In contrast with the previous session, UK equities were under the cosh on Wednesday as commodity prices retreated, taking with them many of the London-listed natural resource plays, and economic recovery concerns once again took hold.
The FTSE 100 index slipped 18.3 points lower to close down 0.3% at 5,762.1, while the FTSE 250 index ended little changed—6.0 points, or 0.1%, weaker at 10,428.0.
Stocks were choppy as Greece’s debt concerns returned to the fore, while investors also awaited comments from both the US and UK governments on their economy’s recovery. The Bank of England will tomorrow announce its rate decision, which is presumed to show no change to either the rate or the quantitative easing programme, but any accompanying comments on the health of the British economy will be more closely eyed. In the US, investors await remarks on continued economic challenges from Federal Reserve Chairman Ben Bernanke, due shortly. Yesterday's FOMC minutes temporarily eased fears of rate hikes, but monetary policy worries resurfaced ahead of Bernanke's speech.
Returning to the stock markets, a little over a third of the FTSE 100 components managed to make headway on Wednesday—at the top was listed hedge fund firm Man Group after its flagship AHL fund increased by almost 4% in net asset value over the past week. Man Group shares topped the leaderboard with a 6.1% jump.
Other gainers included plays from a wide range of sectors but defensives stood out. Imperial Tobacco, Next, Centrica and AstraZeneca were among those consumer staples, utilities and pharma stocks that attracted buyers, each rising between 1.1% and 2.6%.
On the downside, however, there was a lot more activity. Cairn Energy and BG Group led the oil & gas stocks lower, down 3.0% and 1.9%, respectively, as the price of crude came off recent highs, while Antofagasta and Rio Tinto were among those mining companies that saw their shares hit by weaker metal prices.
But it was Petrofac that led the losers with a drop of 4.1% following its demerger, from which newly-listed EnQuest was created and experienced its first fall on the FTSE 100 index of 3.6%.
Index heavyweight Vodafone applied some additional pressure to the blue chip index, sliding 1.2%, as another day passed when a resolution to its long-running relationship with joint venture Verizon Communications failed to emerge.
On the second tier, Heritage Oil stood out—for the wrong reasons—after announcing its oil assets sale in Uganda and the completion of a well appraisal in Iraq will take several months longer than previously thought. Heritage closed the London session down 10.8%.
