Even rallying mining shares couldn’t propel the FTSE 100 to a gain on Wednesday morning, as ex-dividend days for heavyweight energy companies Shell and BP dragged the market lower.
While most other European markets were slightly higher, the FTSE fell 0.3% or 15 points to 6,320. Trading without their dividend attractions, BP (BP.L) dropped 1.6% to 452p and Shell (RDSb.L) fell 1.4% to 2184p. Software firm Sage (SGE.L) was also ex-dividend, down 1.3% to 338p, as was AstraZeneca (AZN.L), off 2.4% to 2,945p.
Miners and energy companies though powered higher, following gains on US and Asian stock markets. Investors are awaiting major economic news from the US and Europe, while last night US president Barack Obama, delivering his annual State of the Union address, urged Congress to support his plans to reignite the economy.
Major currencies were little moved on Wednesday morning, in contrast to gyrations yesterday amid mixed messages from the G7 that had seen the Japanese yen move sharply higher. Currency analysts said the G7 had not done enough to prevent the yen's continued decline.
Tullow Oil (TLW.L) was the top riser in London, with shares up 2.2% to £12.06 after the Citywire Top Stock reported a 3.8% decline in 2012 net profit, but said it had an ‘excellent platform for growth in 2013’.
Rio Tinto (RIO.L) gained 2% to £37.45 ahead of tomorrow’s 2012 earnings report, where Nomura analysts say investors could be in for a dividend ‘bump'.
Supergroup (SGP.L) rose 1% to 698p on news that rival fashion chain Republic is poised to enter administration. Seymour Pierce reiterated its ‘buy’ recommendation on Supergroup, pointing to continued improvements in its stores and the potential for further high street shop closures to bolster its position.
Reckitt Benckiser (RB.L) edged higher after the consumer products company announced better-than-expected 2012 earnings. Deutsche Bank raised its target price for the shares to £48 after the ‘strong’ results. The German bank has a ‘buy’ recommendation on Reckitt praising its ‘attractive TSR [total shareholder return] and a rapidly recovering growth profile’.
Ahead of theBank of England’s quarterly inflation report this morning, the CBI said the UK was ‘beginning to see the return of organic growth’. The employers’ group forecasts GDP growth of 1% in 2013, slightly below its previous forecast of 1.4%.
While ongoing problems in the global economy would keep growth in check, ‘Recent business surveys also give grounds for cautious optimism about our forward prospects,’ the CBI’s update said.