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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 hits five-month high - FTSE hits five-month high
- BP drives index higher after impressing with Q3
- Gold price drags miners lower
techMARK 2,656.00 +0.58%
FTSE 100 6,774.73 +0.73%
FTSE 250 15,535.51 +0.69%
The FTSE made strong gains throughout today's session, ending the day 49 points higher, driven by BP's performance and gains across the pond.
That said, the gains were modest as US investors were still cautious ahead of the Federal Reserve's two-day policy meeting which will see it announce its decision on whether to alter its monetary policy.
Data from the US showed that consumer confidence fell in October, although this was largely attributed to the shutdown of the government earlier this month.
The Commerce Department revealed that September retail sales declined by 0.1%, driven by a fall in auto purchases.
Furthermore, the producer price index also fell last month, dropping a seasonally adjusted 0.1%.
Back on this side of the Atlantic, UK mortgage approvals have hit a high, totalling 66,735 in September - a level not seen since February 2008. The Bank of England also revealed that the effective interest rate on new mortgage lending dropped to a record low at 3.3% - the lowest level since records began in 2004.
As energy firms today faced tough questioning from MPs, a damning report was released, calling for "greater fairness in terms of costs charged to energy consumers" and suggests bills could be £70 cheaper if competition between companies was increased.
Will Straw, an associate director of IPPR, which issued the report, said: "The key question for the Big Six is why profits of 5-6% are acceptable in a competitive market. In 1998, as the market was liberalised, the regulator believed 1.5% was an adequate margin for energy suppliers. Profits in other sectors like supermarkets are as low as 2%."
BP shines after Q3 update, Fresnillo hit by gold price
BP shares were firmly in the top spot today following a positive quarterly update from the oil giant. The group has raised its dividend 5.6% to 9.5 cents a share after third quarter earnings fell less than expected. Profit adjusted for one-time items and inventory changes declined to $3.7bn from $5bn a year earlier, beating the $3.4bn forecast.
Housebuilders were performing well after it was reported that the number of new mortgage approvals rose to 66,700 in September, up from 63,400 in the month before (consensus: 66,000).
Precious metal miner Fresnillo fell into the bottom spot on the FTSE after the International Monetary Fund (IMF) released data showing that Russian gold reserves fell in September, something that hadn't happened for a year, pushing the gold price down.
Tullow Oil declined after it revealed that the Wisting Alternative well, offshore Norway, had reached total depth and although oil shows had been encountered, the reservoir rock was of poor quality. As such, it will be plugged and abandoned.
Close behind was Lloyds Banking Group, which swung to a pre-tax profit of £1.7bn in the first nine months of the year from a loss of £607m in the same period in 2012, but saw a £750m increase in its PPI bill, pushing shares firmly lower. Altogether, the company has paid £8bn in relation to PPI.
Randgold Resources was retreating one day after shares rose strongly on reports of plans for further exploration in Cote d'Ivoire, also hit by the above IMF report.
Temporary power group Aggreko retreated a day 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. It yesterday occupied the top spot on the FTSE. |
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| FTSE 100 - Risers
BP (BP.) 477.50p +5.62%
Persimmon (PSN) 1,255.00p +2.53%
Admiral Group (ADM) 1,270.00p +2.42%
Marks & Spencer Group (MKS) 485.60p +2.23%
BT Group (BT.A) 369.40p +2.13%
Antofagasta (ANTO) 888.50p +2.13%
Associated British Foods (ABF) 2,196.00p +2.00%
ARM Holdings (ARM) 991.00p +1.95%
Capita (CPI) 988.50p +1.91%
International Consolidated Airlines Group SA (CDI) (IAG) 352.00p +1.85%
FTSE 100 - Fallers
Fresnillo (FRES) 1,019.00p -2.21%
Tullow Oil (TLW) 936.00p -2.19%
Lloyds Banking Group (LLOY) 78.01p -2.02%
Randgold Resources Ltd. (RRS) 4,762.00p -1.83%
Aggreko (AGK) 1,584.00p -1.49%
Shire Plc (SHP) 2,773.00p -1.46%
Coca-Cola HBC AG (CDI) (CCH) 1,798.00p -1.37%
Aberdeen Asset Management (ADN) 448.30p -1.28%
Royal Bank of Scotland Group (RBS) 364.80p -1.00%
Compass Group (CPG) 896.50p -0.77%
FTSE 250 - Risers
Ocado Group (OCDO) 430.50p +6.06%
Barr (A.G.) (BAG) 528.00p +5.18%
COLT Group SA (COLT) 126.00p +4.56%
Bovis Homes Group (BVS) 790.00p +4.02%
ITE Group (ITE) 319.00p +3.94%
Redrow (RDW) 263.90p +3.57%
Entertainment One Limited (ETO) 245.00p +3.55%
Brown (N.) Group (BWNG) 527.50p +3.43%
NMC Health (NMC) 367.00p +3.38%
Workspace Group (WKP) 498.00p +3.34%
FTSE 250 - Fallers
Kenmare Resources (KMR) 21.10p -4.09%
Hochschild Mining (HOC) 167.50p -3.79%
Essar Energy (ESSR) 117.90p -2.80%
Evraz (EVR) 122.60p -2.54%
EnQuest (ENQ) 132.30p -2.43%
International Personal Finance (IPF) 595.00p -2.06%
Playtech (PTEC) 745.50p -1.97%
BH Macro Ltd. EUR Shares (BHME) € 19.66 -1.95%
Elementis (ELM) 262.60p -1.65%
F&C Asset Management (FCAM) 103.30p -1.62%
FTSE TechMARK - Risers
Phoenix IT Group (PNX) 150.50p +3.79%
Skyepharma (SKP) 95.50p +3.24%
Vislink (VLK) 50.12p +2.82%
Ricardo (RCDO) 601.50p +2.12%
Promethean World (PRW) 19.50p +1.96%
NCC Group (NCC) 161.75p +1.73%
Ark Therapeutics Group (AKT) 0.36p +1.39%
Kofax (KFX) 375.00p +1.35%
Anite (AIE) 88.50p +1.14%
Torotrak (TRK) 27.62p +0.91%
FTSE TechMARK - Fallers
Puricore (PURI) 47.00p -6.93%
Wolfson Microelectronics (WLF) 142.50p -2.73%
RM (RM.) 115.00p -2.13%
Gresham Computing (GHT) 126.00p -1.56%
Vectura Group (VEC) 111.75p -1.11%
Consort Medical (CSRT) 881.50p -0.96%
Optos (OPTS) 157.00p -0.79% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks rise as Fed begins policy meeting - Fed begins policy meeting
- US retail sales fall
- US consumer confidence slumps
- Bank of Italy addresses nation's growth
FTSE 100: 0.75%
DAX: 0.44%
CAC 40: 0.59%
FTSE MIB: 2.27%
IBEX 35: 1.34%
Stoxx 600: 0.39%
European stocks finished higher on Tuesday as the Federal Reserve started its two-day policy meeting.
The Fed is expected to announce that it will maintain its $85bn in monthly asset purchases and keep the interest rate at 0.25% after the meeting wraps up tomorrow.
The market does not see the central bank tapering stimulus until March 2014 after a 16-day government shutdown earlier this month took at least $24bn out of the economy.
Meanwhile, retail sales declined 0.1% last month compared to August, when it rose 0.2%. Economists expected the report to show that they remained little changed.
"September's retail sales figures suggest that consumption growth gained momentum at the end of the third quarter," said Capital Economics. "And the government shut-down is unlikely to have changed the picture too much at the start of the fourth quarter."
US consumer confidence slumped in October by the most since August 2011 due to the government shutdown and debt ceiling negotiations. The index for consumer sentiment fell to 71.2 in October from a revised 80.2 last month. Economists had predicted a decline to 75.
French Statistics Institute - INSEE's - business confidence gauge for the month of October has come in at 85.0, versus economists forecasts for a reading of 86.0 and last month's print of 85.0.
Bank of Italy on nation's growth
Bank of Italy Director General, Luigi Signorini, has said the central bank expects growth will be worse this year and next than the government predicted last month.
Signorini said the central bank's July forecasts for gross domestic product (GDP) to drop 1.9% this year and expand 0.7% in 2014 have been confirmed by subsequent data.
His remarks come after European Central Bank Executive Board member Joerg Asmussen said Italy will "critically determine the fate of the euro-area" and Fitch Ratings affirmed Italy's BBB+ rating with a negative outlook.
Nokia, BP
Nokia's shares rallied after the company reported that its third quarter loss narrowed thanks to job cuts and site closures.
UBS slid as it said it probably won't be able to reach its profitability goal in 2015 after the Swiss regulator demanded the lender hold more capital for risks related to litigation.
BP gained after raising its dividend 5.6% to 9.5 cents as it reported third quarter earnings.
Deutsche Bank declined after reporting a fall in net income in the three months through September, missing analysts' estimates. It registered a 94% drop in third quarter income.
Standard Chartered slumped after saying third-quarter revenue dropped due to weakness in its corporate-banking business.
Europe's largest tiremaker Michelin & Cie fell as sales in the third quarter dropped, falling short of analysts' forecasts.
Other asset classes slide
The euro fell 0.26% to $1.3749.
Brent crude futures dropped $0.772 to $108.770 per barrel on the ICE. |
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| | US Market Report | | US open: Stocks rise as Federal Reserve begins meeting US stock futures rose before the Federal Reserve kicked off its policy meeting and as retail sales fell unexpectedly.
The Fed is expected to announce that it will maintain its $85bn in monthly asset purchases and keep the interest rate at 0.25% after the two-day meeting wraps up tomorrow.
The market does not see the central bank tapering stimulus until March 2014 after a 16-day government shutdown earlier this month took at least $24bn out of the economy.
Meanwhile, retail sales declined 0.1% last month compared to August, when it rose 0.2%. Economists expected the report to show that they remained little changed.
"September’s retail sales figures suggest that consumption growth gained momentum at the end of the third quarter," said Capital Economics. "And the government shut-down is unlikely to have changed the picture too much at the start of the fourth quarter."
Later today a report on US consumer confidence will be released. The index for consumer sentiment will drop to 75 in October from 79.7 in September, economists forecast.
Data yesterday fuelled concern that growth in the world’s biggest economy eased in the weeks before the government shut-down.
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.
Turning to the earnings session, Pfizer Inc. reported better than forecast adjusted third quarter earnings per share (EPS) figures of 58 US cents, versus the 56 expected by analysts.
Furthermore, the company raised the bottom-end of its full-year EPS guidance, to between $2.15 and $2.20, while at the same time modestly lowering its earnings expectations.
The latest results out of the likes of Cummins and Lyondell Basell undershot expectations. |
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| | Broker Tips | | Broker tips: Coca Cola Hellenic, BP, Regus Analysts at Nomura have downgraded their recommendation for shares of Coca Cola Hellenic as they believe that the positive technical impact of the company's inclusion in the FTSE indices has likely run its course.
They now think the stock is more likely to trade in-line with fundamentals. In that regard, they highlight how Street expectations for a recovery in earnings "look high" and they now see risk of a de-rating.
Thus, their current target of 1,500p now offers 17% downside to the share price.
More specifically, they see a slower growth outlook for global beer over the medium-term and a slower volume growth trajectory for the company versus the good years (2004-2008).
Nomura is also below market consensus when it comes to operating (EBIT) margins.
Lastly, they add that on their estimated forward price-to-earnings multiple of 23.9 the firm's shares look expensive, given negative earnings and de-rating risk; hence their decision to cut their rating to reduce from neutral.
Longer-term Coca Cola Hellenic holds a number of attractions, including strong market shares in key territories, a balanced portfolio mix (circa 70% sparkling, circa 30% still) and an opportunity for per capita consumption to rise as the macroeconomic environment improves.
Regus seems to have a lot going for it, with its expansion plans running ahead of targets, the profitability at its new centres coming in ahead of its own hurdles and with management maintaining a tight control on overheads, such that its financial headroom was extended in the quarter.
Nevertheless, Investec said, the greater than previously projected additions to its new centres, of between 420 and 400 instead of 350, will clearly have an impact on forecasts.
Moreover, Investec has moved its estimated 2013 profit before tax (PBT) forecast to £83m from £99m, for a 16% decrease. Similarly, its projection for fiscal year 2014 stands at £133.5m, instead of £145m as up till now.
Fiscal year 2015 PBT forecasts, on the other hand, have moved up to £188m from £183m.
So as to reflect the additional capital investment, the net debt position moves to £80m (prev: £18m), although that is still very comfortable in terms of available headroom, the broker added.
Thus, while Investec believes that "near term returns will be diluted by the increase in New Centre openings", the ability to go beyond peak earnings now looks more realistic, it went on to explain.
However, the company's shares have had a strong run, hence the broker's decision to downgrade the stock to add from buy, albeit while maintaining its PE-based price target unchanged at 205p.
Investec has reiterated a 'hold' rating on BP's shares after the oil-company reported its third quarter results.
BP has raised its dividend 5.6% to 9.5 cents a share as earnings in the third quarter fell less than expected.
Profit adjusted for one-time items and inventory changes declined to $3.7bn from $5bn a year earlier, beating the $3.4bn forecast.
The company said it will sell a further $10bn of assets by the end of 2015 and give most of the proceeds to shareholders, favouring buybacks.
BP has already sold $38bn of assets to pay for the Gulf of Mexico oil spill of 2010.
"The stockmarket doesn't want the oil majors to spend money. Instead, investors want their cash back," according to Investec analyst Neill Morton.
"And BP has obliged this morning, with an increase in the dividend, a new $10bn disposal programme (with proceeds going to share buybacks) and indicated flat capex in 2014. The bull case for 2014 is that operational gearing could surprise on the upside. The downside is that this could yet be overshadowed by the Macondo legal fallout. Hold retained." | | |
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