FTSE index retreats, engineering shares fall
LONDON – Britain’s share market fell back on Thursday from its gains in the previous session, with some engineering companies such as Smiths Group and Rotork falling because of concern about their outlooks.
Rotork, which makes valve-automation equipment used in the oil and gas, power and nuclear industries, fell 16 percent. The company said it expected a decline in full-year revenue and operating profit after projects were deferred and cancelled and trading in August was “particularly weak”.
Engineer Smiths Group, whose clients include oil majors BP and Chevron Corp, fell 4 percent. Traders blamed the effect of Rotork’s update.
“Engineers, especially those operating in the oil and gas sector, have a grim outlook given weaker oil prices. The challenging environment has been forcing oil companies to defer or cancel orders, hitting revenues of engineering firms,” said Jawaid Afsar, a trader at Securequity.
Another valve and pump maker, Weir Group, fell 4.2 percent. It was also hurt by its demotion from Britain’s FTSE 100 index following a quarterly reshuffle.
Engineering and support services company Babcock International fell 2 percent. Exane BNP Paribas cut its target price for the stock to 900 pence from 1,050 pence, saying “we are becoming increasingly concerned about the earnings risk profile … ”
The FTSE 100 index was down 0.4 percent at lower at 6,206.07 points by 0826 GMT. It gained 1.5 percent in the previous session, when it set a one-week high.
Some investors avoided moves before the Federal Reserve’s interest rate decision at the end of a two-day policy meeting late on Thursday.
A rate increase would be the first in the United States in nearly a decade. The Fed will also issue new economic projections that will provide insight into the pace of future rate hikes.
Merlin Entertainments fell 1.5 percent after the world’s second-biggest visitor attractions operator said summer trade had remained weak at its UK theme parks after a roller coaster crash at its Alton Towers resort in June.
“The aftermath of the Alton Towers tragedy is still being felt in terms of a reduction in visitor numbers, with the possibility that this may yet follow through to next season,” Richard Hunter, head of equities at Hargreaves Lansdown, said. -Reuters