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London open: Standard Chartered and BHP Billiton lead equities lower
UK stocks fell on Tuesday, led by declines in Standard Chartered and BHP Billiton following weak financials from both.
BHP Billiton dragged mining stocks lower after swinging to a loss for the first time in more than 16 years. The group posted a loss of $5.67bn for the six months to December 2015, compared to a profit of $5.35bn for the same period in 2014, as lower commodity prices hurt revenue. The company decided to cut its interim dividend to 16 cents a share from 62 cents a share.
Standard Chartered was under the cosh after it posted a surprise annual pre-tax loss of $1.5bn, down from profit of $4.2bn a year earlier. Revenue fell 15%to $15.4bn, missing estimates of $15.9bn.The bank’s decision to expand across emerging markets has left it with bad loans after an economic slowdown and slide in commodity prices. Standard Chartered’s common equity Tier 1 capital ratio fell to 12.6% from 13.1% at 30 September.
On the upside, housebuilding stocks reversed declines after Persimmon reported a 34% increase in full year underlying profit before tax to £637m, as revenues rose 13% to £2.9bn, driven by a gain in the average selling price and a jump in legal completions.
Meanwhile, the Brexit debate remains in focus after London Mayor Boris Johnson’s shock decision to back the campaign to leave the European Union sent the pound tumbling on Monday. The pound was down 0.18% against the US dollar at 0909 GMT on Tuesday. The Independent on reported that bosses at more than a third of Britain’s biggest businesses are backing the campaign to remain in the EU. Asda, BT, Marks & Spencer, Kingfisher and Vodafone chiefs supported a letter warning of the risks to the economy of exiting the bloc.
In other UK news, Bank of England Governor Mark Carney and fellow Monetary Policy Committee members are due to testify at 1000 GMT.
Elsewhere, the IFO revealed that German business confidence declined in February. The sentiment index dropped to 105.7 this month from 107.3 in January, missing analysts’ estimates of 106.8.
Still to come, the S&P/Case Shiller house price index is released at 1400 GMT, US consumer confidence figures are due at 1500 GMT and existing home sales data will be published at 1500 GMT.
