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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | Stocks jump on US data as Syria concerns recede Markets finished strongly on Thursday, rebounding after recent falls as concerns over an impending Western intervention in Syria eased slightly and US growth estimates were revised higher.
One of London’s largest constituents, Vodafone, was providing a lift on the FTSE 100 today on hopes that it can secure a deal to sell its 45% stake in Verizon Wireless for well over $100bn. Some well-received results from blue chips Melrose and WPP were also boosting markets.
“A much more positive session in European markets today, helped in part by the likelihood that any decision on imminent military action in Syria has receded somewhat on the basis that a political consensus may take a little longer to achieve, which could see cooler heads prevail on a knee-jerk military response,” said Senior Market Analyst Michael Hewson from CMC Markets.
The FTSE 100 finished 52.99 points higher at 6,483.05, a rise of 0.82% on the day.
Helping stocks this afternoon was an upwardly-revised estimate of second-quarter economic growth in the States. US gross domestic product is now said to have expanded at an annualised rate of 2.5%, well above the preliminary 1.7% estimate and ahead of the 2.2% growth analysts were expecting. Initial jobless claims from the US also came in better than forecasts today.
Syria in focus as leaders hesitate on action
Markets have been hit this week by concerns about a potential Western military action in Syria in response to last week's alleged chemical weapons attack that killed over a thousand civilians. While the government has denied responsibility, leaders in the US and UK have agreed that they must be held accountable.
The world is now waiting for a UN report due out later this week of the findings from its chemical weapons inspection team, currently in Damascus.
President Barack Obama said last night on PBS NewsHour that he has not yet decided on a course of action to take but assured that the US won't get drawn into the Syrian civil war. "We can take limited, tailored approaches, not getting drawn into a long conflict, not a repetition of, you know, Iraq, which I know a lot of people are worried about,” he said.
However, he did say that retaliation for using chemical weapons would send a "pretty strong signal" to Bashar Assad's regime.
The threat from disruptions to oil supplies in the Middle East (in the event of action against Syria) had sparked a surge in crude prices - West Texas futures jumped to its highest level in over two years yesterday - which risks eroding growth prospects for the global economy. Oil prices however pulled back today, easing the downward pressure on stocks.
Fears over a looming Western intervention also lessened today after UK Prime Minister David Cameron backed down from taking a vote on military action, as Labour leader Ed Miliband demanded “compelling evidence” from UN inspectors on the use of chemical weapons before making a move.
FTSE 100: Vodafone surges as talks resume with Verizon
Telecoms group Vodafone, one of the biggest companies in terms of market capitalisation on the FTSE 100, was a high riser after confirming that it has restarted talks with partner Verizon about the possibility of selling its stake in their US joint venture, Verizon Wireless. It is speculated that Vodafone could receive as much as $130bn from the sale of the 45% interest through a mixture of cash and stock, making it the third-largest deal in history.
Engineering investment firm Melrose Industries also jumped after seeing revenues and profits more than double in the first half as results were boosted by Elster - the gas, electricity and water measurement business it acquired last year.
Advertising and media giant WPP was also making decent gains after revealing a 19% increase in half year pre- tax profit as slowing growth rates among emerging markets were eclipsed by a strong performance among mature markets like North America and the UK.
Airline peers IAG and easyJet were also higher, rebounding as oil prices edged lower. The recent surge in crude had sparked worries over rising jet fuel costs for the travel industry.
Leading the downside was outsourcing group Serco which dropped 11% after it was revealed that it is under investigation by the City of London police in regards to a "misreporting of data" by a number of employees. Serco said it will forgo any past and future profits on the £285m contract to escort prisoners to and from court. Investors were largely ignoring a strong first-half report by the company this morning which showed a 10.5% rise in first-half adjusted profits.
Insurance firm Admiral was also lower after its first-half results as markets were underwhelmed by a 6% rise in profits and an 8% increase in the interim dividend.
Education and publishing group Pearson was hit by a downgrade by Deutsche Bank this morning to 'sell' on the back of its exposure to a rapidly changing industry in the face of improving technology. In contrast, building materials firm Travis Perkins was higher after Citigroup upgraded it to 'buy', saying it is a good way to play the improving performance of the UK housing market.
FTSE 250: Salamander rockets after first-half results
Asia-focused oil and gas group Salamander Energy saw shares surge after impressing investors with its first-half report and maintaining its full-year production guidance. Salamander managed to increase output by 39% year-on-year to 14,900 barrels of oil equivalents per day in the first half despite some disappointment earlier in the year regarding a drilling programme offshore Indonesia. Elsewhere, the firm said that development of the Bualuang field off Thailand is running ahead of expectations.
EVRAZ, the Russian steel group, was performing well despite swinging to a half-year loss on the back of weak pricing as investors welcomed its announcement to scale back capital expenditure for the full year.
Bus and train operator Stagecoach gained after saying trading overall since the start of the fiscal year May 1st has been good and its prospects remain positive driven by its regional bus business and operations in the US. |
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| | FTSE 100 - Risers
Vodafone Group (VOD) 204.75p +8.16%
Melrose Industries (MRO) 301.80p +6.12%
WPP (WPP) 1,227.00p +4.16%
easyJet (EZJ) 1,259.00p +3.88%
GKN (GKN) 335.80p +3.61%
Petrofac Ltd. (PFC) 1,423.00p +3.49%
CRH (CRH) 1,379.00p +3.45%
Aggreko (AGK) 1,625.00p +3.37%
InterContinental Hotels Group (IHG) 1,843.00p +3.08%
Fresnillo (FRES) 1,321.00p +2.56%
FTSE 100 - Fallers
Serco Group (SRP) 538.50p -11.21%
Antofagasta (ANTO) 849.00p -2.92%
Pearson (PSON) 1,280.00p -2.74%
Vedanta Resources (VED) 1,187.00p -1.82%
BG Group (BG.) 1,245.00p -1.78%
Randgold Resources Ltd. (RRS) 5,105.00p -1.73%
Admiral Group (ADM) 1,270.00p -1.55%
Anglo American (AAL) 1,507.00p -1.54%
Amec (AMEC) 1,050.00p -1.13%
Glencore Xstrata (GLEN) 308.05p -1.06%
FTSE 250 - Risers
Hochschild Mining (HOC) 267.10p +13.66%
Salamander Energy (SMDR) 132.10p +10.08%
Evraz (EVR) 134.00p +7.46%
Stagecoach Group (SGC) 327.80p +6.64%
Thomas Cook Group (TCG) 141.00p +6.33%
Anite (AIE) 116.80p +5.13%
Centamin (DI) (CEY) 43.00p +4.80%
Polymetal International (POLY) 730.50p +4.66%
Greene King (GNK) 837.50p +4.17%
African Barrick Gold (ABG) 187.00p +3.95%
FTSE 250 - Fallers
Xaar (XAR) 830.00p -4.54%
Hunting (HTG) 831.50p -4.21%
F&C Asset Management (FCAM) 99.90p -2.92%
Diploma (DPLM) 605.50p -2.89%
Ferrexpo (FXPO) 168.20p -2.49%
EnQuest (ENQ) 124.50p -2.12%
Berendsen (BRSN) 870.00p -2.08%
Devro (DVO) 316.80p -1.86%
Dairy Crest Group (DCG) 505.00p -1.75%
Lonmin (LMI) 344.10p -1.71% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Stocks jump on upbeat US data FTSE 100: 0.93%
DAX: 0.37%
CAC 40: 0.67%
FTSE MIB: 0.97%
IBEX 35: 0.40%
Stoxx 600: 0.77%
European stocks rose following upbeat US data and as the UK’s plans for a military strike were delayed. The central bank has said it would start trimming stimulus once the economy picks up enough with economists predicting the Fed to make its move in September.
In Germany, a report showed unemployment unexpectedly rose in August by a seasonally adjusted 7,000 to 2.95m, the Nuremberg-based Federal Labor Agency revealed on Thursday.
Analysts had forecast a drop by 5,000 compared to last month’s decline of 7,000.
Syria strike delayed
UK Prime Minister David Cameron has seemingly backed down on plans for military action in Syria after opposing lawmakers warned the leader of the "lessons of Iraq".
Opposition leaders reminded Cameron of when Britain helped the US to invade Iraq after asserting that President Saddam Hussein possessed weapons of mass destruction which later turned out to be wrong.
The UK and other Western governments are now mulling over an intervention in Syrian after US leaders accused the country’s regime of using chemical weapons against civilians last week.
United Nations inspectors are currently investigating the allegations against the Syrian regime which is expected to last until Friday.
UN Secretary-General Ban Ki-moon said the team, which arrived in Syria on August 18th, would report to him as soon as they leave the country on Saturday morning following their investigation.
Reports that military action will be delayed at least several days while the case is laid out to US and UK lawmakers helped to soothe markets.
Vodafone is top riser
Vodafone advanced after saying Verizon Communications is in talks to buy its stake in the Verizon Wireless venture.
Baloise Holding gained after the Swiss insurer reported an increase in first half net income and said it was on track to meet financial targets.
Carrefour SA surged after reporting a 4.9% increase in first-half profit.
WPP edged higher after the advertising company said first-half sales increased 7.1%, driven by strong performance in the UK and North America.
Serco Group slumped after confirming that the UK Ministry of Justice has called police over the misreporting of data by "a small number of employees" associated with Serco's Prisoner Escort and Custody Services contract.
Zurich Insurance Group plunged after announcing Chairman Josef Ackermann will resign with immediate effect.
Vienna Insurance Group declined after Austria’s biggest insurer reported second-quarter pre-tax profit that fell short of analysts’ estimates.
Brent crude snaps rally
Brent crude futures pulled back from two-year highs, falling $0.500 to $116.030, following reports of a delay in military action by the West in Syria.
The euro/dollar fell 0.88% to the 1.3222 dollar mark. |
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| | US Market Report | | Stocks rise on upbeat GPD and jobless reports US stocks advanced as gross domestic product in the second quarter accelerated faster than expected and as jobless benefit claims fell in line with forecasts.
GDP grew at a 2.5% annual rate in the April to June period, according to revised estimates from the Commerce Department. The government had initially reported that GDP had expanded at a 1.7% rate.
Economists had forecast the revised estimate to come in at a 2.2%.
GDP was boosted by recent trade data which showed that exports climbed during the period at their fastest pace in over two years.
Separately, US jobless claims in the week ended August 24th fell 6,000 to 331,000 from a revised 337,000 a week earlier, the Labor Department said.
The upbeat data might provide the Federal Reserve with an excuse to begin scaling back its $85bn per month in bond purchases at its next meeting in September.
The central bank has said it would start trimming stimulus once the economy picks up enough.
Meanwhile, the US and other Western governments are mulling over military action in Syria.
The Syrian regime has been accused of using chemical weapons against civilians which left about 300 dead last week.
United Nations inspectors are currently investigating the allegations against the Syrian regime which is expected to last until Friday.
UN Secretary-General Ban Ki-moon said the team, which arrived in Syria on August 18th, would report to him as soon as they leave the country on Saturday morning following their investigation.
Fears over a potential intervention have pushed the price of oil in the US to a two-year high this week. The price fell back to around $109 per barrel on the NYMEX on Thursday after crude stockpiles in the US rose more than expected.
Soothing Syria concerns on Thursday was news that action will be delayed at least several days while the case is laid out to US and UK lawmakers.
The 10-year US yield has increased from a low of 2.720% on Tuesday to 2.780% on Thursday, suggesting that investors were calming down.
Turning to company news, Campbell Soup retreated after posting a fourth quarter loss after weaker-than expected sales, higher costs and a write-down related to its European unit.
Verizon Communications gained in pre-market New York trading as Vodafone Group said the companies are in talks over the sale of a stake in their Verizon Wireless venture.
Guess rallied after reporting second-quarter adjusted earnings per share that beat analysts’ estimates.
Coca-Cola fell following news gay rights groups protested against the company over its sponsorship of the 2014 Winter Olympic Games in Russia, saying the soft drinks giant "supports hate" by staying silent towards Russia's controversial new law on gay propaganda. |
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| | Broker Tips | | Afren: Westhouse Securities shifts target from 160p to 165p and reiterates a buy recommendation.
BAE Systems: Bank of America aises target from 328p to 412p, while staying with its underperform rating.
Cape: JP Morgan takes target from 308p to 323p and stays with its overweight rating.
Carillion: Liberum Capital moves target from 260p to 280p, while its hold recommendation remains unchanged.
Chemring: JP Morgan increases target from 300p to 325p and maintains an overweight rating.
Close Brothers Group: Panmure Gordon initiates with a target of 1105p and a buy recommendation.
Darty: N+1 Singer ups target to 85p, while downgrading from buy to hold.
Diageo: JP Morgan revises target from 2150p to 2200p and retains an overweight rating.
G4S: Exane moves target from 240p to 260p staying with its neutral rating.
Hunting: JP Morgan takes target from 727p to 752p, while leaving its underweight rating unaltered.
IMI: HSBC increases target from 1530p to 1675p, while downgrading to neutral.
Imperial Tabacco Group: Investec moves target from 2440p to 2475p reiterating a buy recommendation.
Inmarsat: JP Morgan raises target from 750p to 800p maintaining its overweight rating.
International Personal Finance: Panmure Gordon initiates with a target of 700p and a buy recommendation.
Kentz Corporation: HSBC ups target from 600p to 615p retaining a neutral rating. Liberum Capital revises target from 590p to 610p and keeps its hold recommendation.
Lamprell: JP Morgan shifts target from 164p to 166p and stays with its neutral rating.
Meggitt: Bank of America moves target from 550p to 570p reiterating its buy recommendation.
Melrose: Investec revises target from 300p to 315p and keeps a buy recommendation.
Office2Office: Panmure Gordon lowers target from 68p to 57p, while upgrading from hold to buy. WH Ireland cuts target from 100p to 60p and retains an outperform rating.
Ophir Energy: JP Morgan reduces target from 550p to 460p, while leaving its overweight rating unchanged.
Paragon: Panmure Gordon initiates with a target of 390p and a buy recommendation.
Pearson: Deutsche Bank cuts target from 1225p to 1000p downgrading from hold to sell.
Playtech: Investec takes target from 600p to 690p and retains a hold recommendation.
Provident Financial: Panmure Gordon initiates with a target of 1700p and a hold recommendation.
Rotork: HSBC ups target from 2600p to 2650p, while leaving its underweight rating unchanged.
Shire: Berenberg moves target from 2250p to 2350p keeping a hold recommendation.
Smiths Group: HSBC reduces target from 1550p to 1400p and downgrades to neutral.
SOCO International: JP Morgan lowers target from 417p to 413p keeping its neutral rating.
Stagecoach: Investec shifts target from 320p to 325p retaining an add rating.
Travis Perkins: Citi upgrades from neutral to buy with a target of 1745p.
Ultra Electronics: Bank of America ups target from 1960p to 2050p and keeps a buy recommendation.
UNITE Group: Numis takes target from 381p to 415p, while downgrading from buy to add.
Wolseley: Citi increases target from 3400p to 3600p and upgrades from neutral to buy.
WPP Group: Investec places its target prev.: 1250p under review keeping its buy recommendation.
Xaar: Investec raises target from 840p to 920p maintaining an add rating. | | |
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