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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Markets pause for breath after recent run - UK growth in line with expectations
- FTSE 100 holds at five-month high
- RBS, banks lead UK stocks higher
techMARK 2,639.25 -0.11%
FTSE 100 6,721.34 +0.12%
FTSE 250 15,491.63 -0.23%
Stocks finished broadly flat on Friday as investors adopted a cautious approach ahead of the weekend and refrained from building positions with markets already trading at five-month highs.
Still, London's FTSE 100 inched 8.16 points higher to 6,721.34; it has not closed above this level since May 28th. However, the index was largely rangebound for most of the session with just 24 points separating the index's intraday low (6,704) and high (6,728).
There was little reaction to third-quarter UK gross domestic product (GDP) growth figures this morning which came in as expected by analysts. The UK economy expanded at a quarter-on-quarter rate of 0.8% in the July to September period, a slight pick-up from the 0.7% growth registered in the second quarter and the strongest quarterly growth since the second quarter of 2010.
Analyst Blerina Uruçi from Barclays highlighted comments from the Monetary Policy Committee (MPC) which suggested at its latest meeting that the recovery could be stronger than originally estimated. "This raises risks that policy tightening might begin sooner than had been indicated in the August Inflation Report […] although we would not expect it to be a dramatic revision," Uruçi said.
Limiting upside on markets today was the German IFO survey for October which showed that confidence declined slightly among that business executives for the first time in six months. The business climate index fell to 107.4 in October from 107.7 compared to a consensus estimate of 108.
Economic data from the US also failed to impress investors with a strong surge in durable goods order distorted largely by a big jump in the volatile transportation sector; core orders excluding transportation actually declined for the third straight month. Meanwhile, American consumer confidence slipped in October as sentiment was hit by the prolonged government shutdown.
“Global markets were lethargic today as investors couldn’t decide whether buying on multi-year highs amidst a generally disappointing European reporting season is justified,” said Financial Trader Shavaz Dhalla fromSpreadex.
He said that with just 57% of European firms meeting or beating expectations in the current quarter – down from 63% earlier this week – “many analysts are bracing for a correction to the downside as investors are bound to eventually realise that earnings are equally as important as macro-economic headlines”.
RBS leads banks higher
Domestic banking stocks were performing well with RBS, Lloyds and Barclays making gains. RBS was higher after leading investors urged Chancellor George Osborne not to go ahead with a 'good bank-bad bank' split of the part-nationalised lender. Meanwhile, reports that the initial public offering of its US subsidiary Citizens Financial could come sooner than expected also gave the stock a boost.
Oil and gas stocks were on the up this morning with Tullow Oil, BG Group and Premier Oil among the best performers.
Premier Oil shares rose after the company this afternoon announced that first production from the Rochelle gas-condensate field in the UK North Sea has commenced.
Tullow yesterday announced plans to offer $500m in senior notes to repay certain existing debts.
BSkyB was in the red after analysts at Macquerie downgraded their rating on the pay-TV and broadband provider from 'outperform' to 'neutral'. They said that the company could face competition from telecoms group BT over rights to broadcast the Champion's League.
Security solutions group G4S was a high riser this morning after HSBC upgraded the stock to 'neutral' and hiked their price target from 205p to 250p. The company also announced this morning that its UK Chief Executive Richard Morrison is being replaced by Chief Operating Officer Eddie Ashton.
Speciality chemicals group Elementis surged after saying it delivered a "resilient performance" for the three months ended September 30th and saw a return to more normal trading patterns in oilfield drilling. |
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| | FTSE 100 - Risers
Royal Bank of Scotland Group (RBS) 368.40p +3.34%
ARM Holdings (ARM) 983.00p +2.34%
G4S (GFS) 258.50p +2.17%
Tullow Oil (TLW) 978.50p +2.03%
Aberdeen Asset Management (ADN) 459.10p +1.93%
Sage Group (SGE) 331.90p +1.50%
Fresnillo (FRES) 1,037.00p +1.47%
WPP (WPP) 1,344.00p +1.43%
Croda International (CRDA) 2,597.00p +1.37%
Associated British Foods (ABF) 2,133.00p +1.33%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 349.70p -3.93%
Hargreaves Lansdown (HL.) 1,155.00p -2.53%
British Sky Broadcasting Group (BSY) 928.50p -2.26%
Vedanta Resources (VED) 1,068.00p -1.84%
Standard Life (SL.) 366.60p -1.43%
easyJet (EZJ) 1,329.00p -1.41%
Weir Group (WEIR) 2,318.00p -1.11%
Intertek Group (ITRK) 3,309.00p -1.08%
GKN (GKN) 372.20p -1.06%
Bunzl (BNZL) 1,357.00p -1.02%
FTSE 250 - Risers
Elementis (ELM) 266.40p +9.05%
ITE Group (ITE) 316.10p +5.12%
Grainger (GRI) 192.60p +3.88%
Premier Oil (PMO) 347.70p +3.82%
Fisher (James) & Sons (FSJ) 1,122.00p +3.70%
Computacenter (CCC) 570.00p +3.54%
Imagination Technologies Group (IMG) 290.80p +3.34%
Hunting (HTG) 917.50p +3.09%
Diploma (DPLM) 690.00p +2.37%
Hochschild Mining (HOC) 172.40p +2.31%
FTSE 250 - Fallers
Tullett Prebon (TLPR) 309.60p -3.67%
Millennium & Copthorne Hotels (MLC) 580.00p -3.25%
Keller Group (KLR) 1,030.00p -3.20%
Synergy Health (SYR) 1,060.00p -3.11%
Dialight (DIA) 1,149.00p -3.04%
De La Rue (DLAR) 845.00p -2.65%
Paragon Group Of Companies (PAG) 329.10p -2.23%
Rank Group (RNK) 150.50p -2.15%
Pace (PIC) 309.00p -2.15%
Fenner (FENR) 409.00p -2.15% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks little changed on mixed economic data - UK GDP rises in line with forecasts
- German business confidence falls
- US durable goods orders increase
- US consumer confidence declines
- Cameron calls for EU red tap cut
FTSE 100: 0.12%
DAX: 0.06%
CAC 40: -0.08%
FTSE MIB: -1.45%
IBEX 35: -1.04%
Stoxx 600: -0.09%
European stocks ended the week little changed following reports which showed a rise in UK economic growth and a fall in German business confidence.
The Office for National Statistics said UK gross domestic product (GDP) jumped 0.8% between July and September, compared to an increase of 0.7% between April and June, marking the biggest jump since the second quarter of 2010. The figure was in line with market expectations.
The Bank of England has noted the recent pick-up in the economy and jobs market, fuelling speculation of an earlier than expected increase in interest rates.
"A rise of 0.8% in UK GDP for the third quarter, in line with expectations, can only be construed as positive, particularly since it's the strongest pace of growth in over three years," IG said.
"However, the Bank of England Governor has been at pains to temper too much enthusiasm, and it is worth remembering that the UK economy is well below its pre-crisis peak: a whole 2.5% lower."
Meanwhile, Germany saw confidence decline slightly among the country's business executives for the first time in six months. The Ifo business climate index fell to 107.4 in October from 107.7, compared to a consensus estimate of 108.
The report follows the release Germany manufacturing purchasing mangers' index yesterday which rose slightly to 51.5 in October from 51.1 in September, exceeding the 51.4 consensus and the 50 mark that signals expansion.
"Both the October IFO business climate and PMI (flash) surveys still signal robust growth momentum of the German economy," Barclays said.
"For the final quarter of 2013, we continue to expect quarterly GDP growth of about 0.4% q/q, which is also our estimate for Q3 (a first official figure is due on November 14th)."
In the US, durable goods orders for September rose an unexpected 3.7%, boosted by a surge in volatile aircraft orders. It compared to a rise of 0.2% in August and the forecast for an increase of 2.3%.
US consumer confidence dropped in October to a 10-month low. The Thomson Reuters/University of Michigan final consumer sentiment index fell to 73.2 from 77.5 in September. Economists had pencilled in a reading of 75.
Cameron calls for relaxation of EU rules
Prime Minister David Cameron has called on European leaders to relax regulation that he says is hampering small businesses.
In a speech in Brussels for the second day of the European Union (EU) summit, he sought to cut the rules which critics consider overbearing and petty.
Cameron is trying to cut regulation as part of his campaign to convince British voters that remaining in the EU is in Britain's best interest before holding a so-called 'in-out' referendum. He has promised a referendum if he is re-elected in 2015.
Kering falls on disappointing Q3
Luxury-goods maker Kering declined after reporting a fall in third-quarter sales from continuing operations that missed analysts' expectations.
Chemical maker BASF climbed as third-quarter earnings rose to beat analysts' estimates.
Electrolux AB plunged after the maker of ovens and dishwashers posted quarterly profit that missed estimates.
Volvo dropped after posting a decrease in third-quarter earnings before interest and taxes.
Renault slipped as the French carmaker said third-quarter sales dipped due to weaker currencies in emerging markets.
Schneider tumbled after the maker of low- and medium-voltage equipment reduced its 2013 profit and revenue forecasts due to a stronger euro.
MorphoSys advanced after the German biotechnology company raised its earnings forecast for this year.
Other asset classes decline
The euro fell 0.04% to $1.3796.
Brent crude futures slipped $0.347 to $106.620 per barrel on the ICE. |
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| | US Market Report | | US open: Markets shrug off weak data as earnings impress - Durable goods surge, distorted by aircraft orders
- Consumer confidence slips, misses forecasts
- Amazon, Microsoft impress with earnings
Dow Jones: 0.28%
Nasdaq: 0.71%
S&P 500: 0.28%
US markets opened strongly on Friday as investors entered the weekend in an optimistic mood with upbeat corporate earnings offsetting some mixed economic data.
Heavyweight companies including Amazon.com, Microsoft, UPS and Zynga were making gains in morning trade as quarterly earnings beat expectations. Investors were also reacting to the news that social-networking giantTwitter announced initial public offering, through which it expects to raise up to $1.4bn.
Markets have performed well over recent sessions as expectations over the first taper of quantitative easing by the Federal Reserve continue to be pushed back into next year following September’s disappointing jobs report.
“Investors are clearly still bullish at the moment, which is hardly surprising given that most major central banks appear to have adopted a more dovish tone in recent months,” said Market Analyst Craig Erlam from Alpari. “With the Fed, for example, now unlikely to taper before the end of the first quarter of 2014, there’s no reason why this liquidity fuelled rally in equities can’t continue.
The S&P 500 was trading at an intraday level of 1,756 on Friday, ahead of its record closing high of 1,754.67 reached earlier this week. It has now risen by around 4.5% in October alone.
Core durable goods weak
Durable goods orders surged in September by 3.7% to $233.4bn, according to the US Census Bureau, a significant pick-up from the 0.2% gain the month before and the 2.3% increase expected. However, the headline figures were largely distorted by a huge 57.5% jump in new orders of commercial aircraft and parts; excluding transportation, core orders were down 0.1% on the month marking the third consecutive fall.
“We already knew that Boeing took orders for 127 new planes in September, up from an unusually low 16 in August,” said Chief US Economist Paul Ashworth from Capital Economics.
In other economic data, the final reading of the University of Michigan consumer confidence index dipped to 73.2 in October, below initial estimates and well under 77.5 the month before. The consensus forecast was for a reading of 75.
Amazon.com and Microsoft surge
Online merchant Amazon.com soared after posting third-quarter revenue that beat analysts’ expectations. The company narrowed its quarterly loss as it managed to increase sales by a better-than-expected 24%.
Microsoft rallied as it reported a 17% increase in income in the fiscal first quarter to $5.2bn and a 16% rise in revenue to $18.5bn, both of which came in ahead of expectations.
UPS gained as the package delivery company was posted increased third-quarter sales, helped by higher domestic and international shipments.
Online gaming firm Zynga surged after its third-quarter loss narrowed to just $68,000, from $52.7m the year before.
Yahoo slumped after its Japanese business predicted full-year net income that fell short of market estimates.
Basic Energy Services declined after the oil drilling service provider reported a bigger-than-expected third-quarter loss. |
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| | Broker Tips | | AMEC: Canaccord Genuity initiates with a price target of 1215p and a hold recommendation.
Aquarius Platinum: Barclays shifts price target from 44p to 45p and maintains an equal-weight rating.
AZ Electronic Materials: Deutsche Bank cuts price target from 350p to 315p and reiterates its hold recommendation. Liberum Capital reduces price target from 400p to 360p, while leaving its buy recommendation unaltered. Credit Suisse cuts price target from 330p to 290p downgrading from neutral to underperform. Canaccord Genuity reduces price target from 389p to 354p, while its buy recommendation remains unchanged.
Cape: Canaccord Genuity initiates with a price target of 300p and a buy recommendation.
Chime Communications: Investec places its price target (prev.: 335p) under review, while keeping its buy recommendation. Canaccord Genuity moves price target from 330p to 349p and maintains its hold recommendation.
Debenhams: Citi ups price target from 95p to 105p and maintains a neutral rating. Barclays lowers price target from 100p to 97p reiterating an equal-weight rating. Societe Generale shifts price target from 120p to 116p and stays with its buy recommendation.
Genus: Panmure Gordon reduces price target from 1500p to 1210p downgrading from hold to sell.
GKN: Cantor Fitzgerald moves price target from 420p to 430p retaining a buy recommendation.
Great Portland Estates: Deutsche Bank lowers price target from 470p to 460p downgrading to sell.
G4S: HSBC takes price target from 205p to 250p upgrading to neutral.
Home Retail Group: HSBC raises price target from 205p to 220p and maintains an overweight rating.
Hunting: Canaccord Genuity initiates with a price target of 975p and a buy recommendation.
John Wood Group: Canaccord Genuity starts with a price target of 850p and a hold recommendation.
Kazakhmys: Deutsche Bank moves price target from 240p to 243p, but still recommends selling.
Kentz Corporation: Canaccord Genuity starts with a price target of 600p and a buy recommendation.
Kingfisher: Alphavalue shifts price target from 399p to 401.20p, upgrading from reduce to add.
Michael Page International: Jefferies moves price target from 515p to 580p and stays with its buy recommendation.
MITIE Group: HSBC ups price target from 260p to 275p, while downgrading to underweight.
Petra Diamonds: Canaccord Genuity moves price target from 158p to 163p and stays with its buy recommendation.
Petrofac: Canaccord Genuity initiates with a price target of 1600p and a buy recommendation.
Polymetal International: Citi lowers price target from 631p to 615p, while upgrading to neutral.
Shire: Jefferies raises price target from 2900p to 3100p and keeps a buy recommendation. Alphavalue ups price target from 2375.10p to 2383.40p, while downgrading from reduce to sell. Deutsche Bank increases price target from 2660p to 3350p retaining a buy recommendation. JP Morgan raises price target from 3000p to 3200p and stays with its overweight rating. Credit Suisse ups price target from 2600p to 2750p and keeps a neutral rating.
Spirent Communications: Citi cuts price target from 150p to 135p leaving its buy recommendation unchanged. JP Morgan reduces price target from 140p to 125p and retains a neutral rating.
Spirit Pub Company: Nomura increases price target from 42p to 75p and upgrades from reduce to neutral.
Standard Chartered: JP Morgan cuts price target from 1800p to 1750p staying with its neutral rating.
SThree: Jefferies takes price target from 350p to 450p upgrading to buy.
St James's Place: JP Morgan ups price target from 662p to 724p and maintains an overweight rating.
Tate & Lyle: Panmure Gordon upgrades from sell to hold with a price target of 750p.
Thomas Cook Group: Alphavalue increases price target from 124.10p to 158.60p and upgrades from sell to add.
UBM: Canaccord Genuity cuts price target from 745p to 725p keeping a hold recommendation.
Unilever: Barclays reduces price target from 2900p to 2800p and retains an overweight rating.
Vesuvius: Investec ups price target from 450p to 480p reiterating a hold recommendation.
WPP Group: JP Morgan raises price target from 1520p to 1617p and keeps an overweight rating. Nomura takes price target from 1300p to 1450p maintaining a buy recommendation. Investec revises price target from 1325p to 1469p and reiterates a buy recommendation. Barclays ups price target from 1425p to 1450p and stays with its overweight rating. | | |
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