U.K. Stocks Fall Amid U.S. Shutdown as Unilever Declines
U.K. stocks declined for a third day as consumer-goods companies tumbled after Unilever reported a slowdown in quarterly sales, and as investors assessed a partial shutdown of the U.S. government.
Unilever slid 3.8 percent, contributing the most to the benchmark FTSE 100 Index’s decline. SABMiller Plc (SAB) dropped 2.9 percent after a South African union said as many as 3,000 of the company’s workers may join a strike for higher wages. Rolls-Royce Holdings Plc added 2 percent as Bank of America Corp. said the aircraft-engine maker’s share price is attractive.
The FTSE 100 slipped 22.07 points, or 0.3 percent, to 6,440.15 at 1:49 p.m. in London. The gauge gained 4 percent in the third quarter as the Bank of England gave forward guidance on interest rates for the first time and as the Federal Reserve held off cuts to its monthly bond purchases. The broader FTSE All-Share Index fell 0.3 percent today, while Ireland’s ISEQ Index rose 0.5 percent.
“Investors are disappointed with the weak sales growth numbers from Unilever and the problems from SABMiller,” said Jacques Porta, who helps oversee $780 million as a fund manager at Ofi Gestion Privee in Paris. “What’s bad for Unilever is bad for the market, so there is concern that other consumer staples stocks may also be affected.”
The number of shares changing hands today in FTSE 100-listed stocks was 15 percent lower than the average of the past 30 days, data compiled by Bloomberg showed.
The U.S. government began its first partial shutdown in 17 years after Democrats and Republicans failed to agree upon emergency funding measures before a midnight deadline. The shutdown places as many as 800,000 federal employees on temporary unpaid leave, and closes national parks, museums and Internal Revenue Service call centers.
The halt began as Congressional leaders continued a standoff over a call to delay President Barack Obama’s healthcare law by a year. A partial shutdown would cost the U.S. at least $300 million a day in lost economic output at the start, according to IHS Inc.
Lawmakers have not scheduled further negotiations, raising concern the dispute may affect talks to increase the debt limit by Oct. 17 to avoid a default.
In the U.K., manufacturing in September expanded less than forecast. The purchasing managers’ index declined to 56.7 from a revised 57.1 in August, London-based Markit Economics said. The median forecast of economists in a Bloomberg survey had called for a gain to 57.5.
Unilever slipped 3.8 percent to 2,348 pence, shaving 4.3 points from the FTSE 100. (UKX) Underlying revenue for the third quarter rose 3 percent to 3.5 percent, Unilever said late yesterday. The world’s second-biggest consumer-goods maker reported 5 percent growth in the first half and second quarter.
A gauge of food and beverage stocks posted the second-worst performance of the 19 industry groups in the Stoxx Europe 600 Index. Diageo Plc (DGE) dropped 1.5 percent to 1,936.5 pence and Reckitt Benckiser Group Plc (RB/) retreated 2 percent to 4,431 pence.
SABMiller lost 2.9 percent to 3,052.5 pence as a South African workers’ union vowed to continue strike action indefinitely until wages are increased by 9 percent, instead of the 7 percent offered by the world’s second-biggest brewer. The Food and Allied Workers Union said as many as 3,000 employees at SABMiller’s plants in Cape Town, East London and Durban will walk out of work today.
Rolls-Royce (RR/) advanced 2 percent to 1,134 pence as Bank of America’s Merrill Lynch unit recommended that investors buy the stock, saying it has lagged peers after posting first-half results on July 25. Rolls-Royce has dropped 10 percent since then through yesterday’s close, compared with a 5.9 percent gain for the Stoxx Europe 600 Industrial Goods & Services Index.
“The management team is focused on improving margins and cash generation to world class standards as they benefit from significant volume growth, especially in civil aerospace,” analysts led by Celine Fornaro wrote in a note. “This should lead to further re-rating in the share price.”
Experian Plc (EXPN) added 1.4 percent to 1,193 pence after agreeing to buy U.S. fraud-detection services provider 41st Parameter Inc. for $324 million.
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