FTSE LIVE: Footsie falls with traders cautious ahead of tight U.S. election

| November 5, 2012 | 0 Comments

By
This Is Money Reporters

03:07 EST, 5 November 2012


|

12:42 EST, 5 November 2012

17.25 (CLOSE):The prospect of a knife-edge US presidential election shook investors’ confidence and sent the London market lower today.

The FTSE 100 Index closed 29 points lower at 5839 as President Barack Obama and Republican Mitt Romney fought a close-run battle. Germany’s Dax and the Cac-40 in France were both lower.

The president and Mr Romney are running almost neck-and-neck in national polls, but pointers from many key battlegrounds show Mr Obama narrowly ahead.

Going to the wire: The prospect of a tight election day in America has hit investors' confidence.

Going to the wire: The prospect of a tight election day in America has hit investors’ confidence.

The sentiment was dampened further after a purchasing managers survey for the US services sector revealed a worse-than-expected slowdown in growth in October.

The pound fell against the US dollar to 1.59 as the uncertain outlook boosted the greenback’s perceived status as a safe haven investment. Sterling was up against the euro at 1.24.

The poor sentiment hit miners with Eurasian Natural Resources sliding to the bottom of the index, dropping 12.2p to 321.3p, while Vedanta Resources lost 42p at 1118p.

HSBC shares were more than 1 per cent lower after a 51% slide in the bank’s reported pre-tax profits for the three months to 30 September of 3.5 billion US dollars (£2.2 billion).

The bank set aside an additional 800 million US dollars (£500 million) to cover fines from US authorities for breaching anti-laundering rules, while it also took an extra 353 million US dollar (£220 million) hit to cover customer compensation.

Shares in the lender were down 8.1p at 618p.

The wider banking sector was under similar pressure, with Royal Bank of Scotland off 4.8p at 276.5p, Lloyds Banking Group down 0.6p at 42.9p and Barclays losing 3.7p at 237.5p.

Prudential shares came under pressure after the insurer entered into a long-term partnership in Thailand with Thanachart Bank.

The deal will see the Pru buy the Thanachart Life Assurance Company from Thanachart, the fifth largest retail bank in Thailand, for £358 million in cash. Shares were 2.5p lower at 856p.

Weir Group was the biggest riser on the FTSE 100 as the pumps and valves maker said it expected to report full year profits of £440 million to £450 million, in line with market expectations.

The upbeat forecast came despite the group, which focuses on oil and gas markets, revealing that revenue and profits growth had slowed in the third quarter due to a lower opening order book. Shares were ahead 80p at 1831p.

Outside the top flight, shares in low-cost airline Ryanair were 6 per cent higher after the low-cost carrier said it now expected full-year profits of between 490 million and 520 million euros (£392 million-£416 million), up from 400 million to 440 million euros previously forecast.

The upgrade followed a better than expected summer, with a post-Olympics rush for getaways helping to lift profits by 10%. Shares were 0.27 cents higher at 4.81 euros.

The biggest Footsie risers were Weir Group up 80p at 1831p, GlaxoSmithKline ahead 22.5p at 1384p, British American Tobacco up 30.5p at 3128p and International Airlines Group ahead 1.6p to 170.7p.

The biggest Footsie fallers were Eurasian Natural Resources down 12.2p at 321.3p, Vedanta Resources off 42p at 1118p, ITV down 2.2p at 87.4p and Kazakhmys off 17.5p at 717.5p.

16.25: Alastair McCaig, market analyst at IG, said: ‘European markets have tumbled today on fears over Greece’s ability to meet austerity hurdles.

‘The tone for the day was set from the open, with Spain announcing that unemployment levels were rising at a faster-than-anticipated rate.

‘These worries were highlighted by the mid-morning German government bond auction that saw traders accepting a negative yield, as demand for the most stable of the eurozone’s government debt drove up prices as traders hunted for safe investments.

Tight: President Barack Obama and Republican challenger Mitt Romney are neck-and-neck in opinion polls

Tight: President Barack Obama and Republican challenger Mitt Romney are neck-and-neck in opinion polls

‘Greece has until Wednesday for their
coalition government to agree to austerity measures that will ensure
they receive the next tranche of eurozone bailout funds. A demonstration
of market confidence that this would be achieved was highlighted by the
negative price action of European banks that are most heavily exposed
to Greek debt, as the banking sector dragged down most European
markets.’

16.00:

Investors took a step back from the
markets today as US presidential election hopefuls Barack Obama and Mitt
Romney were running almost neck-and-neck in national polls.

Wall Street’s Dow Jones followed
European markets into the red, losing 2.6 points to 13,096, amid ongoing
uncertainty over the race for the White House.

The
Footsie is 30 points lower at 5,837 as the prospect of a knife-edge
contest between President Obama and Mr Romney quashed any appetite for
risk.

The sentiment was
dampened further after a purchasing managers survey for the US services
sector revealed a worse-than-expected slowdown in growth in October.

The weak sentiment hit miners with
Vedanta Resources sliding to the bottom of the index, dropping 48p to
112p, while Eurasian Natural Resources lost 10.3p at 323.4p.

The banking sector was under similar
pressure, with Royal Bank of Scotland off 4.1p at 277.2p, Lloyds Banking
Group down 0.9p at 43p and Barclays losing 3.3p at 237p.

Prudential shares came under pressure after the insurer entered into a long-term partnership in Thailand with Thanachart Bank.

The deal will see the Pru buy the
Thanachart Life Assurance Company from Thanachart, the fifth largest
retail bank in Thailand, for £358million in cash. Shares were 2p lower
at 856.5p.

Weir Group was the biggest riser on
the FTSE 100 as the pumps and valves maker said it expected to report
full year profits of £440million to £450million, in line with market
expectations.

The upbeat forecast came despite the
group, which focuses on oil and gas markets, revealing that revenue and
profits growth had slowed in the third quarter due to a lower opening
order book. Shares were ahead 98p at 1849p.

09.02:

The Footsie started the week in
negative territory, down 23.7 points to 5844.8, as investors opted to
remain on the sidelines amid uncertainty over the outcome of the
upcoming US presidential election.

Miners recorded some of the biggest
drops, with Rio Tinto down 25.5p at 1134.5p and Vedanta Resources off
25.5p at 1134.5p, a fall of 2 per cent.

Opinion polls have suggested that the race between Democrat Barack Obama and Republican Mitt Romney is too close to call.

Meanwhile, HSBC shares dropped by 1
per cent, off 7.85p at 618.25p, after the banking giant reported a 51
per cent slump in its pre-tax profits for the three months to September
30.

Shares in Ryanair were 8 per cent
higher after airline increased its full-year profit expectations to
between 490million and 520 million euros (£392million-£416million), up
from 400million to 440million euros previously forecast.

The upgrade came after a strong performance during the summer period, as a post-Olympic Games rush for getaways helped to boost
profits by 10 per cent. Shares were 0.35 higher at 4.885 euros.

08.45: The Footsie has fallen more sharply than expected, down 38 points (0.6 per cent) to 5,830.

08.00:

The
FTSE 100 index is seen opening down 22-31 points, or 0.5 per cent
lower, reflecting uncertainty over the outcome of a tightly fought U.S.
presidential election.

U.S.
President Barack Obama and Republican challenger Mitt Romney were
neck-and-neck in opinion polls in the stretch before Tuesday’s vote.

Some analysts say an Obama victory is perceived as negative for equities and a Romney win as stock-friendly.

The UK blue chip index closed up 6.6
points, or 0.1 per cent on Friday at 5,868.5 as U.S. jobs data failed to
move bullish investors who remained cautious ahead of the upcoming U.S.
elections, and with corporate earnings mixed.

HSBC HOLDINGS – The global bank is
expected to report a jump in quarterly profits on Monday as lower losses
from bad debts and a cost-cutting plan outweigh mis-selling charges and
the impact of tough economic conditions across the world.

October’s Markit/CIPS British services PMI report will be published at 0928 GMT.

Across the Atlantic, after Friday’s
mixed October U.S. jobs report, the October U.S. employment index will
be released at 1500 GMT, at the same time as October’s U.S. ISM
non-manufacturing index.

UK CORPORATE DIARY:

WEIR GROUP issues a third-quarter trading update
INMARSAT issues a third-quarter trading update
HISCOX issues a third-quarter trading update
TELECITY GROUP issues a third-quarter trading update
ACTIVE RISK GROUP reports first-half results
E2V TECHNOLOGIES posts first-half results
EGDON RESOURCES reveals full-year results

The comments below have not been moderated.

Obama will be like Major in 1992. Not expected to win, but manages to hold on.

51.3% democrat, 46.6% Republican.

You read it here first!

Winseer
,

Chatham, United Kingdom,
05/11/2012 16:01

Good understanding of the markets you are showing there jetty.

Mark78
,

Suffolk,
05/11/2012 12:43

A load of nonsense. The FTSE isn’t an approval voting system any more than the amount of milk sold in ASDA today bears much on anything. The FTSE has dropped and the pound against the dollar is lower than just after the announcement that the UK was ‘surging’ out of recession when they went on about it as if it was important.

Jetty
,

London, United Kingdom,
05/11/2012 09:13

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