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FTSE flat in trading as heavyweight sectors mixed

Article By: ,  Financial Analyst
January 18, 2012 10:45 PM

The FTSE 100 traded flat on the day by mid morning as weakness in heavyweight oil firms was countered by small strength in mining and financial stocks.

Trader attentions has swiftly focused towards the US earnings season, after Citigroup badly missed profit forecasts yesterday and with Goldman Sachs set to report respective earnings today also, there is a degree of hesitation amongst investors in case they report similarly disappointing numbers to that of Citigroup yesterday and JP Morgan last week.

Reports that the IMF may boost its lending facility to the EU to $1trillion did push stocks up slightly from their lows however.

The early session was dominated by two key stocks reporting updates to the market; Tullow Oil and Man Group.

Tullow Oil shares fall on production outlook
We have seen a bearish reaction from traders to today’s update by oil firm Tullow Oil. Shares have fallen 6% in early trading as investors are disappointed by the production estimates for 2012, which the oil firm forecasts to come in at a median range estimate of 82,000 barrels of oil equivalent per day. Most were looking for that figure to be higher than 90,000 and so there is a fair amount of disappointment from that projection today.

Tullow Oil’s share price has also hit technical resistance at around the 1470p, which has put a roof on gains for much of the last year and indeed with investors seeing the production outlook for the next year missing forecasts, they have moved to reduce their holdings.

Man Group shares rise as net client withdrawals in line with forecasts
Man Group shares saw some respite after a year that has seen prices fall by over 60%, after the world’s largest listed hedge fund reported that net client outflows in the last quarter amounted to $2.5 billion, which was broadly in line with the median of expectations of $2.6 billion.

Net client outflows have been a significant concern for shareholders after the relative poor performance of the firm’s flagship AHL fund last year. Make no mistake, this is still a significant amount of net cash withdrawals from investors of Man Group and whilst this still keeps underlying concerns over the ability of the firm to retain cash from its investors, there had been fears that outflows may have accelerated and so the reaction today with outflows meeting forecasts has been a positive one. Man Group shares rose 5% as a result.

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