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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: Stocks rise ahead of FOMC minutes as Aberdeen surges - Aberdeen leads financials higher after SWIP purchase
- Petrofac plummets on cautious outlook
- Fed speculation ramps up ahead of FOMC minutes
techMARK 2,653.19 +0.15%
FTSE 100 6,723.46 +0.45%
FTSE 250 15,290.48 +0.29%
UK markets posted decent gains on Monday with the financial sectors providing a lift after a strong surge by Aberdeen, which helped to offset a record decline by oilfield services group Petrofac.
"After an initially slow start European markets finally threw off some of their caution and pushed higher, playing catch up with Friday's US move […] helped in no small part by a solid performance from financial stocks," said Chief Market Strategist Michael Hewson from CMC Markets.
The FTSE 100 finished up 30.02 points at 6,723.46, a rise of 0.45% on the day.
With the economic data calendar looking pretty light over the next two days, investors are likely to turn most of their attention to the minutes of October's Federal Open Market Committee (FOMC) meeting due to be released on Wednesday.
Although few are still expecting the Fed to begin scaling back its asset purchase programme this year - especially after Fed Chair nominee Janet Yellen's dovish comments last week – markets are still on the lookout for hints of a potential 'taper' timeframe.
Markets in the States were extending recent gains after the opening bell on Wall Street with the Dow Jones Industrial Average and S&P 500 surpassing their milestone intraday levels of 16,000 and 1,800 for the first time, respectively.
A strong performance on the Hang Seng index in Hong Kong overnight was also helping market sentiment today as investors enthusiastically welcomed a sweeping package of Chinese economic reforms. Beijing outlined the biggest restructuring of its economy in decades, saying that the government would open the financial sector and relax investment restrictions.
Aberdeen boosts financials; Petrofac plunges
Aberdeen surged nearly 15% today after saying that it would acquire Scottish Widows Investment Partnership Group from Lloyds. The company also reported annual pre-tax profit jumped 39% on net revenue up 24%, as it raised its full-year dividend by 39% to 16p per share.
Lloyds was also higher following its disposal, along with banking peers Standard Chartered, RBS, Barclays and HSBC.
Heading the other way was Petrofac which registered its worst daily loss in history (-16.6%) after saying that net income in 2014 would show "flat to modest growth year-on-year". The company also said that targets for 2015 were dependent on the timing of certain contracts.
Outsourcing group Capita was in the red after announcing that Chief Executive Officer (CEO) Paul Pindar has called it quits after 26 years with the firm. Severn Trent was also lower after saying that CEO Tony Wray would retire next year and be replaced by the current head of BT's Openreach operations.
Vedanta was also higher, rebounding after some heavy falls following its first-half report released the previous session. Credit Suisse cut its target for the shares this morning but kept an 'outperform' rating, saying that it remains an "attractive structural story".
The share price of AVEVA was sharply lower despite a broadly in-line set of first-half results with revenues up 11% and profits up 6%. Panmure Gordon maintained its 'hold' rating for the engineering software firm, saying that the shares are still too expensive which "is likely to make any new buying muted". |
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| FTSE 100 - Risers
Aberdeen Asset Management (ADN) 489.70p +14.74%
Vedanta Resources (VED) 988.50p +3.45%
Standard Chartered (STAN) 1,482.00p +1.79%
ARM Holdings (ARM) 959.50p +1.64%
GKN (GKN) 372.80p +1.39%
Vodafone Group (VOD) 234.35p +1.30%
Coca-Cola HBC AG (CDI) (CCH) 1,782.00p +1.25%
Burberry Group (BRBY) 1,495.00p +1.22%
Babcock International Group (BAB) 1,331.00p +1.22%
Johnson Matthey (JMAT) 3,049.00p +1.19%
FTSE 100 - Fallers
Petrofac Ltd. (PFC) 1,200.00p -16.61%
Fresnillo (FRES) 915.50p -2.76%
Randgold Resources Ltd. (RRS) 4,532.00p -1.18%
CRH (CRH) 1,574.00p -1.07%
Carnival (CCL) 2,251.00p -0.92%
Sage Group (SGE) 345.70p -0.86%
Admiral Group (ADM) 1,273.00p -0.86%
Land Securities Group (LAND) 969.50p -0.82%
Pearson (PSON) 1,328.00p -0.75%
SSE (SSE) 1,389.00p -0.71%
FTSE 250 - Risers
Imagination Technologies Group (IMG) 255.80p +6.54%
Synthomer (SYNT) 236.50p +4.79%
Ocado Group (OCDO) 439.80p +2.90%
esure Group (ESUR) 233.10p +2.69%
Bank of Georgia Holdings (BGEO) 2,158.00p +2.66%
Barratt Developments (BDEV) 320.80p +2.43%
Electra Private Equity (ELTA) 2,321.00p +2.25%
Catlin Group Ltd. (CGL) 528.50p +2.22%
BTG (BTG) 443.10p +2.21%
Fidelity China Special Situations (FCSS) 105.60p +2.13%
FTSE 250 - Fallers
Aveva Group (AVV) 2,365.00p -7.83%
Essar Energy (ESSR) 100.00p -5.12%
Homeserve (HSV) 244.10p -3.10%
Devro (DVO) 305.60p -2.98%
Fisher (James) & Sons (FSJ) 1,078.00p -2.80%
Spirent Communications (SPT) 107.90p -2.79%
Partnership Assurance Group (PA.) 316.50p -2.62%
Centamin (DI) (CEY) 50.40p -2.51%
Perform Group (PER) 425.00p -2.46%
Lonmin (LMI) 332.30p -2.38% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks rise on German economic growth forecast - Bundesbank expects economic growth in Germany
- Investors eye release of FOMC minutes, US data
- ECB stress test to simulate negative economic conditions
- Spain's bad loan ratio rises
FTSE 100: 0.45%
DAX: 0.62%
CAC 40: 0.66%
FTSE MIB: 2.24%
IBEX 35: 0.90%
Stoxx 600: 0.54%
European stocks advanced as Bundesbank said Germany's economy is growing solidly and as investors waited for this week's release of Federal Open Reserve Committee (FOMC) meeting minutes.
In Bundesbank's November monthly report, the central bank said Europe's biggest economy would see its upturn consolidated in coming months due to domestic demand and an improved global environment.
The report said residential construction and private consumption, boosted by robust labour market and strong wage increase, have helped lift the economy despite weak exports.
While Germany achieved bumper growth of 0.7% in the second quarter, preliminary data shows it expanded by just 0.3% between July and September as exports weighed.
Germany's DAX hit a record high, up 56.74 points to 9,225.43.
In the US, the FOMC meeting minutes will be in focus on Wednesday, potentially offering more insight behind the Federal Reserve's decision to maintain its monthly $85bn bond buying programme.
Economists in a Bloomberg survey estimate that policy makers will wait until next March to begin tapering monthly buying to $70bn.
Fed members William Dudley and Charles Plosser were due to speak in the US today, potentially offering hints on when the central bank will begin winding back its monetary stimulus.
This week investors will also turn to economic data to assess the impact of last month's US government shutdown. Particular attention will be paid to retail sales, existing home sales and manufacturing figures.
ECB stress tests
Stress tests on euro-area banks will probably simulate three years of negative economic conditions, said European Central Bank (ECB) Executive Board member Yves Mersch.
"Our deliberations are tending toward these tests having a three-year horizon, to the end of 2016," Mersch, who is helping to oversee the ECB's preparations to become the currency bloc's bank supervisor, said at a conference in Frankfurt today, according to Bloomberg.
"We would therefore end up with a base scenario and a so-called stress- or worst-case scenario. So, two scenarios."
The ECB is launching a three-stage review of balance sheets with a comprehensive assessment, followed by an examination known as the Asset Quality Review, and then stress tests. Combined results from the process will be published before the ECB starts supervision in November 2014.
Meanwhile, Spain's bank bad loan ratio rose to a record 12.7% in September, as more borrowers missed their payments hampered by an unemployment rate of 26%. It compared with 12.1% in August and 10.7% in the same month a year earlier.
In London, asking prices for homes fell 5% in November from the prior month to an average £517,276, according to Rightmove. Across England and Wales, average prices declined by 2.4%.
RBS gains on sale of IP&ED business
Royal Bank of Scotland edged higher after saying it is in talks to sell its retail investor products and equity derivatives business in an effort to streamline its investment bank. France's biggest bank BNP Paribas is rumoured to be in negotiations with the lender.
Aberdeen Asset Management gained after Lloyds Banking Group agreed to sell its Scottish Widows Investment Partnership division to the money manager. Aberdeen also lifted its annual dividend by 39% after a strong increase in profits and revenues in the year just gone.
RWE jumped after Exane BNP Paribas raised Germany's second-biggest utility to 'outperform' from 'neutral'.
Sonova Holding rallied as the hearing aid maker increased its full-year forecast after first-half revenue exceeded analysts' expectations.
Medica advanced after the French private health group said it would merge with Korian.
Petrofac slumped after the energy services firm said it expected net income to be flat or grow modestly next year.
Capita declined after announcing its Chief Executive Officer Paul Pindar will retire in early 2014.
Brent crude declines
Brent crude futures rebounded from an earlier slump today, rising $0.018 to $108.520 per barrel on the ICE.
The euro was up 0.18% to $1.3520. |
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| | US Market Report | | US open: Stocks edge higher as Dow tops 16,000, S&P hits 1,800 - Dow, S&P 500 trading at all-time high
- Markets await FOMC minutes on Wednesday
- Boeing, Tyson Foods provide a lift
Dow Jones: 0.30%
Nasdaq: -0.12%
S&P 500: 0.05%
US stock markets opened with small gains on Monday as investors started the day in a cautious mood, with upside limited after the Dow Jones Industrial Average and S&P 500 benchmarks pushed into unknown territory.
The Dow managed to surpass 16,000 for the first time in history, while the S&P 500 exceeded its all-time high of 1,800.
Nevertheless, the positive move was helped by decent gains by plane maker Boeing after a record plane order and meat processor Tyson Foods following its better-than-expected quarterly results.
With economic data on the light side today, markets are likely to turn their attention to the minutes of October'sFederal Open Market Committee (FOMC) meeting due to be released on Wednesday. Although few are still expecting the Fed to begin scaling back its asset purchase programme this year - especially after Fed Chair nominee Janet Yellen's dovish comments last week - investors will be looking out for hints of a potential time frame for the 'taper'.
In the meantime, a number of economic figures for October will be released later in the week with the market paying special attention to retail sales, existing home sales and manufacturing figures to gauge the health of the US economy during the government shutdown last month.
Meanwhile, Fed members William Dudley and Charles Plosser will speak later on today, potentially offering hints on when the central bank will begin winding back its monetary stimulus.
Economists in a Bloomberg survey estimate that policy makers will wait until next March to begin tapering monthly buying to $70bn.
Boeing jumps on record orders
Boeing gained following news the company secured record plane orders on the first day of the Dubai Air Show. It has signed a new deal with Abu Dhabi’s state investment fund Mubadala for $2.5bn in advanced composites and machine metals. The company has also made an agreement with Abu Dhabi manufacturing company Tawazun Precision Industries to set up a facility in the United Arab Emirates for producing aerospace parts.
Tyson Foods was in positive territory after reporting a 41% jump in fourth-quarter earnings as it ramped up production in China. The company also raised its quarterly dividend by 50% and reported better-than-expected revenue guidance for the full year.
However, food companies ConAgra Foods and Archer-Daniels-Midland declined as tornadoes and thunderstorms hit the US mid-West.
Nvidia slipped as Morgan Stanley cut its shares to ‘underweight’ from ‘equal weight’.
Software giant Microsoft edged lower after analysts at Bank of America downgraded the stock from ‘neutral’ to ‘underperform’. |
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| | Broker Tips | | Broker tips: Aberdeen, IAG, AVEVA Daniel Stewart & Company said that Aberdeen Asset Management remains one of its favoured stocks in the financial sector following Monday's acquisition of Scottish Widows Investment Partnership (SWIP) from Lloyds.
Analyst Simon Willis said: "We believe this is a very good deal for ADN and despite today's [...] rise, with a 3% yield and likely dividend growth of 12-15% over the next three years, we would expect the stock to perform well over the next 12 months. ADN remains one of our preferred stocks in the sector."
IAG's share price received a little boost on Monday morning as analysts at both UBS and Nomura raised their targets for the stock following Friday's upgrade to 2015 guidance.
Both brokers kept their 'buy' ratings for the shares. "Although the shares are up nearly 100% year to date we think there remains material upside should the current operational trajectory be maintained," said analyst Jarrod Castle from UBS.
Panmure Gordon has maintained its 'hold' rating for engineering software firm AVEVA in spite of a broadly in-line set of first-half results, saying that the shares are still too expensive.
"We remain encouraged by the operational progress but our bugbear remains the valuation – price-to-earnings ratio of 31x – and is likely to make any new buying muted." The broker has lifted its target slightly from 2,374p to 2,386p but maintained its overall cautious stance on the stock. | | |
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