 704.50p -1.87%
BP (BP.) 443.60p -1.85%
Rio Tinto (RIO) 3,080.00p -1.83%
Royal Dutch Shell 'A' (RDSA) 1,955.00p -1.61%
Royal Dutch Shell 'B' (RDSB) 2,037.50p -1.57%
Schroders (SDR) 2,772.00p -1.56%
FTSE 250 - Risers
SSP Group (SSPG) 371.70p 8.84%
BH Macro Ltd. GBP Shares (BHMG) 2,075.00p 5.65%
TalkTalk Telecom Group (TALK) 164.00p 4.33%
Go-Ahead Group (GOG) 2,090.00p 3.67%
FirstGroup (FGP) 105.70p 3.52%
Cranswick (CWK) 2,358.00p 3.19%
IP Group (IPO) 148.00p 2.71%
Berkeley Group Holdings (The) (BKG) 2,493.00p 2.59%
William Hill (WMH) 303.20p 2.26%
Laird (LRD) 148.00p 2.14%
FTSE 250 - Fallers
Aberdeen Asset Management (ADN) 262.00p -4.77%
Ashmore Group (ASHM) 274.00p -3.76%
Countrywide (CWD) 167.80p -3.67%
Henderson Group (HGG) 235.10p -3.01%
Softcat (SCT) 287.00p -2.25%
NMC Health (NMC) 1,339.00p -2.19%
Mitchells & Butlers (MAB) 230.40p -1.96%
Virgin Money Holdings (UK) (VM.) 311.20p -1.89%
Ascential (ASCL) 272.20p -1.84%
BTG (BTG) 590.00p -1.83%