FTSE 100 movers: BP leads market fallers on losses

The FTSE 100 was back below 6,000 on Tuesday, dropping 151.22 points (2.5%) to 5,908.88 by mid-afternoon.

BP took the biggest hit after $2.6bn of write-downs and restructuring charges sent it crashing into losses for the fourth quarter and full year.

A $3.31bn loss was reported for the fourth quarter, with underlying profits crashing 91% to $196m, well shy of forecasts, sending the oil major to a $6.48bn full year loss, with annual underlying profits plunging by just over half to $5.9bn. Underlying operating cash flow for the fourth quarter of 2015 remained solid at $5.9bn, but while the total for the year stood at $20.3bn, this was down by more than a third on 2014.

Although the slump in the oil price sent the upstream business into a loss in the final quarter, the downstream arm partially offset this with a strong set of counter-cyclical results of flat profits compared to the prior year. Cash costs were down by $3.4bn during the year, and are due to be $7m lower in 2017, with $3-5bn of divestments planned for 2016 taking further pressure off the balance sheet.

BHP Billiton and Rio Tinto also suffered after Standard & Poors downgraded BHP's credit after the close on Monday and said a further cut is possible, while Rio Tinto was placed under 'creditwatch negative'.

The credit agency said after recently cutting its price assumptions for commodities such as iron ore, oil, and copper due to the mismatch between demand and supply, BHP could suffer from its ratio of funds from operations-to-debt falling to 30%-40% over the next two years. As a result it has cut the company's credit rating to 'A' from 'A+', with the creditwatch category reflecting the possibility that the rating may well be cut by a further notch after the group's earnings release in late February, largely depending on the announced dividend policy and capital expenditure guidance. Cuts to forecast commodities prices for iron ore, aluminum, and copper affect Rio Tinto, so S&P feels it could also reduce its the 'A-/A-2' corporate bond rating by one notch after group's earnings release in early February, so has slapped it with a 'creditwatch negative' tag as well.

Prudential fell on headlines that China is unleashing new steps to control financial risks and outflows. Bloomberg reported that the currency regulator is imposing restrictions on buying insurance products overseas, specifically a $5,000 cap on insurance products paid for using UnionPay debit and credit cards.

“This is just one method of payment Prudential uses,” said one analyst. “When it rains it pours with negative news around Prudential. This story in itself doesn't seem a big deal but will add further worries about contagion risk in the Chinese financial system.”

Of the few big risers, Hikma Pharmaceutical was up after Bank of America/Merrill Lynch upgraded the company from ‘neutral’ to ‘buy’. It said the purchase of Roxane Laboratories should bring substantial benefits to the company.

Sainsbury was also up after it came to an agreement over the terms of a deal to buy Home Retail Group valued at £1.3bn.

Home Retail shareholders will receive 55p in cash and 0.321 Sainsbury’s shares for each of their Home shares. They will also receive a payout of 25p per share to reflect the £200m capital return from the sale of Homebase and 2.8p in lieu of a final dividend in respect of the financial year ending 27 February. Sainsbury’s said the combination of the two groups was “an attractive proposition for the customers and shareholders of both companies, establishing a platform for long-term value creation”.

FTSE 100 - Risers

Hikma Pharmaceuticals (HIK) 2,089.00p 2.96%
Sainsbury (J) (SBRY) 250.20p 2.29%
Associated British Foods (ABF) 3,193.00p 1.37%
Worldpay Group (WI) (WPG) 310.80p 0.26%
BT Group (BT.A) 495.20p 0.20%
Admiral Group (ADM) 1,771.00p 0.17%

FTSE 100 - Fallers

BP (BP.) 332.65p -9.35%
Anglo American (AAL) 248.55p -9.30%
Prudential (PRU) 1,214.50p -8.44%
BHP Billiton (BLT) 627.90p -7.40%
Standard Chartered (STAN) 429.25p -6.68%
Glencore (GLEN) 82.31p -6.46%
Rio Tinto (RIO) 1,599.00p -5.72%
Carnival (CCL) 3,321.00p -5.52%
Rolls-Royce Holdings (RR.) 525.50p -5.32%
Royal Dutch Shell 'B' (RDSB) 1,422.50p -5.17%