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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 rises as investors celebrate Iran deal - Global indices continue to set new highs
- P5+1 strikes deal with Iran over nuclear programme
- Travel stocks rise, oil stocks fall
techMARK 2,651.39 +0.35%
FTSE 100 6,694.62 +0.30%
FTSE 250 15,299.92 +0.74%
UK financial markets on Monday celebrated the deal to limit Iran’s nuclear activity with sentiment lifted as indices across the globe continued to set record highs.
Germany’s DAX 30 index closed at another all-time high, while the S&P 500 and Dow Jones in the US were both extending their recent records.
The FTSE 100 finished 20.32 points higher at 6,693.62 a rise of 0.3% on the day.
Travel stocks were performing particularly well in London as a fall in oil prices brightened the cost outlook for companies.
“The prospect of lower oil prices is always going to be received in a positive fashion given the positive effects they have on the cost base of not only businesses, but also consumers, who will inevitably find that they have more money available for other discretionary spending,” said Michael Hewson, Chief Market Analyst at CMC Markets.
Iran to limit nuclear programme
Iran and the so-called P5+1 nations of Russia, China, France, Germany, the UK and the US came to an interim agreement over the weekend limiting Iran's nuclear programme in exchange for the easing of economic sanctions. The deal will run for the next six months as both sides work on a final agreement.
Iran is home to the world's fourth-largest oil reserves but its exports have been affected by tough sanctions. The nation will not be allowed to increase its oil sales for six months but the deal has relieved tensions in the oil producing region of the Middle East.
Brent crude futures for January delivery were down 1.18% at $109.74 a barrel before the close of trade, after having dropped 3% earlier on in the session.
Analyst Jens Nærvig Pederson from Dankse Bank said: "As Iran is not allowed to increase its oil exports, the effect [on oil prices today] probably reflects relief in the market that the sides are finally moving closer together and an expectation that the momentum will continue to grow."
Travel stocks rise, oil stocks slip
Travel stocks such as easyJet, IAG, Carnival, TUI Travel and Thomas Cook were making gains on Monday as the price of oil fell following the Iran deal. Jefferies raised its rating for easyJet from 'hold' to 'buy', saying that after a pause for breath over the summer, "we are now increasingly confident of a return to share-price outperformance". The broker also lifted its target for the stock, along with IAG.
Petrofac, the oil and gas services provider, rose strongly after saying that its 50/50 joint venture with Korean based Daelim Industrial has been awarded a $2.1bn engineering, procurement and construction contract by Oman Oil Refineries and Petroleum Industries.
Oil peers Shell, Tullow and BG Group were also out of favour as crude prices weakened significantly. BP was lower after the US judge overseeing the entire civil liability trial arising from the Gulf of Mexico oil spill criticised the company’s “deeply disappointing” attempt to block what it sees as excessive compensation payments.
Similarly, gold producers Randgold Resources, Centamin, Hochschild Mining and African Barrick Gold were in the red with the price of the precious metal slipped.
Engineering services giant Babcock fell after revealing that it is in discussions about setting up a "joint venture" with helicopter firm Avincis, which press reports have suggested could include a partial or even full buy-out. Numis and Panmure Gordon were weighing on the shares after both downgraded their recommendations from 'buy' to 'hold'.
Defence group Chemring surged after saying that expectations for the financial year ended October 31st remain in line with previous guidance despite the adverse market backdrop.
Power plant operating and oil group Essar Energy sank after seeing first-half core profits fall 7% to $543.7m due to a weak Indian rupee.
Meanwhile, pork producer Cranswick gained after beating forecasts with its interim results as first-half pre-tax profits rose 16% to £26.1m. |
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| | FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 372.80p +2.76%
Aberdeen Asset Management (ADN) 486.10p +2.25%
easyJet (EZJ) 1,434.00p +2.06%
Carnival (CCL) 2,272.00p +1.97%
Reckitt Benckiser Group (RB.) 4,939.00p +1.90%
Compass Group (CPG) 927.00p +1.87%
William Hill (WMH) 375.00p +1.87%
Kingfisher (KGF) 390.90p +1.80%
Schroders (SDR) 2,485.00p +1.80%
Sports Direct International (SPD) 705.50p +1.80%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 4,215.00p -3.37%
Babcock International Group (BAB) 1,284.00p -3.09%
Severn Trent (SVT) 1,785.00p -1.49%
Tullow Oil (TLW) 874.50p -1.41%
WPP (WPP) 1,355.00p -1.17%
Rio Tinto (RIO) 3,164.00p -0.94%
Vedanta Resources (VED) 887.00p -0.89%
BP (BP.) 490.10p -0.68%
Anglo American (AAL) 1,371.50p -0.62%
G4S (GFS) 262.00p -0.61%
FTSE 250 - Risers
IP Group (IPO) 180.00p +13.78%
Chemring Group (CHG) 213.00p +9.57%
Perform Group (PER) 462.00p +8.71%
Cranswick (CWK) 1,166.00p +6.00%
Dunelm Group (DNLM) 880.50p +5.83%
RPS Group (RPS) 295.50p +4.86%
Supergroup (SGP) 1,165.00p +4.77%
Alent (ALNT) 335.20p +4.00%
UDG Healthcare Public Limited Company (UDG) 305.00p +3.74%
Oxford Instruments (OXIG) 1,471.00p +3.66%
FTSE 250 - Fallers
Essar Energy (ESSR) 87.35p -13.17%
Centamin (DI) (CEY) 43.70p -7.63%
African Barrick Gold (ABG) 164.40p -4.31%
Moneysupermarket.com Group (MONY) 173.00p -2.54%
Polymetal International (POLY) 511.00p -2.48%
Hochschild Mining (HOC) 126.50p -2.32%
Kenmare Resources (KMR) 18.45p -2.12%
NMC Health (NMC) 390.00p -1.76%
Premier Oil (PMO) 313.00p -1.73%
Greencore Group (GNC) 183.80p -1.71% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed after Iran deal, US data - Oil slides on Iran deal
- US service activity grows
- US pending home sales drop
- UK mortgage approvals slide
FTSE 100: 0.32%
DAX: 0.91%
CAC 40: 0.52%
FTSE MIB: -0.20%
IBEX 35: 0.15%
Stoxx 600: 0.45%
European stocks ended mixed as Iran agreed to curb its nuclear programme, US service activity rose and pending home sales in the world’s biggest economy fell.
Iran and the so-called P5+1 nations of Russia, China, France, Germany, the UK and the US this weekend came to an interim agreement to limit Iran's nuclear activity in exchange for the easing of economic sanctions. The deal will run for the next six months as both sides work on a final agreement.
Markets initially rallied on the news which pushed the price of oil down with Brent crude futures falling $0.881 to $110.080 per barrel. Travel stocks, including Air France and International Consolidated Airlines, were among the top risers benefiting from the drop in oil prices.
Offsetting the gain was an upbeat report on US service activity as it fuelled concerns that the Federal Reserve would being scaling back monetary stimulus before the end of the year.
The ‘flash’ reading of the US service sector purchasing managers' index rose to 57.1 points in November after a reading of 49.3 for the month before, marking a sharp rebound in activity levels within the sector, according to survey compiler Markit.
Another report showed pending home sales in the US declined by 0.6% in October, better than the revised 4.6% fall the month before but below the 1% increase expected by analysts. Compared with last October, sales were down 2.2%.
In the UK, mortgage approvals unexpectedly declined to £42,808 in October from the prior month’s £43,182, according to the British Bankers’ Association. Economists had pencilled in £45,000 worth of approvals.
ECB officials address interest rates, inflation
European Central Bank Governing Council member Ardo Hansson said the monetary authority stands ready to cut interest rates further in an effort to fight a slowdown in inflation.
He said the ECB is also prepared to make its deposit rate negative.
“The options on rate cuts are still not fully exhausted and there are all kinds of other measures that are still on the table,” Hansson said in an interview in Tallinn, Bloomberg reported. “Of course, every time you use one option, you have one less to use. But I don’t see us, by any means, running out of our toolkit of things we can draw on.”
Separately, ECB executive board member Benoit Coeure said the central bank’s decision to cut interest rates from 0.50% to 0.25% was spurred by “slow motion” disinflation rather than concerns of deflation risks in the euro-area.
Inflation fell to 0.7% in October from 1.1% the previous month.
"We did not act because we see deflation risks materialising in the euro area," he said in a forum in Tokyo.
"Rather, we acted because we wanted to keep a sufficient safety margin above zero percent inflation."
Novartis, Fresenius
Novartis rallied after Natixis upgraded the drugmaker’s shares to ‘buy’ from ‘neutral’.
Fresenius Medical Care AG bounced higher after US regulators threw out a plan to cut Medicare payments next year.
Banco Popolare SC and Unione di Banche Italiane SCPA slumped after Societe Generale SA reduced its 12-month price forecasts on the shares, saying Italian banks will need €44bn more in provisions for their bad loans.
PSA Peugeot Citroen advanced following reports that its Chief Executive Officer Philippe Varin intends to step down next year and will be replaced by former Renault SA Chief Operating Officer Carlos Tavares.
The euro dropped 0.43% to $1.3500. |
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| | US Market Report | | US open: Markets mixed after Iran deal, services PMI - Dow, S&P at record highs, Nasdaq near 13-year high
- Iran deal sparks fall in oil prices
- US services PMI rises to 57.1 in November
Dow Jones: 0.09%
Nasdaq: -0.04%
S&P 500: 0.01%
US markets opened mixed on Monday with benchmarks fluctuating at record highs as news of an historic nuclear-programme deal in Iran was offset by increased speculation about a tapering of stimulus.
Activity in the US services sector as measured by Markit surged to its highest level in over one and a half years this month, sparking concerns that the Federal Reserve could move to scale back asset purchases before the end of 2013.
The Dow Jones Industrial Average and S&P 500 were both registering mild gains early on after hitting their all-time highs of 16,065 and 1,805 on Friday, respectively. Meanwhile, the Nasdaq briefly exceeded the 4,000 level for the first time since 2000 before falling into the red.
Iran and the so-called P5+1 nations of Russia, China, France, Germany, the UK and the US this weekend came to an interim agreement to limit Iran's nuclear activity in exchange for the easing of economic sanctions. The deal will run for the next six months as both sides work on a final agreement.
The news pushed the price of oil down with West Texas Intermediate futures falling 0.88% to $94.01 per barrel.
US services PMI surges in November
The ‘flash’ reading of the US service sector purchasing managers' index rose to 57.1 points in November after a reading of 49.3 for the month before, marking a sharp rebound in activity levels within the sector, according to survey compiler Markit. It came in above the series average of 55.5 and was one of the highest for over one and a half years.
Chris Williamson, Chief Economist at Markit, said that the data “adds to the upbeat picture painted by the manufacturing survey of an economy that continues to grow at a robust pace in November”.
Williamson pointed out that the employment index contained in the report is a reliable guide to underlying non-farm payroll trends and the November data points to another month of employment growth in the region of 200,000. “The on-going resilience of the data therefore tips the balance even further towards the Fed tapering policy at its next meeting, in early December, rather than waiting until next year,” he added.
In other economic data, pending home sales declined by 0.6% in October, better than the revised 4.6% fall the month before but below the 1% increase expected by analysts. Compared with last October, sales were down 2.2%.
Alcoa, Caterpillar boosted by broker upgrades
Aluminium giant Alcoa was making gains after analysts at Goldman Sachs upgraded the stock to ‘buy’, saying that the market “is not fully appreciating Alcoa’s solid position in growing valued-added and high-margin aluminium products for the aerospace and automotive industries”. The target was lifted from $8 to $11.
Caterpillar edged higher after Bank of America lifted its rating of the world’s largest maker of mining equipment to ‘buy’ as it expects the power-systems business to boost earnings next year.
Mining stocks including Barrick Gold and Randgold Resources, slid as the prices of gold, silver and copper declined.
DaVita HealthCare Partners and Fresenius Medical Care rose strongly after payments to kidney dialysis providers through Medicare were reduced less than expected. |
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| | Broker Tips | | Alcoa shares were rising strongly at the open of Monday's trading session in New York after investment bank Goldman Sachs upgraded the stock to 'buy' from 'neutral' and raised the price target to 11 dollars from eight dollars.
Goldman Sachs believes the market does not fully appreciate the aluminium group's position in value-added and high-margin products for the aerospace and automobile industries.
Engineered products, according to Goldman analyst Sal Tharani, are less aluminium price-sensitive and should provide upside even with a sluggish overall outlook for aluminium overall.
Tharani expects Alcoa to boost revenue by more than $2bn and rake in additional earnings of $525m from end-market growth and share gains over the next three years. He sees the downstream businesses, particularly in engineering products, less conditioned by aluminum prices and sees an upside potential for the group despite estimates that stem from demand for aluminum.
Goldman Sachs expects productivity improvements and a positive cash flow by next year.
By 11:40 in New York, the stock was up 3.46% at $9.56. | | |
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