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London open: Stocks decline following losses in Asia
UK stocks continued to decline on Tuesday following losses in Asia as oil prices fell below $30 per barrel.
Brent crude fell 2.85% to $29.65 per barrel and West Texas Intermediate dropped 2.9% to $29.48 per barrel at 0856 GMT amid ongoing concerns about an oversupply in the market.
“The pain of an excessive oversupply continues to pressure prices as even Iraq announced record high oil productions for December, pumping more supply into the saturated international oil markets, while crude oil stock piles have perpetually risen, sabotaging any opportunity for a recovery in value,” saidFXTM research analyst Lukman Otunuga.
“Some OPEC ministers are feeling the pressure and have requested for an emergency meeting but these have been swiftly disregarded as it remains very clear the cartel is willing to leave production unchanged to regaining more market share.”
Elsewhere, stocks in China plunged to 13-month lows, dragging down the rest of Asia, on worries that capital outflows will accelerate as the economy slows and support and the yuan devalues. The Shanghai Composite Index fell 6.4% to 2,749.79 at the close. It came despite the People’s Bank of China flooding the system with cash to keep borrowing costs in check ahead of the Lunar Holiday.
Connor Campbell, financial analyst at SpreadEx, said the Asian session has “already set a sour tone of trading, something that looks likely to continue throughout the day’s European session”.
In economic data, the focus is in the US with the release of the house price index at 1400 GMT, the S&P Shiller Composite at 1400 GMT, Markit’s services purchasing mangers’ index at 1445 GMT, the consumer confidence report at 1500 GMT and the Richmond Fed manufacturing indext at 1500 GMT.
On the company front, PZ Cussons tumbled after reporting a dip in reported revenue and drop in pre-tax profit, reflecting foreign exchange headwinds.
Dixons Carphone slumped after lifting profit guidance slightly above consensus forecasts and saying it will go ahead with the full roll-out of stores in the US. The group reported like-for-like sales were up 5% in the third-quarter, with an all-time record day on Black Friday as the FTSE 100 electronics retailer said it now expected profit before tax to range between £440m and £450m for the full year.
Crest Nicholson gained after the housebuilder beat profit expectations for the full year on sales revenues rising 26% to £804.8m and said it was confident of meeting its target of £1bn for the new financial year.
Card Factory declined after saying it was looking towards a solid annual performance on Tuesday, with increased like-for-like sales growth and constant total sales growth in the 11 months to 31 December 2015.
