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FTSE 100 Index falls as Standard Chartered earnings disappoint

Published 01/11/2016

The FTSE 100 Index closed down 43.07 points at 6,917.14
The FTSE 100 Index closed down 43.07 points at 6,917.14

London's top flight index remained in the doldrums, with investors punishing Standard Chartered for churning out worse-than-expected earnings.

The FTSE 100 Index was languishing in the red, down 43.07 points to 6,917.14, as Standard Chartered dropped more than 5% after boss Bill Winters admitted the bank's profits are "not yet acceptable".

Shares in the Asian-focused bank slumped 38.6p to 673.3p after it reported third quarter underlying profits of 458 million US dollars (£374 million).

This marked an improvement from losses of 139 million US dollars (£113.5 million) a year earlier, but left investors disappointed as it fell short of City forecasts.

The London-listed mining giants helped offset the declines earlier in the session, as they rallied on the back of strong economic data from China.

Private and official surveys showed that China's factory activity rose last month to its highest level in more than two years, suggesting the world's number two economy is stabilising.

Robust Chinese growth brightens the outlook for miners, as investors pin their hopes on the Asian nation's demand for commodities remaining strong.

Antofagasta rose 10p to 553p, but Anglo American pared morning gains to close down 7.5p at 1,123.5p.

Across Europe, Germany's Dax was down 1.3%, while the Cac 40 in France dropped 0.9%.

The price of oil rose 0.3% to 48.75 US dollars a barrel as the weakening US dollar boosted greenback-denominated commodities.

On the currency markets, the pound gave up its morning gains after closely watched figures for the manufacturing industry came in below expectations.

Sterling rose as high as 1.228 against the US dollar and 1.117 against the euro in early trading, buoyed by the news that Bank of England governor Mark Carney would stay on until June 2019.

However, the pound eased back after the Markit/CIPS UK manufacturing purchasing managers' index (PMI) revealed that output hit 54.3 in October, down from 55.5 in September, and below economists' expectations of 54.4.

In afternoon trading, the pound was 0.1% lower against the US dollar at 1.222 and 0.8% off against the euro at 1.105.

In UK stocks, Royal Dutch Shell raced ahead after it swung into profit in the third quarter as a cost-cutting and divestment programme began to bear fruit.

The oil giant said profits reached 1.4 billion US dollars (£1.1 billion), compared with a 6.1 billion US dollar (£5 billion) loss in the same period last year as the company also reaped the benefits of its acquisition of BG Group.

Shares in Royal Dutch Shell B were up nearly 4% or 84p to 2,199p.

In a contrast of fortunes, shares in rival oil major BP took a tumble after it said profits nearly halved in the third quarter as it remained under pressure from low oil prices.

The group posted underlying replacement cost profits - the benchmark industry measure - of 933 million US dollars (£762.8 million) for the three months to the end of September against 1.82 billion US dollars (£1.49 billion) a year earlier.

Shares were down more than 4% or 21.7p to 462.1p.

The biggest risers on the FTSE 100 Index were Polymetal International up 47.5p to 938.5p, Fresnillo up 78p to 1,718p, Royal Dutch Shell B up 84p to 2,199p, Royal Dutch Shell A up 76.5p to 2,115p.

The biggest fallers on the FTSE 100 Index were Standard Chartered down 38.6p to 673.3p, BP down 21.7p to 462.1p, Shire down 122.5p to 4,527.5p, Smith & Nephew down 27p to 1,156p.

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