LONDON MARKETS: FTSE 100 Sags As Rio Tinto, Standard Chartered Shares Shoved Lower
Construction activity at weakest in nearly a year
U.K. stocks fell Wednesday, with commodity shares, including mining heavyweight Rio Tinto PLC, in the red after underlying earnings were a disappointment. Standard Chartered PLC's downbeat news about dividends prompted a selloff in the lender's stock.
The FTSE 100 lost 0.3% at 7,399.17, with only the consumer-services sector showing a gain. The benchmark on Tuesday climbed 0.7% (http://www.marketwatch.com/story/ftse-100-marches-higher-as-bp-rolls-royce-shares-advance-2017-08-01).
The benchmark was drawn to an intraday low after Standard Chartered (STAN.LN) said it's not ready to begin paying dividends again (http://www.marketwatch.com/story/standard-chartered-dividends-remain-suspended-2017-08-02), but that it will reconsider at the end of the year. Shares were yanked down 5%. The Asia-focused bank, which has been working on resetting its business after a slowdown in growth, posted an increase in first-half profit and revenue.
Shares of rival Asia-focused bank HSBC Holdings PLC (HSBA.LN) were down 0.3%. That lender this week said it would launch another $2 billion in share buybacks (http://www.marketwatch.com/story/hsbc-to-launch-2-billion-buyback-as-profit-up-57-2017-07-31) after second-quarter profit leapt 57%.
Resource stocks: Rio Tinto shares (RIO) (RIO) (RIO) fell 2.3%, struggling near the bottom of the FTSE 100. The iron ore producer's first-half underlying earnings rose to $3.9 billion, but that was below a Thomson Reuters consensus estimate of $4.19 billion. Rio did say it will buy back a further $1 billion in shares (http://www.marketwatch.com/story/rio-tinto-ups-buyback-plans-as-profit-jumps-2017-08-02) and that debt has been reduced.
Other mining shares traded lower, with iron ore miner BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) down 0.9%. Glencore PLC (GLEN.LN) shares also fell 0.9% and copper miner Antofagasta PLC (ANTO.LN)gave up 0.6%, moving off session lows.
Meanwhile, oil prices pushed lower, extending losses from late Tuesday (http://www.marketwatch.com/story/oil-extends-losses-as-oversupply-fears-return-us-data-loom-2017-08-02) after the American Petroleum Institute said U.S. crude inventories unexpectedly rose last week, by 1.8 million barrels. U.S. government data on weekly supplies is due later Wednesday. Shares of oil majors BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) fell 1.2% and 0.3%, respectively.
Stock movers: RSA Insurance Group PLC (RSA.LN) fell 2% even as the company said first-half earnings rose to GBP196 million (http://www.marketwatch.com/story/rsa-insurance-profit-up-amid-restructuring-2017-08-02)($259 million), aided by its restructuring program.
BAE Systems PLC shares (BA.LN)(BA.LN) flipped down 0.3%. Shares had been up about 3% after the weapons maker posted a 11% increase in first-half underlying earnings before interest, taxes and amortization to GBP945 million.
Economic data: Construction activity in July marked in its weakest performance since August 2016, with IHS Markit/CIPS construction PMI coming in at 51.9 in July. That widely missed the 54.3 estimate from a FactSet survey of economists.
Lower volumes of commercial building and slower housing-activity expansion hit the index. As well, a reduction in new business volumes hurt job creation and input buying, according to the survey.
But the pound eventually drifted higher after the report, trading hands at $1.3237 compared with $1.3205 late Tuesday in New York, as the U.S. dollar slipped. Investors are looking ahead to Wednesday's report on U.S. private-sector hiring, due at 1:15 p.m. London time.
Read:Confusion reigns for investors ahead of Bank of England's 'Super Thursday' (http://www.marketwatch.com/story/confusion-reigns-for-investors-ahead-of-bank-of-englands-super-thursday-2017-08-01)
(END) Dow Jones Newswires
August 02, 2017 06:12 ET (10:12 GMT)