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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: FTSE ends higher after UK data - FTSE closes modestly higher
- Investors pause ahead of tomorrow's Fed meeting
- Aggreko leads risers, Tullow is biggest faller
techMARK 2,640.77 +0.06%
FTSE 100 6,725.82 +0.07%
FTSE 250 15,428.79 -0.41%
The FTSE ultimately ended the session higher, albeit marginally, tracking some modest gains on the S&P 500 in the US and despite some less-than-impressive data ahead of the Federal Reserve's two-day meeting which begins tomorrow.
The Fed is expected to announce after the meeting that it will keep its monthly $85bn bond buying programme unchanged and maintain the interest rate at 0.25%. Economists predict the Fed will hold off on a tapering of quantitative easing until March 2014.
In the UK, helping stocks inch higher was the news consumer credit rose in October for the first time since the recession, boosted by an improvement in confidence. According to a study by the EY ITEM Club, consumers are more prepared to take on credit than they have been in the five years since the crisis, helping to drive the economy towards improvement. The news indicates confidence in job security and UK economic prospects as a whole.
Also providing a boost was the announcement that average UK asking house prices rose 0.5% in October on the previous month, boosted by higher buyer demand and a decline in the supply of houses. Hometrack, the property tracking firm, said Monday that the increase matched that seen in September, and represents the ninth monthly climb in prices. On the year, average prices were up 3.1%, up from 2.4% the prior month.
Begbies Traynor reported a decline in levels of 'critical' financial distress amongst UK businesses. The group's Red Flag Alert research, which looks at UK corporate financial health, saw a 2% fall in the number of businesses experiencing this level of financial trouble, which follows a 9% decline in the previous quarter.
However, the UK CBI's reported sales balance dropped precipitously in October, to a reading of +2 from +34 (Consensus: +32).
US data fails to impress
Disappointing US reports on factory production and home sales dragged most European stocks lower on Monday.
Factory output eased to rise 0.1% in September after a revised 0.5% increase in August as the partial government shut-down halted manufacturing. It missed forecasts for a 0.3% jump.
Total industrial production advanced 0.6% in September after a 0.4% gain a month earlier as higher temperatures drove up electricity use. The consensus estimate was for a gain of 0.4%.
US pending home sales slowed slightly to grow 1.1% in September compared to a rise of 2.8% and market forecast for a 3.5% increase.
Aggreko tops leaders on full year expectations
Temporary power group Aggreko climbed into the top spot after it said it expected full year profits to be in line with market expectations despite the absence of a one-off lift from the London Olympics.
Also on the rise was Randgold Resources after boss Mark Bristow said the miner is exploring further opportunities in Cote d'Ivoire. Randgold owns and operates Côte d'Ivoire's largest gold mine at Tongon, which has achieved more than 600,000 ounces of gold since it started production at the end of 2010.
Investors also welcomed the news that security giant G4S has rejected a £1,550m offer from Charterhouse Capital Partners for its cash solutions business, saying that that the proposal "fundamentally under-values the business and its prospects" and on the basis of its "strategic importance" to the company as a whole.
Pharmaceuticals giant AstraZeneca was another strong riser following an upgrade from Bank of America, whose Analyst, Sachin Jain, upgraded the stock from 'underperform' to 'neutral'. Sector peer GlaxoSmithKline was also making decent gains.
Meanwhile, InterContinental Hotels Group was firmly lower after it disappointed investors with the news that its revenue per available room (RevPAR) for its US and Americas brands in the nine months ended September 30th grew 4.5%, driven predominantly by a 2.9% increase in rates.
Tullow Oil was also in the red after it temporarily suspended all operations in Block 10BB and Block 13T in Northern Kenya due to labour unrest. The company said its decision to suspend exploration and appraisal operations was taken to prevent further escalation of strikes while it tries to resolve the issue.
Barclays was leading the banking sector lower, with Lloyds and RBS also registering losses. RBS is making headlines today ahead of its expected re-launch this week - reforms are expected to include the splitting of the lender into a 'good bank' and a 'bad bank'. |
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| FTSE 100 - Risers
Aggreko (AGK) 1,608.00p +6.00%
Randgold Resources Ltd. (RRS) 4,851.00p +4.57%
AstraZeneca (AZN) 3,301.00p +1.62%
Whitbread (WTB) 3,422.00p +1.48%
Shire Plc (SHP) 2,814.00p +1.37%
Vedanta Resources (VED) 1,082.00p +1.31%
GlaxoSmithKline (GSK) 1,624.50p +1.25%
Reckitt Benckiser Group (RB.) 4,833.00p +1.11%
Unilever (ULVR) 2,520.00p +1.08%
Hargreaves Lansdown (HL.) 1,166.00p +0.95%
FTSE 100 - Fallers
InterContinental Hotels Group (IHG) 1,823.00p -2.25%
Tullow Oil (TLW) 957.00p -2.20%
GKN (GKN) 364.10p -2.18%
easyJet (EZJ) 1,300.00p -2.18%
Barclays (BARC) 263.25p -1.74%
Persimmon (PSN) 1,224.00p -1.53%
BG Group (BG.) 1,237.00p -1.40%
Mondi (MNDI) 1,101.00p -1.26%
International Consolidated Airlines Group SA (CDI) (IAG) 345.60p -1.17%
Wolseley (WOS) 3,263.00p -1.15%
FTSE 250 - Risers
EnQuest (ENQ) 135.60p +2.34%
Greencore Group (GNC) 179.00p +2.29%
Hikma Pharmaceuticals (HIK) 1,176.00p +2.26%
AL Noor Hospitals Group (ANH) 908.50p +2.25%
Booker Group (BOK) 149.70p +2.11%
Playtech (PTEC) 760.50p +1.94%
Bank of Georgia Holdings (BGEO) 1,996.00p +1.78%
Telecom Plus (TEP) 1,542.00p +1.65%
Fidessa Group (FDSA) 2,050.00p +1.59%
AZ Electronic Materials SA (DI) (AZEM) 282.00p +1.48%
FTSE 250 - Fallers
Thomas Cook Group (TCG) 136.90p -6.49%
Countrywide (CWD) 560.00p -4.27%
Petra Diamonds Ltd.(DI) (PDL) 113.60p -3.81%
esure Group (ESUR) 232.70p -3.60%
Barr (A.G.) (BAG) 502.00p -3.46%
ITE Group (ITE) 306.90p -2.91%
Bovis Homes Group (BVS) 759.50p -2.88%
Imagination Technologies Group (IMG) 282.90p -2.72%
Essar Energy (ESSR) 121.30p -2.57%
Premier Oil (PMO) 339.30p -2.42%
FTSE TechMARK - Risers
Puricore (PURI) 50.50p +8.60%
Vislink (VLK) 48.75p +3.72%
Kofax (KFX) 370.00p +2.92%
Oxford Biomedica (OXB) 2.67p +2.88%
XP Power Ltd. (DI) (XPP) 1,601.00p +1.97%
Gresham Computing (GHT) 128.00p +1.59%
Anite (AIE) 87.50p +1.16%
Innovation Group (TIG) 32.00p +0.79%
RM (RM.) 117.50p +0.75%
Consort Medical (CSRT) 890.00p +0.56%
FTSE TechMARK - Fallers
Phoenix IT Group (PNX) 145.00p -10.49%
Ricardo (RCDO) 589.00p -6.36%
BATM Advanced Communications Ltd. (BVC) 18.25p -1.35%
Torotrak (TRK) 27.38p -0.91%
Optos (OPTS) 158.25p -0.63%
E2V Technologies (E2V) 144.00p -0.35%
Wolfson Microelectronics (WLF) 146.50p -0.34%
SDL (SDL) 255.00p -0.29%
NCC Group (NCC) 159.00p -0.16% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks drag as US data misses forecasts - US factory output eases
- US pending home sales slows
- Eurozone must act on reforms, says Coeure
- Greece refuses more austerity, insists president
FTSE 100: 0.07%
DAX: -0.02%
CAC 40: -0.42%
FTSE MIB: -0.15%
IBEX 35: -0.72%
Stoxx 600: -0.16%
Disappointing US reports on factory production and home sales dragged most European stocks lower on Monday.
Factory output eased to rise 0.1% in September after a revised 0.5% increase in August as the partial government shut-down halted manufacturing. It missed forecasts for a 0.3% jump.
Total industrial production advanced 0.6% in September after a 0.4% gain a month earlier as higher temperatures drove up electricity use. The consensus estimate was for a gain of 0.4%.
US pending home sales slowed slightly to grow 1.1% in September compared to a rise of 2.8% and market forecast for a 3.5% increase.
The economic data comes ahead of the Federal Reserve's two-day policy meeting which starts tomorrow.
Economists predict the Fed will maintain its monthly $85bn stimulus programme and hold interest rates at 0.25%.
A tapering of quantitative easing is not expected now until March 2014.
"Usually, the prospect of Fed tapering is enough to move investors to the sidelines," said Craig Erlam, Market Analyst at Alpari.
"However, on this occasion that has so far not been the case, which clearly highlights the fact that investors do not see this as a likely outcome on Wednesday."
ECB's Coeure says euro-area out of danger zone
European Central Bank policymaker Benoit Coeure has said that the euro-area is out of the danger zone but needs to restructure its financial sector in order to grow.
Speaking at the Asia Europe Economic Forum in Beijing on Monday, Coeure said the Eurozone must foster growth with new business models and avoid protectionism.
"Europe has emerged from the danger zone," he said.
"It's time for us to get our act together, to reform and to grow."
He also noted that two thirds of the €500bn in three-year long-term refinancing operation (LTRO) funding, launched in January of last year, had been paid back.
Meanwhile, the European Central Bank today called for bids on a seven-day refinancing agreement at a fixed rate of 0.5%. The benchmark allotment amounts to €92.5bn, based on its liquidity forecast.
In Greece, President Karolos Papoulias warned that Athens would not yield to pressure from foreign lenders to impose more austerity.
His remarks, made at an annual commemoration of the country's stand against fascism in World War II, come as the Greece butts heads with European Union leaders over reaching targets under its second bailout.
"Greeks gave their blood and whatever they could [in 1940] and today have given what they could to overcome the crisis. This must be appreciated by Europe. Greek people cannot give anything more," he said, according to Reuters.
"They should not think that we may yield to blackmail. Greek people have never surrendered to blackmail," Papoulias said.
Carmakers slide
A gauge of carmakers fell the most among the 19 industry groups in the Stoxx 600 including Fiat PSA and Peugeot Citroen after JP Morgan downgraded automakers to 'neutral' from 'overweight'.
Technip declined as Europe's second-largest oilfield-services provider won't pay employees a share of 2013 earnings due to insufficient orders, according to a report in weekly newsletter La Lettre de L'Expansion.
BT Group's shares rose on speculation that it will raise its dividend by more than 10% when it reports its half year results on Thursday.
Aggreko increased after the temporary power group said it expected full year profits to be in line with market expectations despite the absence of a one-off lift from the London Olympics.
ThyssenKrupp slumped following reports that a series of issues made it impossible for the steelmaker to sell its plant in Brazil.
TNT Express climbed after the package-delivery company reported a decline in third quarter sales.
Euro/dollar edges higher
The euro dropped 0.10% to $1.3788.
Brent crude futures rose $1.511 to $108.570 per barrel on the ICE. |
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| | US Market Report | | US open: Stocks fall after disappointing US factory output report A weaker-than-expected report on US factory production sent stocks in the world’s biggest economy falling in opening Monday trading.
Factory output rose 0.1% in September after a revised 0.5% increase in August as the partial government shut-down halted manufacturing. Economists had forecast a 0.3% jump.
The easing growth was driven by declines in production of such non-durable goods as chemicals and textiles, while output of autos and business equipment increased.
Total industrial production advanced 0.6% in September after a 0.4% gain a month earlier as higher temperatures drove up electricity use. The consensus estimate was for a gain of 0.4%.
“September’s US industrial production figures aren’t as good as they look, but at least they suggest that the economy had some momentum ahead of October’s government shut-down,” according to Capital Economics.
“Of course, October’s figures are likely to be weak as the government shut-down probably reduced activity for some private producers. But beyond that, we expect a steady, albeit unspectacular, improvement in industrial production.”
The economic data comes ahead of the Federal Reserve’s two-day policy meeting which starts tomorrow.
Economists expect the Fed will maintain its monthly $85bn stimulus programme and hold interest rates at 0.25%.
A tapering of quantitative easing is not expected now until March 2014.
“Usually, the prospect of Fed tapering is enough to move investors to the sidelines,” said Craig Erlam, Market Analyst at Alpari.
“However, on this occasion that has so far not been the case, which clearly highlights the fact that investors do not see this as a likely outcome on Wednesday.”
In company news, Tribune Co’s shares rose following a Reuters report that said the media firm was launching a $4.1bn credit via a lender meeting on Thursday. JP Morgan will help lead the new credit, which backs Tribune's acquisition of Local TV and refinances existing Tribune debt.
Merck & Co Inc slumped after reporting better-than-expected third-quarter earnings due to cost cuts but lower sales of its Januvia diabetes treatment.
The 10-year government yield was little changed at 2.51% in morning trading. |
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| | Broker Tips | | Broker tips: InterContinental Hotels, Ophir Energy, Unilever InterContinental Hotels Group's shares slumped after Panmure Gordon reiterated a 'hold' rating as the company reported a weaker-than-expected third quarter trading update.
The company's third quarter trading was a bit below expectations, these analysts pointed out, with a weak showing for the Americas in September (RevPar up 3.7% and the US at 1.6%).
"The culprit was Holiday Inn which was down 0.9% reflecting slower group business. Current trading trends give the group confidence for the rest of the year but we think RevPar expectations may edge back a bit for Q4 in both Americas and Greater China," the broker said.
"Strengthening sterling works against static valuation metrics with majority of earnings in dollars and share price in £. The company trades on a estimated 2014 price-to-earnings multiple of 18.9 times, adjusted enterprise value/earnings before interest, taxes, depreciation, amortisation and rent [EV/EBITDAR] of 11.3 times and yields 2.6%. We reiterate our hold recommendation."
Consensus forecasts are for $660m earnings before interest and tax and Panmure expects these will edge back.
Oil exploration group Ophir Energy is moving into a more 'interesting' phase in the opinion of analysts at Credit Suisse, as the appraisal/drilling campaign in the Tanzanian joint-venture with BG Group continues and with drilling at the Mlinzi prospect in the northern part of Tanzania and then, possibly, the Terrace prospect – also in Tanzania – gets underway.
The Mlinzi prospect, where drilling may begin from late November/December, is a high-risk/high-impact well that could open up a northern gas hub, the broker explains.
As well, now that another rig has been secured the time-line to drill the pre-salt Gabon prospects is much firmer. Ophir's acreage in Gabon is in the northern basin, where the primary reservoir target is at a significantly shallower depth (i.e. better chance that any hydrocarbon present will be in the oil window).
Despite all of the above the Swiss broker has moved to mark-to-market foreign exchange (FX) rates, following recent macro changes. As well, it has decided to 'conservatively' take out the risked exploration upside from the Tanzania BG joint-venture, despite the remaining prospectivity.
Due to these two factors the price target on the company's shares has been cut to 495p from 550p before.
Compensating in part for the above, Credit Suisse has adjusted its other exploration valuations consistent with their global interactive offshore oil model and adopted Ophir's guidance for geological chance of success. They were previously more conservative on both accounts.
The recommendation has been maintained at 'outperform'.
Consumer goods conglomerate Unilever has the means to withstand weaker growth in its markets and increased competition. However, it needs to improve growth in developed markets and it has been a disappointingly long time (nearly two years) since the company's last material acquisition, analysts at Panmure Gordon wrote on Monday.
Thus, the company's latest trading update showed that the rate of contraction in developed market growth slowed in the third quarter from -1.6% to -0.3%. However, that came despite a surprisingly poor performance in North America, while the rate of expansion in Europe barely edged into positive territory.
As regards to emerging markets, growth slowed sharply, from 10.3% in the first half of 2013 to a 5.9% pace in the first quarter, led by a deceleration in Asia/Africa. The expansion of sales in Latin America was hit by SAP changes and an on-going product recall.
Furthermore, while the broker is confident that sales growth will tick-up in the fourth quarter, earnings per share growth this year and next will be held back by the currency drag, it goes on to explain.
For all of the above reasons they have decided to lower their price target on the shares to 2,625p (from 2,800p) and move to a 'hold' recommendation, from 'buy'. | | |
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