It seems as though investors have taken the opportunity to lock in some profits this morning following yesterday’s rally, which saw the FTSE 100 rise to the highest level since 12 September 2008 on relatively low volumes.
Financials took a breather this morning, with the likes of Barclays and HSBC both down by around 1.3% to 319.9p and 751.4p respectively.
Miners were also exerting pressure on the blue-chip index after metal prices retreated on the back of a rebound in the US dollar. The dollar gained after the Federal Reserve chairman Ben Bernanke last night said that the central bank is monitoring currency markets ‘closely’ and will implement policies that will ‘help ensure that the dollar is strong’.
Lonmin was the worst performing miner this morning, down 3.6% to 1677p after Nomura said they ‘remain negative on Lonmin shares after the company disclosed further details about its long-term production prospects.’ The broker has a ‘reduce’ recommendation on the miner’s shares and a price target of 830p.
Other mining sector casualties included Rio Tinto, which fell 1.8% to 3245.5p and Eurasian Natural Resources, which retreated 1.5% to 893p.
Bucking the negative trend this morning was telecommunications firm Cable & Wireless, which rallied 3.2% to 142.8p after saying that its plans to split into two companies is on track and will be completed by April next year. The company also plans to raise £200 million via a convertible bond issue to help fund the demerger.
Interbroker dealer ICAP was also trading in positive terrain, up 1.5% to 430.5p, despite unveiling a 4.5% drop in first-half pre-tax profits (excluding one-off items and impairments) of £166 million. On a positive note, ICAP’s revenues rose 5.9% to £809 million and the company said it is well positioned to benefit as normal trading conditions return.
‘This environment has provided a significant number of opportunities to develop an even more diversified revenue base as a platform for future growth, and we are continuing to invest,’ Chief Executive Officer Michael Spencer said in the statement.
In contrast, luxury retailer Burberry fell 1.3% to 592p despite reporting stronger sales and raising its dividend.
The company posted a 6% rise in first half sales of £572.4 million, thanks to favourable exchange rates. However, once foreign exchange movements were stripped out, sales slid 5%. In addition, first half profits before tax declined 19.2% to £78.4 million. The luxury retailer said that it is in the process of starting a joint venture in India and has raised its dividend by 4% to 3.5p a share.
Real estate firm British Land was also among the FTSE losers, down 1.8% to 494.5p, after unveiling further erosion in rental income and group profits On a positive note, however, its property portfolio valuation rose 1.4% from the second quarter.
Elsewhere, the important UK Consumer Price Index (CPI), released this morning, revealed that the UK inflation rate rose for the first time in eight months. The Office for National Statistics reported a 1.5% annual rise in the CPI for October. This was higher than Bloomberg’s expectations for a 1.4% annual increase.
By 10.30am (London time), the FTSE 100 was trading 20.94 points (-0.39%) in the red at 5361.73, while the broader FTSE 250 was 55.41 points (-0.58%) below its previous close at 9467.86.
Looking ahead to the US, December Dow and S&P 500 futures ticked marginally lower, suggesting the market currently expects Wall Street to open lower this afternoon.
Investors should also keep an eye out for this afternoon’s US producer prices and TIC flows, which are scheduled for release at 1.30pm (London time). In addition, US industrial production and capacity utilisation figures will be published at 2.15pm.
