London stocks down as energy stocks drag By Pranav Kashyap (Reuters) – London stocks moved lower on Tuesday as investors assessed the chance of an earlier U.S. rate cut against a backdrop of faltering manufacturing activity that could hurt corporate profits, while energy stocks added to losses. The blue-chip FTSE 100 index and the mid-cap […]
London stocks down as energy stocks drag
(Reuters) – London stocks moved lower on Tuesday as investors assessed the chance of an earlier U.S. rate cut against a backdrop of faltering manufacturing activity that could hurt corporate profits, while energy stocks added to losses.
The blue-chip FTSE 100 index and the mid-cap FTSE 250 dropped 0.6% each.
Energy stocks BP and Shell fell 3.4% and 1.9%, respectively, after ratings agency S&P Global revised lower BP’s credit outlook and as oil prices slipped 1%. [O/R]
“It’s a messy old time for investors, falling oil is not great news for some of the big oil companies, which certainly do an awful lot in terms of balancing the FTSE 100,” Danni Hewson , head of financial analysis at AJ Bell said.
The oil and gas sector fell to the lowest in two months.
Investors weighed the potential relief of a September rate cut by the Federal Reserve against the backdrop of a second consecutive dip in U.S. manufacturing activity that could erode revenue for global companies listed on the benchmark index.
Traders are pricing in a 60% chance of a cut by the Fed in September.
Adding to dour sentiment were India’s elections where vote-counting trends showed Prime Minister Narendra Modi’s alliance falling short of a predicted landslide victory. [.BO]
“The FTSE is full of massive global players, and with questions asked about the way forward for India, which has been the absolute global engine of growth, it does impact those globally-facing stocks,” Hewson said.
However, losses were capped as focus turns to the European Central Bank, which meets on Thursday and is anticipated to trim interest rates by 25 basis points.
Carnival Plc was the top gainer on the mid-cap index, with a 4.6% jump after Peel Hunt upgraded the stock to “buy” from “add”.
British American Tobacco lost 1.5% as the cigarette maker sees a small decline in half-year revenue.
(Reporting by Pranav Kashyap in Bengaluru; Editing by Sonia Cheema and Mrigank Dhaniwala)
