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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 fall as Fed speculation overshadows ECB euphoria - ECB cuts main policy rate
- US GDP picked up in Q3, eyes turn to jobs data
- Randgold jumps after Q3 results
tech MARK 2,643.07 -0.40%
FTSE 100 6,697.22 -0.66%
FTSE 250 15,389.52 -0.09%
As the initial euphoria following a rate cut in Europe faded, UK stocks swung sharply into the red on Thursday on concerns that a pick-up in US economic growth could prompt the Federal Reserve to scale back stimulus.
The FTSE 100 was 44.47 points lower at 6,697.22 by the close, well below its intraday high of 6,773 reached after the European Central Bank (ECB) decision.
The ECB cut its main policy rate by 25 basis points (bp) to an all-time low of 0.25% in a move which some analysts said was widely priced in following the steep drop in Eurozone inflation revealed last week. It also cut its emergency borrowing rate from by 25bp to 0.75% but held the deposit rate at zero.
The move initially prompted markets across Europe to push into positive territory, though the bullish mood was quickly overshadowed by a sharp acceleration in US gross domestic product revealed by the Congress Department this afternoon. It said the economy expanded at a 2.8% annual rate in the third quarter. While this smashed forecasts for 2% growth, the beat was entirely due to inventory accumulation, which contributed 80 basis points to growth.
Nevertheless, Chief US Economist Paul Ashworth from Capital Economics said that the pick-up in growth will “increase speculation that the Fed will begin tapering its asset purchases in December”. However he said that Friday’s release of the October employment report will “probably more important for the policy outlook”.
At midday, the Monetary Policy Committee announced that it had voted to keep its Bank Rate at 0.5% and its asset purchase programme at £375bn in a move that was widely anticipated.
Randgold bucks the trend as profits jump
Gold producer Randgold Resources saw its share price surge this afternoon after it said quarter-on-quarter profit increased 80% following a strong performance by its flagship Loulo-Gounkoto complex in Mali. Investors were shrugging off the weakness seen across the wider mining sector with Vedanta, Anglo American, Glencore Xstrata and Fresnillo tracking metal prices lower.
Mondi extended yesterday's losses, which came after it said that sales volumes in the third quarter were held back by planned maintenance shutdowns at some of its larger sites.
Schroders fell as investors cashed in strong gains seen in the share price over the past year (around 65%). The company reported with a sharp rise in third-quarter profits today, but Canaccord Genuity was putting downwards pressure on the stock after downgrading it to 'hold', saying that the company needs to show "stronger growth to justify upgrades".
Coca-Cola HBC, the world's second-largest bottler of Coca-Cola, rose despite recording a dip in revenues in the third quarter as volumes were hit by tough economic conditions in Europe.
Meggitt was also rising as sentiment recovers following a forecast downgrade, which led to a sharp drop in the share price last week. A purchase by Chief Financial Officer Doug Webb of 15,000 shares helped move the share price in the right direction.
Others in the aerospace and defence sector were also making gains today, including Rolls-Royce after winning a contract extension with the US Department of Defence and BAE Systems as investors continued to celebrate the company’s restructuring plans announced yesterday.
Auto and bike parts retailer Halfords surged after a better-than-expected increase in first-half profits following a strong Retail performance. |
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| | FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 4,885.00p +6.08%
Coca-Cola HBC AG (CDI) (CCH) 1,800.00p +2.51%
Marks & Spencer Group (MKS) 508.50p +1.82%
Rolls-Royce Holdings (RR.) 1,170.00p +1.74%
Admiral Group (ADM) 1,288.00p +1.34%
Bunzl (BNZL) 1,391.00p +1.24%
BAE Systems (BA.) 460.20p +0.97%
Meggitt (MGGT) 507.50p +0.79%
GKN (GKN) 374.50p +0.75%
British Land Co (BLND) 612.00p +0.74%
FTSE 100 - Fallers
Schroders (SDR) 2,491.00p -4.38%
Mondi (MNDI) 1,025.00p -4.21%
Anglo American (AAL) 1,512.00p -2.80%
Vedanta Resources (VED) 1,060.00p -2.66%
Croda International (CRDA) 2,317.00p -2.65%
Glencore Xstrata (GLEN) 333.00p -2.60%
Travis Perkins (TPK) 1,759.00p -2.49%
Aviva (AV.) 435.90p -2.11%
Fresnillo (FRES) 970.00p -2.02%
Royal Bank of Scotland Group (RBS) 321.80p -1.89%
FTSE 250 - Risers
Halfords Group (HFD) 478.00p +14.16%
Beazley (BEZ) 239.90p +5.17%
Centamin (DI) (CEY) 50.75p +5.07%
Grainger (GRI) 206.10p +4.62%
Cable & Wireless Communications (CWC) 48.27p +3.81%
Xaar (XAR) 853.50p +3.08%
Renishaw (RSW) 1,728.00p +2.98%
Elementis (ELM) 263.00p +2.77%
Bodycote (BOY) 669.50p +2.37%
Menzies(John) (MNZS) 826.00p +2.23%
FTSE 250 - Fallers
Kazakhmys (KAZ) 255.00p -4.89%
Telecity Group (TCY) 672.50p -4.00%
Dairy Crest Group (DCG) 519.00p -3.71%
Hunting (HTG) 875.00p -3.53%
Partnership Assurance Group (PA.) 401.00p -2.67%
Inmarsat (ISAT) 695.00p -2.66%
Micro Focus International (MCRO) 828.00p -2.42%
Moneysupermarket.com Group (MONY) 175.40p -2.39%
Balfour Beatty (BBY) 275.30p -2.38%
Ashmore Group (ASHM) 385.90p -2.35% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed after shock ECB interest rate cut - ECB cuts interest rates
- BoE keeps policy unchanged
- US economy grows
- US initial jobless claims fall
FTSE 100: -0.72%
DAX: 0.49%
CAC 40: -0.06%
FTSE MIB: -2.07%
IBEX 35: -0.90%
Stoxx 600: 0.00%
European stocks were mixed after the European Central Bank (ECB) lowered its benchmark interest rate to a record low to fight off deflation worries.
The ECB stunned markets today as it cut its main refinancing rate to 0.25% from 0.50%.
The rate cut was only expected by a few, including Bank of America, UBS and Royal Bank of Scotland.
The cut was prompted by fears that economic recovery could stall after the Eurozone's inflation rate surprisingly dropped to 0.7% in October, well below the ECB target "under but close to 2%". The slower pace of improvement in the degree of fragmentation of the Eurozone's financial system was also a major factor behind the monetary authority's decision.
The marginal lending rate was also cut by 25 basis points to 0.75%.
"Clearly the ECB see deflation as a very real threat and October's drop as not being a one-off figure," said Craig Erlam, Market Analyst at Alpari UK.
"The central bank has been very reluctant in the past to cut interest rates, so this reaction now begs the question, did they leave it too long to cut rates on this occasion? And, is deflation a real threat for the Eurozone?"
The Bank of England's (BoE) Monetary Policy Committee (MPC) also announced it will keep its monetary policy unchanged after a meeting Thursday.
The central bank held interest rates at 0.50% and its quantitative easing programme at £375bn, as expected by economists.
US economy, jobs data
The US economy grew faster than expected in the third quarter, the Commerce Department revealed today. Gross domestic product (GDP) expanded at a 2.8% annual rate, the fastest pace since the third quarter of 2012 and above forecasts for a 2% rate.
Chief US Economist Paul Ashworth from Capital Economics said that the pick-up in growth will "increase speculation that the Fed will begin tapering its asset purchases in December, but the release of October's employment figures tomorrow is probably more important for the policy outlook".
Another report showed initial jobless claims fell to 336,000 in the week ended November 2nd from 345,000 the previous week. Economists had expected 335,000 claims.
US personal consumption was up 1.5% in the third quarter, compared to 1.8% previously, missing estimates for a 1.6% increase.
HeidelbergCement, Siemens
ArcelorMittal climbed after the steel-maker unveiled third quarter earnings that surpassed analysts' predictions.
Societe Generale and Credit Agricole edged higher as the French banks said they are in talks to swap stakes in asset manager Amundi Group and derivatives broker Newedge Group. Credit Agricole plans to raise its holding in Amundi to 80% from 75%, while Societe Generale will double its share of Newedge to 100%.
Heidelberg Cement declined as the maker of cement said quarterly operating income before depreciation fell due to weaker currencies in emerging markets.
Siemens advanced after saying it expected fiscal 2014 earnings per share to rise by at least 15% from last year.
Swiss Re rose after the re-insurer reported third-quarter profit that beat analysts' estimates.
Deutsche Telekom slumped despite posting a rise in third-quarter adjusted earnings before interest, taxes, depreciation and amortisation that exceeded forecasts.
Bureau Veritas plunged as the goods-inspection company reported third-quarter sales that lagged behind analysts' expectations.
Commerzbank gained as the German bank reported third-quarter income ahead of consensus.
Euro falls on shock ECB rate cut
The euro fell 0.92% to $1.3389 on the ECB's unexpected interest rate cut.
Brent crude futures fell $1.397 to $103.790 per barrel on the ICE. |
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| | US Market Report | | US open: Gains quickly erased after initial rise - Markets rise after ECB, but drop sharply
- US GDP picks up in Q3, other data on tap
- Twitter to debut this morning
Dow Jones: -0.13%
Nasdaq: -1.07%
S&P 500: -0.42%
US markets opened strongly following an interest-rate cut by the European Central Bank rate, but markets quickly erased gains as investors reacted to a barrage of economic data closer to home.
The ECB cut its main policy rate by 25 basis points to 0.25%. Analysts said that the rate cut was widely priced into markets after the steep drop in Eurozone inflation revealed last week. It also cut its emergency borrowing rate from by 25bp to 0.75% but held the deposit rate at zero.
In the States, gross domestic product expanded at a 2.8% annual rate in the third quarter, according to the first estimate by the Congress Department. While this smashed forecasts for 2% growth, the beat was entirely due to inventory accumulation, which contributed 80 basis points to growth.
Chief US Economist Paul Ashworth from Capital Economics said that the pick-up in growth will “increase speculation that the Fed will begin tapering its asset purchases in December, but the release of October's employment figures tomorrow is probably more important for the policy outlook”.
Initial jobless claims fell to 336,000 in the week ended November 2nd from 345,000 the previous week. The figure was broadly in line with the consensus estimate of 335,000.
Analyst Cooper Howes from Barclays said that claims returned to their gradual downward trend: “Claims have been volatile over the past two months due to the effects of computer system upgrades in California and the government shutdown, but both of these appear to have faded by this point.”
US personal consumption was up 1.5% in the third quarter, compared to 1.8% previously, missing estimates for a 1.6% increase.
Twitter debuts on New York Stock Exchange
Twitter is set to float on the New York Stock Exchange this morning in New York after the social media company priced its initial public offering above the expected range.
The company priced 70m shares at $26 last night, above the target range of $23 to $25. However, according to MarketWatch, traders at the New York Stock Exchange have received orders for Twitter shares with prices ranging from $40-44.
J.C. Penney advanced after the retailer’s comparable-store sales rose 0.9% in October, the first increase since December 2011.
American Eagle Outfitters gained after saying it expects third-quarter earnings to fall to 19 cents a share, above its August forecast for as much as 16 cents a share.
Whole Foods declined as the natural foods grocer said profit excluding certain items will be as much as $1.69 a share in the year ending in September 2014, compared with a previous estimate of as much as $1.72 and the average analyst estimate of $1.73 a share. |
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| | Broker Tips | | Afren: Liberum Capital takes target from 136p to 197p and upgrades to buy.
African Minerals: Liberum Capital cuts target from 423p to 410p, while staying with its buy recommendation. Canaccord Genuity reduces target from 400p to 345p leaving its buy recommendation unchanged.
Alent: Deutsche Bank lowers target from 350p to 320p retaining a hold recommendation. Credit Suisse cuts target from 430p to 410p and keeps an outperform rating.
Amara Mining: Canaccord Genuity lowers target from 30p to 25p, while maintaining its buy recommendation.
APR Energy: Credit Suisse ups target from 1300p to 1350p and reiterates an outperform rating.
ASOS: Societe Generale raises target from 6000p to 6400p, while its hold recommendation remains unchanged.
Barclays: Credit Suisse moves target from 280p to 270p maintaining a neutral rating.
British American Tabacco: Barclays ups target from 3950p to 4000p and stays with its overweight rating.
Centamin: Investec shifts target from 50p to 54p staying with its buy recommendation.
China Chaintek: Daniel Stewart initiates with a target of 300p and a buy recommendation.
Clarkson: Panmure Gordon raises target from 2000p to 2500p and keeps a buy recommendation.
Croda International: Nomura reduces target from 2800p to 2700p keeping a neutral rating. Canaccord Genuity moves target from 2000p to 2030p, while still keeping a sell recommendation.
CSR: Deutsche Bank ups target from 330p to 350p, but still recommends selling.
Dairy Crest: Investec takes target from 500p to 530p, but downgrades from buy to add.
DCC: Jefferies raises target from 3200p to 3250p and keeps a buy recommendation.
easyJet: Alphavalue moves target from 1126.9p to 1129.9p and upgrades from sell to reduce. Liberum Capital starts with a target of 1500p and a buy recommendation.
Global Petroleum: Northland Capital lowers target from 18.1p to 10.7p staying with its buy recommendation.
Halford Group: Investec ups target from 460p to 520p and retains a buy recommendation.
Kazakhmys: Canaccord Genuity takes target from 280p to 300p maintaining a hold recommendation.
Laird: Liberum Capital initiates with a target of 290p and a buy recommendation.
Lancashire: Canaccord Genuity moves target from 780p to 790p and reiterates a hold recommendation.
Lloyds Banking Group: Credit Suisse shifts target from 65p to 68p retaining a neutral rating.
Morgan Sindall: Jefferies increases target from 650p to 1000p maintaining a buy recommendation.
New Britain Palm Oil: Liberum Capital upgrades to buy with a target of 750p.
Persimmon: Liberum Capital ups target from 1261p to 1303p and stays with its hold recommendation. Deutsche Bank raises target from 1274p to 1310p and maintains a hold recommendation.
Provident Financial: Berenberg increases target from 1560p to 1970p and upgrades to buy.
Reed Elsevier: Investec places its target prev.: 900p under review, while leaving its buy recommendation unchanged.
RSA Insurance Group: Alphavalue shifts target from 147.4p to 148p and upgrades from add to buy.
SAB Miller: Nomura raises target from 3600p to 3700p reiterating an overweight rating.
Schroders: Canaccord Genuity increases target from 2400p to 2500p, while downgrading from buy to hold.
Spirax-Sarco Engineering: Investec upgrades from hold to buy with an unchanged target of 3150p.
Super Group: Investec raises target from 1300p to 1500p and reiterates a buy recommendation. Canaccord Genuity ups target from 1500p to 1530p staying with its buy recommendation.
Synthomer: Canaccord Genuity takes target from 248p to 277p and maintains a buy recommendation.
Tullow Oil: Alphavalue lowers target from 870.9p to 867.2p, while upgrading from sell to reduce.
Weir Group: Liberum Capital reduces target from 2300p to 2200p downgrading to hold. | | |
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