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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 100 at four-week low on policy concerns - FTSE 100 sinks to lowest level since mid-October
- Rate-hike speculation follows BoE Inflation Report
- Sainsbury up after strong first half
techMARK 2,625.69 -0.83%
FTSE 100 6,630.00 -1.44%
FTSE 250 15,179.84 -1.23%
UK stocks declined sharply on Wednesday as investor risk appetite was scaled back after a more-hawkish-than-expected Inflation Report from the Bank of England (BoE).
Following recent data which showed a sharp fall in consumer price inflation and declining unemployment, the BoE said that the 7% threshold for the jobless rate – the point at which it will begin to re-assess current monetary policy – could be breached a year earlier than previously planned. It also raised its economic growth assumptions for 2014 and 2015.
Despite the positive revisions, the FTSE 100 finished 96.79 points lower at 6,630, its worst closing level since October 18th when it finished at 6,622.58.
David Madden, Market Analyst at IG, said it seems “the days of rock-bottom interest rates may be coming to an end sooner than initially anticipated, and the London equity market is off over 1% as a result”.
“The drop in unemployment and increased growth guidance from the BoE implies that the quantitative easing gravy train may be reaching the end of its journey. When [Mark] Carney took over as governor of the BoE in July, he suggested that interest rates would remain unchanged for three years; now a rate change could happen within 18 months,” Madden said.
Howard Archer, Chief UK & European Economist at IHS Global Insight, agreed that the message from the BoE was that it remained in no hurry to hike rates. Nevertheless, Archer said he favours a gradual increase in rates beginning in the “latter months of 2015”. “Meanwhile, any further quantitative easing now looks highly improbable”.
Markets were also reacting to an underwhelming Communist Party meeting in China which lacked certain details on reforms. Comments from European Central Bank member Peter Praet were also in focus after he suggested that negative interest rates or asset purchases were still possibilities to boost inflation.
FTSE 100: Sainsbury rises on strong first half
Supermarket giant Sainsbury rose after boasting of its largest market share for a decade in the first half, helped by fast growth from its own-brand food and an even faster growth of non-food.
Sector peer Tesco however was trading in the red after HSBC downgraded the shares to 'neutral'. Vodafone and CRH, both of which impressed with results on Tuesday, were pulling back as Beaufort Securities cut its ratings for the two stocks to 'hold'.
Shares in London Stock Exchange were falling sharply after it posted a 13% decline in adjusted group operating profit on an organic and constant currency basis. According to Sharecast analysts, the fall may also be linked to the significant declines in many Italian bank stocks following the latest earnings out this morning from Intesa San Paolo.
Oil producer Tullow Oil was also lower despite saying it is confident of exiting 2013 with output at record levels after "strong production across the group" in the third quarter.
Utility stocks put in a relatively good performance today as the category benefitted from its defensive characteristics amidst a sell-off across equity markets. Centrica, Severn Trent, United Utilities and Drax were trading higher with the latter receiving a boost after saying full-year underlying earnings would be “materially ahead” of current market consensus forecasts. |
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| | FTSE 100 - Risers
Sainsbury (J) (SBRY) 410.70p +2.98%
Centrica (CNA) 363.90p +0.97%
United Utilities Group (UU.) 692.00p +0.51%
easyJet (EZJ) 1,233.00p +0.49%
Croda International (CRDA) 2,341.00p +0.39%
Severn Trent (SVT) 1,825.00p +0.22%
Antofagasta (ANTO) 813.50p +0.12%
Aggreko (AGK) 1,583.00p +0.06%
Sage Group (SGE) 346.00p +0.06%
Capita (CPI) 970.00p +0.05%
FTSE 100 - Fallers
RSA Insurance Group (RSA) 104.10p -4.84%
British Sky Broadcasting Group (BSY) 805.00p -4.17%
Persimmon (PSN) 1,154.00p -3.83%
ITV (ITV) 181.80p -3.45%
Mondi (MNDI) 1,010.00p -3.35%
International Consolidated Airlines Group SA (CDI) (IAG) 371.70p -3.25%
London Stock Exchange Group (LSE) 1,555.00p -3.12%
WPP (WPP) 1,307.00p -2.97%
Barclays (BARC) 249.50p -2.84%
Vedanta Resources (VED) 1,011.00p -2.79%
FTSE 250 - Risers
Fenner (FENR) 450.00p +10.48%
esure Group (ESUR) 224.00p +5.51%
Bwin . party Digital Entertainment (BPTY) 130.00p +4.42%
ICAP (IAP) 391.80p +4.12%
Wood Group (John) (WG.) 812.00p +3.64%
Xaar (XAR) 945.50p +3.33%
Bank of Georgia Holdings (BGEO) 2,161.00p +2.90%
Drax Group (DRX) 653.00p +2.59%
Oxford Instruments (OXIG) 1,458.00p +2.32%
Dixons Retail (DXNS) 47.80p +1.85%
FTSE 250 - Fallers
Partnership Assurance Group (PA.) 325.00p -21.14%
Kier Group (KIE) 1,688.00p -6.64%
NMC Health (NMC) 346.30p -5.79%
Enterprise Inns (ETI) 139.90p -5.28%
Barratt Developments (BDEV) 312.00p -4.67%
Ferrexpo (FXPO) 178.80p -4.64%
Bovis Homes Group (BVS) 751.00p -4.63%
Synthomer (SYNT) 223.90p -3.91%
Greencore Group (GNC) 186.90p -3.86%
Rightmove (RMV) 2,510.00p -3.57% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks dip after BoE Inflation Report, jobless rate - BoE in no rush to raise interest rates
- UK unemployment rate falls
- ECB could adopt negative interest rates, say Praet
- Eurozone industrial output declines
FTSE 100: -1.38%
DAX: -0.30%
CAC 40: -0.60%
FTSE MIB: -1.43%
IBEX 35: -0.34%
Stoxx 600: -0.58%
European stocks closed lower as the Bank of England (BoE) revealed it was in no rush to raise interest rates despite a pick-up in the economy.
In its quarterly Inflation Report, the central bank gave a positive outlook for the economy, lifting its gross domestic product forecasts.
At the same time the jobless rate for the three months to September was released, showing a fall to 7.6% from 7.7% in the previous quarter. Economists had expected the rate to remain unchanged.
The BoE has vowed to keep interest rates at a record low of 0.5% until the unemployment rate falls to at least 7%, which is expected to be reached in late 2015.
However, Governor Mark Carney stressed in today's Inflation Report that an unemployment rate of 7% will not automatically trigger an increase in interest rates.
ECB's Praet hints at negative interest rates
European Central Bank (ECB) executive board member Peter Praet said the monetary authority could adopt negative interest rates or purchase assets from banks if needed to lift inflation closer to its target.
"If our mandate is at risk we are going to take all the measures that we think we should take to fulfill that mandate. That's a very clear signal," Praet said in an interview with The Wall Street Journal.
His remarks come after annual inflation slowed to 0.7% in October, far below the central bank's target of just below 2%. The dip in inflation prompted the ECB to cut interest rates to 0.25% from 0.5%.
Separately, ECB Governing Council member Jens Weidmann said low interest rates come with risks that can't be ignored.
"It is important to make sure that negative real interest rates won't become a permanent state and that monetary policy isn't captive to politics or financial markets," Weidmann, who heads Germany's Bundesbank, said in a speech in Frankfurt today.
"Ultra-loose interest-rate policy is no substitute for structural adjustment programs, which are necessary in some euro-area member states."
Also in the Eurozone today, industrial production fell by a seasonally adjusted 0.5% in September, compared to expectations for a 0.3% decline and a 1% rise in August.
Banco Popolare, Carlsberg
Banco Popolare declined as the Italian lender reported third quarter income that fell short of forecasts.
Carlsberg rallied after the brewer reported a fall in third quarter earnings that missed analysts' estimates.
Stada Arzneimittel tumbled as the drugmaker posted nine-month adjusted net income below consensus.
ProSiebenSat.1 Media AG fell after KKR & Co. and Permira Advisers LLP sold 35m shares in the broadcaster for about €1.1bn.
ICAP advanced after saying cost cuts will boost full-year pre-tax profits this year.
Oil rises amid Libya supply outages
Brent crude futures gained $1.241 to $107.140 per barrel on the ICE as protests in Libya has disrupted exports.
The euro fell 0.04% to $1.3430. |
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| | US Market Report | | US close: Markets slip as taper speculation ramps up - Dow pulls back from record high
- Taper speculation ramps up after Fisher, Lockhart comments
- NFIB small business optimism misses forecasts
Dow Jones: -0.21%
Nasdaq: 0.00%
S&P 500: -0.24%
Heightened speculation about a near-term tapering of quantitative easing (QE) pushed US markets into the red on Tuesday with the Dow Jones Industrial Average pulling back after hitting a record high the day before.
The Dow finished 32.43 points lower at 15,750.67, 0.21% lower than the all-time high of 15,738.1 on Monday, its 35th record close of the year. The S&P 500 closed down 0.24% while the Nasdaq ended flat.
No major economic data was released on Tuesday so the spotlight remained on the Federal Reserve with comments from a number of policymakers under close scrutiny. This follows last week's better-than-estimates growth and jobs data which has brought forward some expectations of when the Fed will begin to scale back its stimulus programme.
Dallas Fed President Richard Fisher told CNBC that "markets should bear in mind that this programme [QE] cannot go on forever". Meanwhile, Atlanta Fed President Dennis Lockhart warned that a taper could very well take place next month.
Also in focus were analysts at Morgan Stanley, who reportedly said that they see a 40% chance of tapering in December and 60% probability in January.
One small economic indicator released on Tuesday was the NFIB small business optimism index which declined from 93.9 to 91.6 in October, below the 93.3 forecast.
Over in China, the Communist Party unveiled a series of reforms to boost growth in the world's second largest economy after wrapping up its Third Plenum talks in Beijing. The four-day meeting took place amid intense security and secrecy before announcing that "major issues concerning comprehensively deepening reforms" were approved, the official Xinhua News Agency reported.
Corporate movers
T-Mobile US, the nation's fourth-largest mobile-phone carrier, declined after announcing that it will raise almost $1.8bn in fresh capital to acquire wireless airwaves, either from other parties or through government auctions.
Media giant News Corp. slumped after reporting a fall in first-quarter revenue, reflecting weak demand for print advertising.
Liberty Global fell following news the European cable operator is in talks to acquire Intel Corp.'s online pay-TV service under development.
Milk producer Dean Foods dropped sharply after cutting its full-year profit outlook on the back of high commodity prices.
S&P 500 - Risers
Sears Holdings Corp. (SHLD) $61.70 +2.87%
Regeneron Pharmaceuticals Inc. (REGN) $286.89 +2.75%
Broadcom Corp. (BRCM) $27.23 +2.48%
Whole Foods Market Inc. (WFM) $59.00 +2.08%
Micron Technology Inc. (MU) $18.63 +1.97%
Electronic Arts Inc. (EA) $26.44 +1.73%
F5 Networks Inc. (FFIV) $84.13 +1.53%
Windstream Holdings Inc (WIN) $8.18 +1.49%
Wynn Resorts Ltd. (WYNN) $167.38 +1.42%
QUALCOMM Inc. (QCOM) $68.51 +1.32%
S&P 500 - Fallers
First Solar Inc. (FSLR) $61.72 -2.25%
Hudson City Bancorp Inc. (HCBK) $8.91 -2.09%
E*TRADE Financial Corp. (ETFC) $17.63 -1.67%
News Corp Class A (NWSA) $17.15 -1.55%
Amazon.Com Inc. (AMZN) $349.53 -1.37%
Netflix Inc. (NFLX) $333.73 -1.24%
Zions Bancorporation (ZION) $28.89 -1.10%
Fifth Third Bancorp (FITB) $19.56 -1.06%
Huntington Bancshares Inc. (HBAN) $8.81 -1.01%
Fossil Group Inc (FOSL) $126.08 -0.97%
Dow Jones I.A - Risers
Cisco Systems Inc. (CSCO) $23.73 +1.22%
Intel Corp. (INTC) $24.43 +1.08%
Walt Disney Co. (DIS) $68.34 +0.00%
McDonald's Corp. (MCD) $97.09 +0.00%
AT&T Inc. (T) $35.03 +0.00%
JP Morgan Chase & Co. (JPM) $54.10 +0.00%
Coca-Cola Co. (KO) $39.87 +0.00%
3M Co. (MMM) $127.95 +0.00%
Goldman Sachs Group Inc. (GS) $163.84 +0.00%
Verizon Communications Inc. (VZ) $49.96 +0.00%
Dow Jones I.A - Fallers
Microsoft Corp. (MSFT) $37.36 -0.61%
Nike Inc. (NKE) $77.16 -0.00%
Home Depot Inc. (HD) $75.37 -0.00%
Wal-Mart Stores Inc. (WMT) $79.01 -0.00%
International Business Machines Corp. (IBM) $182.88 -0.00%
Procter & Gamble Co. (PG) $82.26 -0.00%
Visa Inc. (V) $199.27 -0.00%
American Express Co. (AXP) $81.40 -0.00%
Caterpillar Inc. (CAT) $84.15 -0.00%
United Technologies Corp. (UTX) $108.08 -0.00%
Nasdaq 100 - Risers
Sears Holdings Corp. (SHLD) $61.70 +2.87%
Regeneron Pharmaceuticals Inc. (REGN) $286.89 +2.75%
Check Point Software Technologies Ltd. (CHKP) $61.27 +2.68%
Broadcom Corp. (BRCM) $27.23 +2.48%
Avago Technologies Ltd. (AVGO) $45.13 +2.08%
Whole Foods Market Inc. (WFM) $59.00 +2.08%
Micron Technology Inc. (MU) $18.63 +1.97%
F5 Networks Inc. (FFIV) $84.13 +1.53%
Wynn Resorts Ltd. (WYNN) $167.38 +1.42%
QUALCOMM Inc. (QCOM) $68.51 +1.32%
Nasdaq 100 - Fallers
Tesla Motors Inc (TSLA) $137.80 -4.77%
Randgold Resources Ltd. Ads (GOLD) $73.08 -3.59%
Vimpelcom Ltd Ads (VIP) $12.73 -3.12%
Amazon.Com Inc. (AMZN) $349.53 -1.37%
Equinix Inc. (EQIX) $155.18 -1.30%
Netflix Inc. (NFLX) $333.73 -1.24%
Liberty Global plc Series A (LBTYA) $78.58 -1.13%
Fossil Group Inc (FOSL) $126.08 -0.97%
Applied Materials Inc. (AMAT) $17.64 -0.90%
Twenty-First Century Fox Inc Class A (FOXA) $33.17 -0.87% |
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| | Broker Tips | | StanChart, Sainsbury's, AMEC Nomura has maintained its 'buy' rating and 1,810p target for emerging markets-focused bank Standard Chartered saying that the company's medium-term guidance is still better than consensus estimates despite a reduction in targets this week.
"There still appears to be scepticism in the market that it is not out of the woods yet as far as Asian concerns go. We believe this will remain the case until STAN can convincingly show sequential growth, which we expect from 1Q14. Read-across from Asian peers will be equally important in this context. STAN remains a stock owned predominantly in the West, and is therefore the West's sentiment beacon on the East. With growth prospects for Asia turning for the positive, we believe STAN is well positioned at reasonable valuation."
Panmure Gordon kept its 'hold' rating but upped its target for UK grocery chain Sainsbury's from 400p to 425p after a better-than-expected first half and continued outperformance against its rivals.
"Sainsbury's is the only 'Big Four' grocer that is taking market share, and that comes from being the only one, in our view, that isn't in the process of rectifying previous strategic mistakes, whether it be lack of exposure to growth channels c-stores and online in the case of Morrisons or a portfolio of overly large stores in the case of Tesco."
AMEC's share price was lower on Wednesday despite the announcement of a contract with GDF SUEZ, as Credit Suisse dampened enthusiasm by downgrading its rating on the stock from 'outperform' to 'neutral'.
The bank said shares of the project management and engineering firm have seen "strong multiple expansion" so far this year with the stock up nearly 20% despite consensus forecasts remaining more or less unchanged. "This leaves the shares trading on almost 12 times our revised 2014 earnings per share EPS estimates, a 10% premium to the sector and to peers and with limited upside to our unchanged 1,250p target." | | |
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