The FTSE 100 index had been set to finish the week flat but a 0.6% slide on Friday following disappointing earnings and data from the US and led lower by mining stocks dragged on the overall performance.
The UK benchmark index shed 32.7 points to close at 5,193.2, while the FTSE 250 index lost 59.0 points or 0.6% to 9,246.2. The losses weren’t as marked as in the United States, however, where Wall Street’s benchmark indices had each fallen around 1.0% by the time of the UK close after Bank of America and General Electric both dampened investors’ hopes for a strong earnings season.
Bank of America recorded a third-quarter loss of $1 billion or $0.26 per diluted share—greater than the market had predicted and down from a $1.2 billion profit in the same period a year ago.
Stellar earnings reports from industry stalwarts Alcoa and JP Morgan earlier may have set the bar too high, commented City Index market strategist Joshua Raymond. “The problem is investors want to see other companies outperforming just as much as JP Morgan and when they don’t, that little bit of rush of blood to the head that boosted the FTSE 100 to new 12 month highs calms quickly.”
Also weighing on indices on both sides of the pond was a larger-than-expected fall in a US consumer confidence reading for October. The University of Michigan preliminary index of consumer sentiment slipped to 69.4 from 73.5 in the previous month.
Here in the UK, metal extractors were the main drag on the blue-chip index as gold and copper prices moved off recent highs.
Kazakhmys, Fresnillo and Antofagasta were the industry’s main casualties on the FTSE 100, each dropping 2.9%, 2.6% and 2.4%, respectively. Peer Xstrata, which was also out of favour, lost 2.2% after chief executive Mick Davis implied on Thursday that, despite the Anglo-Swiss firm dropping its merger proposal for Anglo American yesterday, it may pick up bid plans again in the future.
The index’s main faller on Friday was Sainsbury. The supermarkets group shed 4.0% as investors took profits following the previous day’s 10% jump, which came on the back of takeover rumours surrounding the Qatar Investment Authority.
Following Bank of America’s quarter earnings, UK banks were also down in the dumps, with Royal Bank of Scotland, HSBC and Standard Chartered sliding 1.9%-2.4% apiece amid heightened fears of a disappointing earnings season. Lloyds Banking Group shunned the broader trend to take on 1.9%, however, as talk gathered pace that the group could be soon to confirm asset sales.
Helping to offset these losses, oil & gas producers climbed higher in Friday deals, tracking the 3% jump in crude prices overnight. Tullow Oil, Cairn Energy and Royal Dutch Shell featured among the top performing blue-chips, with gains of 1.2%-1.8% each.
There was some excitement on the second tier, where troubled bus and rail operator National Express slumped 23.1%--its largest single-day fall since 2001—after buyout firm CVC Capital Partners dropped its £765 million bid for the group.
National Express now plans to attempt to shore up its balance sheet via a share sale in the coming weeks.
