FTSE CLOSE: Footsie falls as traders digest glut of UK results; US stocks also weak on earnings, hawkish Fed statement

• e-mail

17.20: The FTSE 100 closed down 29.37 points at 6721.06 as the price of oil fell back below $43 a barrel amid fears of softer global demand and a supply glut.

The US Dow Jones dropped 73.5 points to 18,398.7 in early trading, while Germany's DAX slid 44.6 points to 10,274.9 and France's CAC 40 fell 26.4 points to 4,420.6.

'A week-long slide in oil prices is beginning to weigh on sentiment and the Federal Reserve opting to keep interest rates on hold again generated limited enthusiasm,' said Jasper Lawler of CMC Markets. 'With the Fed on the sidelines, a multitude of corporate earnings were front and centre.

Lower: US blue chips  fell as earnings from the likes of motors giant Ford and oil firm ConocoPhillips disappointed, although social media firm Facebook pleased, and after some mixed economic data

'The FTSE 100 came off one-year highs but remained above 6,700. Britain’s benchmark was dragged down as shares of Royal Dutch Shell and Lloyds bank slumped following quarterly earnings reports but losses were limited by well-received results from Rolls Royce and telecoms rivals BT and Sky.'

The FTSE 250 remained close to erasing its post-Brexit vote losses despite slipping 13.6 points to 17,252.3 - just shy of its closing figure of 17333.51 on June 23.

The mid-cap index - seen as a better barometer for the health of the UK economy than the FTSE 100 - took a hammering following Britain's vote to leave the European Union, sliding 7 per cent to 16088.1 on June 24.

Among stocks, Lloyds fell 5 per cent or 3.3p to 52.5p as it moved to cut 3,000 jobs and shut 200 branches as it expects the 'lower for longer interest rate environment' to continue.

Royal Dutch Shell announced a 72 per cent slump in profits for the second quarter of 2015 as chief executive Ben van Beurden flagged the 'significant challenge' lower energy costs are posing. Shares in Royal Dutch Shell B were down 53.5p to 2051.5p.

Rolls-Royce was in the ascendancy after boss Warren East pledged up to £200million in cost savings by 2017 and swung the axe on 400 top jobs. Shares at the engine maker were up more than 13 per cent or 99p to 831p.

Game of Thrones broadcaster Sky was enjoying a lift as it brushed aside economic uncertainty surrounding the referendum result to drive up revenues and profits. Shares climbed 16.5p to 904p after it reported a 12 per cent rise in operating profits for the full year to June 30, while revenues climbed 7 per cent to £11.9billion over the period.

Rival BT also raced ahead after cheering better than expected earnings and stating that crunch talks with Ofcom would continue over the independence of its Openreach broadband network.

The telecoms giant rose 12.3p to 414.4p as revenues lifted 35 per cent to £5.8billion in its first quarter, compared with the same period in 2015. However, BT said the results were impacted by its £12.5billion takeover of EE in January.

On the currency markets, the pound was down 0.8 per cent against the euro at €1.184 and slipped 0.5 per cent against the dollar at $1.314.

The biggest risers on the FTSE 100 were Rolls-Royce up 99p to 831p, AstraZeneca up 337p to 5027p, Anglo American up 43.4p to 842.6p, RELX up 50p to 1456p.

The biggest fallers were Lloyds Banking Group down 3.3p to 52.5p, Smith & Nephew down 73p to 1227p, SSE down 85p to 1541p, Schroders 109p to 2531p.

17.01: The FTSE 100 closed down 29.37 points at 6721.06. More to come. 

14.45: The Footsie remained lower in late afternoon trading as a glut of mixed blue chip earnings from the likes of Lloyds, Shell, and Rolls-Royce were digested, while US stocks also fell on weak earnings, dull data, and after yesterday’s hawkish Federal Reserve policy statement.

With around an hour and three-quarters of trading to go in London, the FTSE 100 index was down 15.1 points, or 0.2 per cent at 6,735.4, above the day’s low of 6,718.90 but well below the session peak of 6,762.72 having closed at a 12 month high yesterday.

European markets also stayed weak, with France’s CAC 40 index losing 0.1 per cent and Germany’s Dax 30 index falling 0.2 per cent despite stable eurozone consumer confidence data.

In early trade on Wall Street, the blue chip Dow Jones Industrial Average was down 57.7 points to 18,414.5, while the broader S&P 500 index lost 12.7 points at 2,163.9, but the tech-laden Nasdaq composite ticked up 0.9 points at 5,140.7.

US blue chips fell as earnings from the likes of motors giant Ford and oil firm ConocoPhillips disappointed, although social media firm Facebook pleased, and after some mixed economic data.

The latest US jobless claims rose by 14,000 to 266,000 in the week to July 23, a touch higher than economists’ forecasts of 260,000.

And the advanced US trade gap widened to a seasonally adjusted $63.3billion, up from $61.1billion in June and wider than the $61.0billion gap estimated by economists.

Investors were also still assessing yesterday’s fairly upbeat policy statement from the Federal Reserve, which saw US interest rates pegged at hold once again but with the door left open for as many as two possible hikes later this year.

However, Joshua Mahony, Market Analyst at IG, said: ‘There is clearly a willingness to act at the Fed, yet each time around another problem rears its head to put the committee off acting. China, stock market weakness, jobs market weakness, disinflation, Brexit, the list goes on.

‘Unfortunately we expect this hunt for a goldilocks scenario to continue and despite talk of two 2016 rate hikes, it is likely we will remain at 0.5 per cent until 2017.’

Investors were also cautious ahead of tomorrow’s Bank of Japan monetary policy meeting, with a further easing having been predicted.

IG’s Mahoney said: ‘The BoJ is the last of the major central banks to decide upon their monetary policy stance in the wake of the EU referendum result. With the BoE and ECB both disappointing, tonight’s announcement brings about a significant possibility of a hat-trick of disappointing central bank meetings.’

On currency markets, the pound was lower as traders focused further ahead to the Bank of England’s latest rate decision and inflation report, due a week today.

Sterling was down 0.8 per cent against the euro to €1.1853, and 0.4 per cent lower versus the dollar at $1.3155. 

12.35:The Footsie stayed weak at lunchtime as traders poured over a flood of mixed blue chip earnings today from the likes of Lloyds, Shell, and Rolls-Royce, while the pound was also lower as the focus switched ahead to next week’s Bank of England meeting after the Fed decision yesterday.

By mid session, the FTSE 100 index was 15.4 points, or 0.3 per cent lower at 6,735.0, holding above the day's low of 6,718.90, but below the peak of 6,762.72 having closed at a 12 month high yesterday.

European markets were also subdued, with France’s CAC 40 index off 0.1 per cent, and Germany’s Dax 30 index down 0.2 per cent despite stable eurozone consumer confidence data.

US stock index futures, however, were modestly higher, pointing to a recovery after a mixed performance yesterday, supported by optimism over US corporate earnings and further consideration of the Federal Reserve's policy statement yesterday.

Fed watch: US stock index futures, however, were modestly higher, pointing to a recovery after a mixed performance yesterday on further consideration of Janet Yellen and Co.'s policy statement yesterday

Connor Campbell, Financial Analyst at Spreadex, said: ‘Looking ahead to the US session and with only the usual jobless claims on offer (forecast at 261k against the 253k seen last week) it doesn’t seem as if there is going to be a huge shift in sentiment this afternoon.

‘The Dow Jones’ pre-open reticence is understandable; yesterday’s Fed statement was more hawkish than anticipated, with Janet Yellen and co. leaving a rate hike as early as September on the table.

‘The central bank stated that the "near-term risks to the economic outlook have diminished", but that inflation still remains far below its long-term target. ‘

Investors were also cautiously hopeful that the Bank of Japan will tomorrow announce more easing at the outcome of its two-day meeting, which got underway today.

On currency markets, the pound stayed weak as traders focused further ahead to the Bank of England’s latest rate decision and inflation report, due a week today.

Sterling was down 0.7 per cent against the euro to €1.1871, and 0.3 per cent lower versus the dollar at $1.3173.

Among equities, Lloyds Banking Group was the biggest FTSE 100 faller at lunchtime, down 4.8 per cent, or 2.7p to 53.0p despite reporting a better-than-expected underlying pre-tax profit in the first half, as the lender ramped up its job-cutting scheme with a further 3,000 jobs and 200 branches set to be axed.

Lloyds shares were weighed by concerns about its dividend and fading prospects for the sale of the government’s remaining stake in the taxpayer-rescued lender.

Medical products group Smith & Nephew was also under pressure, falling 4.3 per cent or 56p to 1,244p after Europe's biggest maker of artificial knees and hips said it continued to struggle with weak demand for its products in China and the Gulf States.

The firm posted a 3 per cent rise in first half revenues to $2.3billion (£1.7billion), but pretax profits dropped 20 per cent to $327million (£251million).

And oil giant Royal Dutch Shell shed 4.2 per cent, or 89p to 2,016p after reporting a more than 70 per cent drop in quarterly profits, well below analyst estimates, pressured by weak oil prices.

But engineering firm Rolls-Royce was the top FTSE 100 gainer, jumping 13.6 per cent, or 99.5p higher to 831.5p despite posting a 76 per cent drop in first half profits as the firm reaffirmed that its profit would improve in the second half and its turnaround plan would deliver cost cuts at the top end of a guided range.

Elsewhere, satellite broadcaster to telecoms and broadband provider Sky gained 3.1 per cent, or 27.5p at 915p as it posted an above-forecast rise in full year operating profits boosted by a strong rise in customer numbers of 808,000 across the group to 21.8 million in total.

And rival BT Group added 3.4 per cent, or 13.5p to 415.6p as its quarterly profit also beat market expectations, helped by a healthy contribution from the continuing integration of mobile arm EE since January's acquisition. 

10.35:The Footsie eased back as the morning session progressed as traders digested a fairly hawkish statement yesterday from the US Federal Reserve and poured over a flood of blue chip earnings from the likes of Lloyds, Shell, Rolls-Royce, and Smith & Nephew.

By mid morning, the FTSE 100 index was down 10.8 points, or 0.2 per cent at 6,739.6 having closed 26.40 points higher yesterday at a 12 month peak.

European markets were also subdued, with France’s CAC 40 index flat, and Germany’s Dax 30 index down 0.2 per cent despite stable eurozone consumer confidence data.

Weak: By mid morning, the FTSE 100 index was down 10.8 points, or 0.2 per cent at 6,739.6 having closed 26.40 points higher yesterday at a 12 month peak

The European Commission's economic sentiment indicator for the 19 countries sharing the euro rose to 104.6 in July, up from 104.4 in June, against market expectations for a fall to 103.7.

Dennis de Jong, managing director at UFX.com, said: ‘Consumer confidence in the EU has unsurprisingly remained low in the aftermath of Brexit, but ECB president Mario Draghi will take solace that figures are at least stable.

‘The predicted hit from the UK’s EU referendum results was already less than expected, so today’s numbers show that the bloc is proving resilient to the upheaval.’

US stocks ended little changed overnight following the Fed's policy to leave interest rates unchanged while leaving the door open for a move later this year, with the US central bank saying that near-term risks to the economic outlook had diminished.

Asian markets were mostly lower today, with Japan's Nikkei 225 down over 1 per cent, undermined by a stronger yen and nerves ahead of the Bank of Japan's monetary policy decision tomorrow.

On currency markets, the pound was weak as traders focused ahead to the Bank of England’s latest rate decision and inflation report, due a week today.

Sterling dropped 0.7 per cent against the euro to €1.1871, and was down 0.3 per cent versus the dollar at $1.3173.

No important UK data was released today but overnight a survey showed that UK house prices rose to a new record in cash terms in July, passing £205,000 on average for the first time.

But the Nationwide Building Society report also cautioned that the increased economic uncertainty following the EU referendum could lead to weaker demand for homes in the near term.

Among equities, a mass of blue chip news and results dominated sentiment.

On the upside, engineering firm Rolls-Royce was the top FTSE 100 gainer, surging 15 per cent, or 110p higher to 842p despite posting a 76 per cent drop in first half profits as the firm reaffirmed that its profit would improve in the second half and its turnaround plan would deliver cost cuts at the top end of a guided range.

Miner Anglo American was also stronger, up 5.6 per cent, or 44.7p to 843.9p after revealing a drop in its net debt and saying its cost-cutting and asset-sale strategy was on track

But on the downside, Smith & Nephew was the biggest FTSE 100 faller, shedding 4 per cent or 54p at 1,246p after Europe's biggest maker of artificial knees and hips said it continued to struggle with weak demand for its products in China and the Gulf States.

The firm posted a 3 per cent rise in first half revenues to $2.3billion (£1.7billion), but pretax profits dropped 20 per cent to $327million (£251million).

Meanwhile, oil giant Royal Dutch Shell fell 3.4 per cent, or 70.5p to 2,034.5p after reporting a more than 70 per cent drop in quarterly profits, well below analyst estimates, pressured by weak oil prices.

And Lloyds Banking Group was also under pressure despite reporting a better-than-expected underlying pre-tax profit in the first half, as the lender ramped up its job-cutting scheme with a further 3,000 jobs and 200 branches set to be axed..

Lloyds shares fell 3.4 per cent, or 1.9p to 53.9p weighed by concerns about its dividend and fading prospects for the sale of the government’s remaining stake in the taxpayer-rescued lender.

On the second line, Premier Farnell, the maker of the Raspberry Pi mini-computer, jumped nearly 17 per cent, or 27.5p higher to 192.0p after agreeing to a £691million cash offer from US electric component distributor Avnet.

The 185p-a-share offer trumps a bid of 165p a share from Switzerland's Daetwyler Holding which Premier Farnell had previously agreed to on June 14.

Sports Direct also shot higher, up 13.5 per cent, or 34.8p to 292.3p after announcing plans for a near £90million buy-back of up to 5 per cent of its share capital.

And holidays group Thomas Cook gained 8 per cent, or 5p at 65p with its third quarter trading update and cut to its full year profit expectations broadly as expected by the market.  

08.30: The Footsie was flat in early trading, tracking subdued overnight showings from US and Asian markets after the Federal Reserve kept US interest rates on hold, with investors in London pouring over a flood of blue chip earnings from the likes of Lloyds, Shell, Rolls-Royce, and Centrica.

In opening deals, the FTSE 100 index was up 4.7 points, or 0.1 per cent at 6,755.1, having closed 26.40 points higher yesterday after surprise news that the UK economy expanded 0.6 per cent in the spring despite uncertainty caused by last month’s European Union referendum.

US stocks ended little changed overnight following the Fed's policy decision to leave interest rates unchanged. The US central bank did say, however, that near-term risks to the economic outlook had diminished, opening the door for a potential near-term hike in the eyes of many.

Stready: The Footsie was flat in early trading, tracking subdued overnight showings from US and Asian markets after the Fed kept US rates on hold with investors in London pouring over a flood of blue chip earnings

But the Fed also noted that inflation expectations were on balance little changed in recent months, and gave no firm indication of whether it would raise rates at its next policy meeting in September.

Michael Hewson, Chief Market Analyst at CMC Markets UK, said: ‘Last night’s Federal Reserve rate decision didn’t offer too much in the way of surprises, as the FOMC left policy unchanged.

He added: ‘There were some other minor changes in the language of the statement, but importantly there were none that suggested that the odds of a September move were any more or less likely, which is probably exactly what Fed officials wanted given the rise in the value of the US dollar over the past few weeks, and is probably why the US dollar slid back and gold rose sharply in the aftermath of the decision.’

Asian markets were mostly lower today as Chinese stocks sunk on news that regulators are planning a tough clampdown on wealth management products to curb risks to the banking system.

Japan's Nikkei 225 also declined more than 1 per cent, undermined by a stronger yen and nerves before the Bank of Japan's monetary policy decision tomorrow.

CMC’s Hewson said: ‘All in all last night’s meeting didn’t shed any further light on what the Fed might do at its next meeting, so in that context it now shifts the focus to tomorrow’s Bank of Japan meeting, given yesterday’s reports of a significant fiscal stimulus program that could be in the works from Japanese Prime Minister Shinzo Abe.

‘Whatever the Japanese government has in mind markets remain sceptical given previous promises that have failed to deliver.’

No important UK data will be released today but overnight a survey showed that UK house prices rose to a new record in cash terms in July, passing £205,000 on average for the first time.

But the Nationwide Building Society report also cautioned that the increased economic uncertainty following the EU referendum could lead to weaker demand for homes in the near term.

The typical UK property value was £205,715 in July, marking a 0.5 per cent increase compared with June. House prices are 5.2 per cent higher than a year earlier, accelerating from annual growth of 5.1 per cent in June.

Average house prices tipped over the £200,000 mark in March and have been moving steadily upwards since.

On currency markets, the pound dropped 0.6 per cent against the euro to €1.1877 and was down 0.1 per cent versus the dollar at $1.3197.

Stocks in focus in London include:

LLOYDS BANKING GROUP – The part-state owned lender is cutting 3,000 jobs and shutting 200 branches as its braces for a cut in interest rates following Britain's decision to quit the EU. The moves came as Lloyds reported a first half statutory pretax profit of £2.45billion for the six months to June 30, more than double the sum achieved in the same period last year.

ROYAL DUTCH SHELL – The oil giant has reported a 72 per cent plunge in adjusted earnings to $1.05billion (£800million) from $3.76billion (£2.85billion) as chief executive Ben van Beurden flagged the ‘significant challenge’ lower energy costs are posing.

ROLLS-ROYCE – The engines maker has stuck to its prediction that profit would improve in the second-half of the year, as it said its turnaround plan would deliver cost-cuts at the top end of a guided range. The prediction came as Rolls reported an 80 per cent drop in underlying pretax profit to £104million pounds for the first six months of the year, which was substantially ahead of a consensus forecast for it to be £16million in the red.

BAE SYSTEMS - The world's third-largest defence contractor by revenue reported slightly higher half year earnings and said it was on track to meet its forecast for 2016 earnings to rise by between 5 per cent and 10 per cent.

ASTRAZENECA - Generic competition to cholesterol buster Crestor in the US market pushed second quarter earnings down by nearly a third at the FTSE 100 drugmaker, which is now banking on new cancer medicines to revive its fortunes.

CENTRICA - Britain's largest energy supplier, lost 399,000 customers in the first half of the year, contributing to a 13 per cent dip in revenue to £13.38billion in the first half of 2016, compared with the same period last year, with adjusted operating profit down 12 per cent at £853million.

SKY – The European pay-TV group reported a 12 per cent rise in full-year adjusted operating profit, just ahead of forecasts, in what it said was another excellent year for the group.

BT GROUP - Britain's biggest telecoms group reiterated its full year outlook after strong demand for broadband helped it to report better-than-expected first quarter core earnings.

COUNTRYWIDE - The UK's biggest lettings and estate agency company warned on full year core earnings, saying that commercial and London residential transactions had stalled after Britain voted in June to leave the European Union.

DIAGEO - The drinks maker reported higher full year sales, returning to growth after two flat years marred by issues such as an emerging market slowdown and a shift in US consumer tastes from vodka to bourbon.

UK company news scheduled today includes:

Interims: Lloyds Banking Group , Royal Dutch Shell (Q2), AstraZeneca (Q2), Centrica, Rolls-Royce, BAE Systems, Anglo American, British American Tobacco, Smith & Nephew (Q2), Schroders, RELX, Intu Properties, Weir Group, Merlin Entertainments, National Express, Countrywide, Domino's Pizza, Just Eat, Beale, Genel Energy, Henderson Group, Informa, International Personal Finance, Spectris, Vesuvuis, Greencoat UK Wind

Finals: Diageo, Sky, Angle, Ebiquity

Trading updates: BT Group (Q1), Compass Group, Thomas Cook, Countryside Properties, Kaz Minerals, Ensco, Genel Energy, Immunodiagnostic Systems, Mortgage Advice Bureau, Pentair, Sophos, CYBG, Bonmarche Holdings

Ex-dividends trim 2.42 points off FTSE 100 (SSE)

Economic news scheduled today includes:

Nationwide house prices at 7am

eurozone consumer confidence at 10am

US weekly jobless at 1.30pm