U.K. Stocks Little Changed as Diageo Falls, BSkyB GainsInyoung Hwang
U.K. stocks were little changed, heading for their biggest monthly drop since June, as declines in Diageo Plc and Standard Chartered Plc offset gains in British Sky Broadcasting Group Plc.
Diageo slid the most since March 2009 after the world’s biggest distiller reported first-half sales growth that missed analysts’ estimates. Standard Chartered retreated to its lowest price since August 2012 after Jefferies Group LLC recommended selling the lender’s shares. BSkyB climbed the most since October after saying first-half revenue increased.
The FTSE 100 lost 5.83 points, or 0.1 percent, to 6,538.45 at the close of trading in London, after earlier rising as much as 0.5 percent and falling 0.6 percent. The gauge is heading for a 3.1 percent monthly decline. It has slumped 4.2 percent since Jan. 22 as emerging-market currencies slid amid investor concern that Fed tapering is hurting growth. The broader FTSE All-Share Index also retreated 0.1 percent today, while Ireland’s ISEQ Index fell 0.9 percent.
“Markets are in more of a correcting-mode than a buying-mode,” Otto Waser, chief investment officer at R&A Research & Asset Management AG in Zurich, said by telephone. “People are taking profits rather than putting fresh money, but the fundamentals haven’t turned for the worse.”
The Federal Open Market Committee said yesterday it will cut monthly bond purchases by $10 billion to $65 billion, keeping to a plan for a gradual withdrawal from its monetary easing. The meeting, Chairman Ben S. Bernanke’s last, was the first without a dissent since June 2011. The Fed reiterated that it will probably hold its target interest rate near zero “well past the time” that unemployment falls below 6.5 percent.
In the U.S., Commerce Department data showed the economy expanded at an annualized 3.2 percent pace in the fourth quarter, matching the median forecast in a Bloomberg survey. The increase followed a 4.1 percent rise in the prior three months. Growth in the second half of the year was the strongest since the six months ended in March 2012.
A Labor Department report showed applications for unemployment benefits last week rose more than forecast to the highest level in more than a month.
Separate data showed that contracts to purchase previously owned homes in the U.S. plunged in December by the most since May 2010. A gauge of pending home sales slumped 8.7 percent after a revised 0.3 percent drop in November that was initially reported as a gain, the National Association of Realtors said. The median projection in a Bloomberg survey of economists called for the index to drop 0.3 percent.
In China, a manufacturing gauge signaled the first contraction in six months in January. A purchasing managers’ index fell to 49.5 from 50.5 in December, HSBC Holdings Plc and Markit Economics said in a statement. The reading compared with the median 49.6 estimate in a Bloomberg News survey of 14 economists. A number below 50 indicates contraction.
Diageo sank 4.7 percent to 1,820 pence. The London-based drinks group said organic sales rose 1.8 percent in the six months through December. That compared with the median estimate of a 3.5 percent increase.
Diageo was one of two shares that had a sudden price swing today. The stock plunged 11 percent to 1,691 around 9:25 a.m. before paring losses. HSBC surged 9.9 percent to 688 pence around 11:20 a.m. before falling to 629 pence minutes later.
The FTSE 100 jumped as much as 0.5 percent, reversing earlier losses, before resuming declines within minutes.
“The HSBC spike looks like an erroneous trade -- a fat finger,” Manoj Ladwa, the head of trading at TJM Partners in London, said by e-mail. “Diageo did have weak numbers out and spiked lower. It’s more likely the HSBC trades could be canceled, but the FTSE spike will have to be looked at too.”
SABMiller Plc, the world’s second-biggest brewer, slipped 1.7 percent to 2,753 pence, its lowest price since November 2012. A gauge of food and beverage companies posted the worst performance of the 19 industry groups on the Stoxx Europe 600 Index.
Burberry Group Plc lost 2.8 percent to 1,411 pence, as retailers and personal-goods companies fell in the Stoxx 600.
Standard Chartered dropped 2.1 percent to 1,260.5 pence, falling for a seventh day, its longest losing streak since October. Jefferies rated the bank as underperform, citing slower than expected revenue growth and the lender’s lack of readiness for a deterioration in credit markets.
Serco Group Plc tumbled 17 percent, its biggest loss since at least 1991, to 423.2 pence. The U.K.’s largest provider of outsourcing service to the government said adjusted operating profit for 2014 may be 10 percent to 20 percent less than analysts’ average estimate of 277 million pounds ($457 million).
BSkyB climbed 4 percent to 878 pence. The U.K.’s largest pay-TV broadcaster said first-half sales rose 6.3 percent to 3.76 billion pounds as it signed up more customers for broadband and TV services.
International Consolidated Airlines Group SA increased 3.8 percent to 418.7 pence. Bank of America Corp. added the British Airways owner to its list of top European companies.
Royal Dutch Shell Plc rose 1 percent to 2,147.5 pence. Chief Executive Officer Ben van Beurden promised to slash capital spending and accelerate asset sales to revive earnings. Europe’s largest oil producer issued its first profit warning in a decade earlier this month.