Wednesday 15 August 2018

London market dives despite Centrica share rally

The FTSE 100 Index closed down 29.18 points to 7,252.39.

A view of the London Stock Exchange sign in the City of London (PA)
A view of the London Stock Exchange sign in the City of London (PA)

By Ben Woods, Press Association Chief City Correspondent

London’s premier index sank into the red despite a rousing performance from British Gas owner Centrica as it kept its dividend on hold in the face of falling profits.

The FTSE 100 Index closed down 29.18 points to 7,252.39, with the energy giant emerging as the biggest riser, up more than 7% or 9.9p to 142.2p.

The company’s UK business division suffered a whopping 92% fall in adjusted operating profit to just £4 million for the full year to December 31, while its UK home arm managed a 1% rise to £819 million.

It compounded pain caused by a drop in its North American business unit, resulting in a 17% fall in group adjusted operating profits to £1.25 billion, although on a statutory basis, operating profits plunged 80% to £486 million.

Across Europe, Germany’s Dax was 0.1% lower and the Cac 40 in France rose by 0.1%.

On the currency markets, sterling lifted 0.3% versus the US dollar at 1.396 despite the UK economy growing at a slower pace than originally thought in the fourth quarter of last year.

The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.4% in its second estimate for October to December 2017, revising down a first estimate of 0.5%.

The move caught economists off guard, with consensus figures predicting that the statistics agency would stick by its initial estimate made in January.

It means growth stuttered towards the end of 2017, failing to accelerate beyond the 0.4% recorded during the third quarter.

The pound managed to climb against the greenback following an afternoon sell-off of the dollar. Against the euro, sterling was 0.1% lower at 1.132.

The price of oil pushed 2% higher at $66.38 a barrel in a response to a drop in US oil inventories by 1.61 million barrels, easing concerns over the global supply glut.

Elsewhere in UK stocks, Barclays was among the biggest risers despite a mixed update from the banking giant, which swung to a bottom-line loss of nearly £2 billion after a string of hefty charges.

Shares closed 4% higher, up 8.9p to 211p, with boss Jes Staley hailing a year of “considerable strategic progress” as pre-tax profits rose 10% to £5.3 billion for 2017.

However, it booked an after-tax loss of £1.9 billion against profits of £1.6 billion in 2016.

It was pushed into the red by £2.5 billion in previously announced losses from the sale of Barclays Africa Group and a £901 million charge from the US president’s January 1 corporate tax changes, as well as a £127 million blow in the fourth quarter from failed outsourcing giant Carillion.

In a contrast of fortunes, defence giant BAE Systems saw its share price sink 2% after reporting a drop in annual profits and said it expects earnings to flatline in 2018.

The company said lower growth forecasts for its applied intelligence unit resulted in a £384 million hit, which helped drag operating profit down 15% to £1.48 billion in 2017 from £1.74 billion a year earlier.

Shares were down 16.4p to 585p, as sales for the year rose just 3% to £19.6 billion, which the company said largely reflected currency effects.

The biggest risers on the FTSE 100 Index were Centrica up 9.95p to 142.2p, Barclays up 8.9p to 211p, NMC Health up 110p to 3,510p, RSA Insurance up 19.6p to 632.6p.

The biggest fallers were Barratt Developments down 15.6p to 551.8p, BAE Systems down 16.4p to 585p, HSBC down 19.2p to 728.1p, TUI down 34p to 1,545p.

Press Association

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