The FTSE 100 was clinging on to gains at the time of writing on Tuesday as a turbulent month of October drew to a close.
London’s leading index had started the session firmly in positive territory before US futures fell, taking European stocks with them.
Investors were digesting a raft of economic data on Tuesday, including weaker US manufacturing data and slower retail sales in Germany.
The ongoing human tragedy in the Middle East also continued to weigh on sentiment.
“We’re at the end of a difficult month for equity markets, shaken by conflict in the Middle East and a mixed set of corporate results. The FTSE 100 and Dax indices are on track to end the month down 4%. In the US, the S&P is looking at a 3% decline on the month. Investors will be hoping for an end-of-year rally to help repair portfolios,” said Russ Mould, investment director at AJ Bell.
Earnings season in the US and UK has been mixed to date, with many companies missing already conservative analyst estimates.
Mould highlighted a number of big losers in October, adding; “NatWest has had a shocker of a time with its share price down more than 23% in October. Rat-catcher Rentokil has shown that its business is not as defensive as one might have thought, with its shares down 30% on the month.”
BP was the latest casualty on Tuesday as shares slipped 4% after missing analyst earnings estimates. The oil major was suffering from lower gas trading activities, and falling oil prices piled further pressure on their refining business.
“The third quarter has been something of a mixed bag for oil & gas supermajor BP. But overall the strong cash flows is still enabling it to invest in new projects, make inroads into the debt position and make generous payouts to shareholders,” said Derren Nathan, head of equity research at Hargreaves Lansdown.
“Whilst the oil pricing outlook remains strong there are some headwinds blowing into the fourth quarter. The high oil price is favourable to the upstream operations but the profits it makes in its petrol station forecourts remain sensitive to the cost of supply. And in refining margins are expected to trend significantly lower. Production is expected to be flat, but with four major projects due to have been completed by the end of the year its building a solid foundation for the future and it has upped its longer-term profit guidance.
“Despite a strong run in the shares, the valuation remains well below the long-term average. The market has been disappointed by today’s results and concerns remain around the Group’s renewable ambitions, but fundamentally BP is well placed to continue building shareholder value.”
Shell will report on Thursday.