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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: Fed's Yellen sparks gains on hopes of continued stimulus - Yellen comments in focus as taper speculation picks up
- Corporate earnings come in mixed
- Economic data weakens in UK, Eurozone
techMARK 2,649.23 +0.90%
FTSE 100 6,666.13 +0.54%
FTSE 250 15,257.93 +0.51%
Markets were able to shrug off some disappointing economic data on Thursday as hopes over a continuation of monetary easing by the US Federal Reserve lifted stocks.
Speaking this afternoon to the Senate Banking Committee, soon-to-be Fed Chair Janet Yellen argued that the central bank's quantitative easing (QE) programme, which has been in place since late 2008, has made a "meaningful contribution to economic growth".
However, she said that the labour market and wider economy are still performing "far short of their potential" with unemployment still too high. As such, she assured that Fed policy is "not on a set course", raising hopes that the central bank could put off a tapering of QE until next year.
The FTSE 100 finished 36.13 points higher at 6,666.13, rebounding after hitting its lowest level in nearly four weeks on Wednesday (6,630).
Financial Sales Trader Alex Conroy from Spreadex said that Yellen's "vigorous defence of QE" led to a strong finish for markets "as investors who may have been cautious about getting into equities just before tapering occurred, get the encouragement they need".
Stocks had pared gains this morning after a series of gloomy economic figures from this side of the Atlantic.
UK retail sales fell by 0.7% in October, compared with a 0.6% gain the month before, disappointing analysts who had pencilled in no change month-on-month.
Meanwhile, Eurozone gross domestic product growth eased to 0.1% in the third quarter, in line with analysts' estimates but down from the 0.3% expansion seen in the second quarter. German GDP growth slowed from 0.7% to 0.3%, as expected, while French economic activity contracted by 0.1% from 0.5% growth in the second quarter, worse than forecasts.
Sainsbury extends gains, Tesco falls
Supermarket group Sainsbury gained as investors continued to celebrate the company's better-than-expected first-half results yesterday. The stock was benefitting from broker upgrades from HBSC, Exane BNP Paribas and Citigroup who all lifted their ratings on the stock and raised targets.
In contrast, sector peer Tesco was being pressured lower by a Goldman Sachs downgrade to 'sell', with the bank saying that investors "still have some time to wait before a cash return programme (buyback of special dividends) can be instigated".
British Gas-owner Centrica was also down after warning that market conditions remained challenging, particularly in business energy supply in both the UK and the US, in UK gas-fired power generation and in UK gas storage. The company said it expects 2013 adjusted earnings to be flat on last year.
Consumer packaging company Rexam fell after saying trading since the start of July. Sentiment still seems fragile following the company's profit warning in June.
Burberry's share price was higher after the luxury fashion company said that first-half revenues exceeded £1bn for the first time on the back of strong growth in retail.
Oil and gas group Ophir Energy surged after announcing the sale of a 20% interest in three blocks in Tanzania to Pavilion Energy for a maximum of $1.3bn.
Digital sports media firm Perform, however, dropped sharply after saying that earnings would be lower than expected this year. Serco's shares also tumbled as the service company warned profits would be hit by contract delays with the UK government and currency movements. |
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| FTSE 100 - Risers
Aberdeen Asset Management (ADN) 419.20p +3.02%
Shire Plc (SHP) 2,840.00p +2.86%
WPP (WPP) 1,342.00p +2.68%
ITV (ITV) 186.40p +2.53%
Smiths Group (SMIN) 1,440.00p +2.35%
CRH (CRH) 1,617.00p +2.21%
Associated British Foods (ABF) 2,311.00p +2.08%
Rolls-Royce Holdings (RR.) 1,235.00p +2.07%
Randgold Resources Ltd. (RRS) 4,598.00p +1.97%
Prudential (PRU) 1,266.00p +1.85%
FTSE 100 - Fallers
Centrica (CNA) 345.30p -5.11%
Morrison (Wm) Supermarkets (MRW) 266.20p -2.85%
Tesco (TSCO) 356.15p -2.34%
Rexam (REX) 506.50p -2.31%
William Hill (WMH) 370.70p -2.16%
RSA Insurance Group (RSA) 102.50p -1.54%
Mondi (MNDI) 996.00p -1.39%
Antofagasta (ANTO) 804.00p -1.17%
Johnson Matthey (JMAT) 2,990.00p -0.47%
Glencore Xstrata (GLEN) 324.20p -0.22%
FTSE 250 - Risers
Ophir Energy (OPHR) 362.10p +10.03%
Xaar (XAR) 1,015.00p +7.35%
Ted Baker (TED) 1,887.00p +5.42%
NMC Health (NMC) 363.20p +4.88%
Booker Group (BOK) 157.70p +4.78%
SIG (SHI) 215.60p +4.76%
Ferrexpo (FXPO) 185.40p +3.69%
Amlin (AML) 447.70p +3.68%
Ocado Group (OCDO) 432.10p +3.60%
Brewin Dolphin Holdings (BRW) 287.10p +3.27%
FTSE 250 - Fallers
Serco Group (SRP) 419.10p -16.85%
Perform Group (PER) 460.00p -14.81%
Phoenix Group Holdings (DI) (PHNX) 713.50p -8.17%
Bank of Georgia Holdings (BGEO) 2,060.00p -4.67%
3i Group (III) 353.80p -4.58%
BBA Aviation (BBA) 320.30p -4.22%
Ladbrokes (LAD) 180.20p -3.53%
Pace (PIC) 295.00p -3.41%
Thomas Cook Group (TCG) 139.50p -2.99%
IG Group Holdings (IGG) 613.50p -1.68% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Dovish Yellen statement boosts stocks - US economy must improve before Fed tapering, says Yellen
- US initial jobless fall less than expected
- Eurozone economic growth eases
FTSE 100: 0.66%
DAX: 1.03%
CAC 40: 1.06%
FTSE MIB: 0.15%
IBEX 35: 0.32%
Stoxx 600: 0.85%
European stocks ended higher as Federal Reserve Chair nominee Janet Yellen said the US economy needs to improve before the central bank begins tapering monetary stimulus.
At her nomination hearing before the Senate Banking Committee today, Yellen said it was "important not to remove support especially when the economy is fragile".
The Vice Chair, who is expected to take over from Ben Bernanke in January, argued that the US was not ready for a scaling back of the Fed's monthly $85bn bond buying programme due to a weakness in the labour market.
"With Janet Yellen's confirmation hearing taking place on Capitol Hill the markets continue to rally after her statements regarding QE," according to Spreadex trader Alex Conroy.
"Stating there is no set time at which tapering will occur, her belief that the US economy is performing far below where it should be, has led to bulls pushing the markets up."
Acting as a backdrop, US initial jobless claims fell to 339,000 in the week ended November 9th from the previous week's revised 341,000, the Labor Department revealed today. Economists had predicted a drop to 330,000.
Eurozone GDP slows
Eurozone gross domestic product (GDP) expanded 0.1% in the third quarter, down from growth of 0.3% registered in the second quarter. Consensus had forecast a 0.2% expansion.
Germany's GDP rose 0.3% in the third quarter, compared to 0.7% in the prior quarter, while France's GDP contracted by 0.1% from a previous increase of 0.5%.
The figures come as the Eurozone continues to struggle through the recovery, with the debt crisis now in its fifth year and unemployment at a record 12.2%.
European Central Bank President Mario Draghi last week surprised the market by announcing a cut of the benchmark interest rate from 0.5% to 0.25%, citing fears of deflation and the euro-area's struggling economy.
Taylor Wimpey, Bouygues
Taylor Wimpey bounced as the UK homebuilder forecast an improvement in "all of our key financial metrics for the second half of 2013".
Bouygues jumped after the French building and telecommunications company reported a rise in operating profit that beat analysts' predictions.
RWE slumped after the German utility company said net income would fall in 2014 from this year.
Burberry advanced after the luxury fashion group reported a 17% rise in first-half revenue to £1bn, driven by strong retail sales.
CaixaBank declined after owner La Caixa sold an 8.6% stake in the Spanish bank for €1.65bn to boost its capital.
Ophir Energy surged after the UK oil and gas explorer announced the sale of a 20% stake in its Tanzanian assets.
Oil gains
Brent crude futures rose $1.390 to $108.630 per barrel on the ICE.
The euro fell 0.10% to $1.3474. |
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| | US Market Report | | US open: Markets pull back from record high, Cisco drops - Yellen comments in focus ahead of nomination hearing
- Jobless claims inch lower
- Trade deficit widened in September
Dow Jones: -0.07%
Nasdaq: -0.19%
S&P 500: 0.00
US stocks opened flat to slightly lower on Thursday as markets paused for breath after a record finish the day before following some dovish comments from Janet Yellen, the nominee to take over the Federal Reserve from Ben Bernanke in January.
In prepared remarks ahead of a Congressional hearing later today, Yellen said that the Fed has "more work to do" to help the recovery, easing fears that a taper of quantitative easing is just around the corner. She said that the labour market and wider economy are performing "far short of their potential" with unemployment still too high.
The comments pushed both the Dow Jones Industrial Average and S&P 500 to fresh all-time highs on Wednesday.
Yellen, currently Vice Chair of the Fed, will appear at her nomination hearing before the Senate Banking Committee today in Washington at 15:00 GMT.
Craig Erlam, Market Analyst at Alpari, said that Bernanke prompted a significant sell-off when he testified earlier this year after he laid out the timetable for tapering. “Given the comments we’ve had from some Fed members this week, I wouldn’t be surprised to see a similar outcome again,” he said.
Acting as a backdrop, US initial jobless claims fell to 339,000 in the week ended November 9th from the previous week’s revised 341,000, the Labor Department revealed. However, economists had predicted a larger drop to 330,000.
In other economic data, the trade deficit widened by 8% to $41.8bn in September from $38.7bn the month before. Analysts were expecting a deficit of $39bn.
Cisco plunges as outlook disappoints
Computer networking equipment group Cisco Systems was a heavy faller after the opening bell as it warned investors that profits could decline this year with earnings expected to come within the range of $1.95-2.05 a share. Current consensus estimates were for earnings of around $2.10 a share, compared with last year’s $2.02.
Department-store firm Kohl’s disappointed as profits fell from 91 cents a share to 81 cents in the third quarter, below the 86 cents forecast. The firm also reduced its profit guidance for the full year.
Office Depot rallied after Bank of America recommended investors ‘buy’ the stock.
NetApp gained after reporting a rise in second-quarter earnings that beat analysts’ expectations.
Viacom advanced as the cable network operator posted fourth-quarter profit that exceeded forecasts. |
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| | Broker Tips | | Broker tips: RBS, Tesco, Perform Investec has upgraded its rating for UK domestic banking group RBS from 'sell' to 'hold', but maintained its cautious view on the stock.
Analyst Ian Gordon said that the RBS "disaster story" has been running since 2007, yet he still sees little hope of a meaningful near-term recovery for shareholders. The broker has cut its target from 345p to 335p, but said that the recent collapse in the share price triggers a lift in its recommendation from 'sell' to 'hold'.
Supermarket giant Tesco was being pressured lower on Thursday morning by a Goldman Sachs downgrade from 'neutral' to 'sell', with the bank saying that investors will have to wait a while for a cash return.
Goldman estimates that Tesco store sales have lost 100 basis points (bp) of grocery market share since 2010, though this decline is only 30bp when including online sales. "Continued pressure from the discount and online channels will drive lower UK margins in the medium term, in our view," the bank said.
Prime Markets has labelled Perform Group as a 'sell' following the digital sports media firm's profit warning on Thursday.
"With weakness in technology and production hitting the EBITDA measure so hard, and mindful of the raft of director share sales earlier in the year around current levels, we expect further weakness in the shares before a sustained recovery develops." | | |
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