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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | FTSE 100 finishes at eight-week low - FTSE 100 at lowest level since October 11th
- Autumn Statement, BoE, ECB in focus
- Eyes on jobs report ahead of Fed meeting
- AZ Electronic soars after 1.6bn-pound offer from Merck
techMARK 2,648.11 +0.15%
FTSE 100 6,498.33 -0.18%
FTSE 250 15,157.70 +0.20%
UK markets traded broadly sideways on Thursday, much the same as those over in the US, as investors adopted a cautious approach ahead of tomorrow´s US non-farm payrolls report. Acting as a backdrop, the ECB seemed to adopt a more steady-as-you-go policy bias, which may have on sentiment over on the Continent. Similarly, the Chancellor´s Autum statement reflected a conservative bias meant to ensure the medium-term sustainability of the recovery. While market participants seem to believe to be justified it offered little in the way of immediate additional stimulus.
In any case, the FTSE 100 still finished lower, ending below 6,500 for the first time in nearly eight weeks. The index fell 11.64 points on the day to 6,498.33, its worst level since October 11th.
Markets gave little reaction to announcements from the Bank of England this afternoon, with both choosing to leave benchmark interest rates unchanged as expected at 0.5% and 0.25%, respectively.
Sentiment was dampened slightly after ECB President Mario Draghi said at today´s press conference that he expects the Eurozone economy to remain weak next year. However, he did say that the Bank has a “powerful artillery of instruments available”.
As regards the Autumn Statement the Chancellor assured that the economic recovery was on track with Britain "currently growing faster than any other major advanced economy".
The Statement included upwardly revised growth forecasts from the Office for Budget Responsibility and downward changes to deficit estimates, but "offer[ed] little excitement for the markets", according to Toby Morris, Senior Sales Trader at CMC Markets.
"The FTSE instead took its first notable move from the US, with jobless and GDP data putting further pressure on the Fed to begin turning the taps the other way," he said.
Data this afternoon showed a sharp fall in US jobless claims last week along with a strong upwards revision to third-quarter economic growth in the States. While seasonal factors such as Thanksgiving could have affected claims and stronger inventory building boosted growth figures, the data boosted bets that the Federal Reserve could begin to scale back its stimulus programme as soon as this month.
AZ Electronic rockets after Merck offer
AZ Electronic Materials' share price rocketed after German drugs and chemicals giant Merck launched a 403.5p-a-share offer for the specialty chemicals firm, a 53% premium to yesterday's closing price. The all-cash recommended deal values the company at £1,565m and sent AZEM's stock up 51.4% to 398p.
Travel operator TUI Travel was in demand today after Numis reiterated its 'add' rating, saying that "the trading outlook for summer 2014 is increasingly positive".
Canaccord Genuity gave engineering and project management group AMEC a lift after it raised its stance from 'hold' to 'buy', saying that the company could benefit from the improving outlook for the UK nuclear market.
Supermarket stocks were under pressure today on the back of Tesco's disappointing third-quarter results yesterday, which showed that its like-for-like sales performance in the UK had deteriorated. Analysts at Panmure Gordon downgraded Tesco today from 'buy' to 'hold', saying that the company's continued market share loss and strong growth online "must […] inevitably put pressure on core store profits".
Rival grocers Morrison and Sainsbury were also down today, along with High Street retailers Next and Marks & Spencer.
Phoenix Group Holdings slumped after private equity firm TDR Capital said it has raised £145.2m from the sale of 22m shares in the firm. |
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| | FTSE 100 - Risers
Shire Plc (SHP) 2,707.00p +2.00%
Meggitt (MGGT) 489.50p +1.92%
Experian (EXPN) 1,097.00p +1.86%
TUI Travel (TT.) 374.60p +1.71%
Burberry Group (BRBY) 1,501.00p +1.62%
RSA Insurance Group (RSA) 103.10p +1.28%
Admiral Group (ADM) 1,210.00p +1.17%
Tullow Oil (TLW) 886.00p +1.14%
Bunzl (BNZL) 1,354.00p +1.04%
Smith & Nephew (SN.) 839.50p +1.02%
FTSE 100 - Fallers
Petrofac Ltd. (PFC) 1,152.00p -3.68%
Tesco (TSCO) 333.15p -2.01%
William Hill (WMH) 379.80p -1.81%
Babcock International Group (BAB) 1,268.00p -1.55%
CRH (CRH) 1,444.00p -1.50%
Carnival (CCL) 2,139.00p -1.47%
WPP (WPP) 1,310.00p -1.43%
Next (NXT) 5,470.00p -1.35%
Aviva (AV.) 412.70p -1.29%
Old Mutual (OML) 187.20p -1.16%
FTSE 250 - Risers
AZ Electronic Materials SA (DI) (AZEM) 395.00p +50.25%
Centamin (DI) (CEY) 42.60p +10.42%
Premier Farnell (PFL) 215.30p +4.51%
Alent (ALNT) 350.00p +4.48%
Smith (DS) (SMDS) 311.10p +4.05%
Howden Joinery Group (HWDN) 317.80p +3.65%
Enterprise Inns (ETI) 141.80p +3.50%
Ultra Electronics Holdings (ULE) 1,825.00p +3.28%
Halfords Group (HFD) 488.70p +2.54%
Taylor Wimpey (TW.) 106.00p +2.32%
FTSE 250 - Fallers
Phoenix Group Holdings (DI) (PHNX) 661.50p -6.04%
AL Noor Hospitals Group (ANH) 807.00p -5.06%
Polymetal International (POLY) 477.30p -4.64%
IP Group (IPO) 169.00p -4.52%
Essar Energy (ESSR) 72.70p -4.34%
Perform Group (PER) 400.00p -4.15%
Rank Group (RNK) 133.00p -3.41%
Savills (SVS) 620.00p -3.12%
Amlin (AML) 424.70p -2.90%
Workspace Group (WKP) 488.00p -2.79% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Fed stimulus fears drag stocks lower - Positive US data points to Fed stimulus cut
- BoE and ECB keep policy on hold
- Osborne unveils reforms in Autumn Statement
FTSE 100: -0.18%
DAX: -0.61%
CAC 40: -1.17%
FTSE MIB: -1.75%
IBEX 35: -1.45%
Stoxx 600: -0.89%
European equities slumped after the release of upbeat US data fuelled concerns that the Federal Reserve will begin reducing monetary stimulus at its next meeting.
US initial weekly jobless claims fell to 298,000 in the week ended November 30th, compared with a total of 321,000 the previous week and well below the consensus forecast for a reading 320,000.
US gross domestic product growth expanded at an annual pace of 3.6% in the third quarter, the strongest growth registered in a year and a half. This was revised up from the initial 2.8% estimate and well ahead of the 2.5% expansion in the second quarter.
The positive reports increase the likelihood that the central bank could announce a tapering of its monthly $85bn bond buying programme as soon as its policy meeting on December 17th and 18th.
The key release, however, will be non-farm payrolls tomorrow which is expected to fall to 183,000 in November from 204,000 in October, according to consensus.
The unemployment rate is tipped to fall to 7.2% from 7.3%.
ECB and BoE keep policy unchanged
The European Central Bank announced today that it would maintain its current policy, including its benchmark interest rate of 0.25%.
The move was expected and followed last month’s surprise decision to cut the rate from 0.5%.
Addressing reporters after the ECB’s announcement, President Mario Draghi reiterated that the central bank stands “ready to act” to resolve extreme scenarios in the Eurozone.
The BoE, as predicted, kept its policy on hold, maintaining its benchmark interest rate at 0.50% and asset purchases at £375bn.
The Bank has vowed that it will not consider raising the rate until employment reaches at least 7%. Even then the central bank will not necessarily raise interest rates, BoE Governor Mark Carney has stressed.
Elsewhere in the UK, Chancellor George Osborne revealed in his Autumn Statement that economic growth this year has been twice as good as expected.
He announced a series of fiscally-neutral measures intended, to use his own words, “to fix the roof while the sun is shining”. The government will place a new cap on social security spending from next year, although state pensions will be excluded.
The pension age will also rise to 68 by the mid 2030s and 69 by the late 2040s.
FLSmidth & Co, Metro
FLSmidth & Co. A/S slumped as the Danish mining-equipment maker lowered its forecast earnings margin.
Metro AG fell as Morgan Stanley lowered its rating of Germany’s biggest retailer to ‘equal weight’ from ‘overweight’.
Luxembourg-based and London-listed AZ Electronic Materials advanced after Merck KGaA agreed to buy the company for about £1.6bn.
Vienna Insurance Group AG dropped as an undisclosed seller offered 2.29m shares in the company.
Remy Cointreau SA gained after the maker of Remy Martin cognac said its board has authorised a buyback of up to 2.5m shares.
Euro strengthens
The euro rose 0.55% to $1.3668.
Brent crude futures fell $0.359 to $111.480 per barrel, according to the ICE. |
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| | US Market Report | | Markets flat as upbeat data increases taper bets - Jobless claims drop, but on seasonal factors
- US GDP revised higher for Q3 due to inventory build-up
- Apple lifts Nasdaq on China Mobile speculation
Dow Jones: -0.02%
Nasdaq: 0.07%
S&P 500: -0.08%
Upbeat economic data on Thursday was met with a subdued reaction on Wall Street with benchmarks mixed on fears that a stronger economy may not require the current level of asset purchases by the Federal Reserve.
A sharp drop in jobless claims and an upwards revision to third-quarter US economic growth increased bets that the central bank could begin to scale back stimulus as soon as this month amid signs of an accelerating recovery.
"With little left on the data calendar from this afternoon, investors will have to chew over possible Fed reaction until the next clue comes along[…]cue non-farm payrolls," said Toby Morris, Senior Sales Trader at CMC Markets.
The official jobs report - likely to be a key factor in the Fed's policy decision at its meeting on December 17-18th - is due out on Friday afternoon and is expected to reveal a 183,000 increase in non-farm payrolls for November, below the 204,000 gain in October.
Economic data in focus ahead of Fed decision
Initial weekly jobless claims fell to 298,000 in the week ended November 30th, compared with a total of 321,000 the previous week and well below the consensus forecast for a reading 320,000.
However, the Labor Department did note that seasonal factors could have affected the data, such as the timing of the Thanksgiving holidays.
US gross domestic product growth expanded at an annual pace of 3.6% in the third quarter, the strongest growth registered in a year and a half. This was revised up from the initial 2.8% estimate and well ahead of the 2.5% expansion in the second quarter.
However, analysts were divided over the data given that the upwards revision was directly as a result of inventory accumulation during the period, which is now likely to be a drag on growth in the fourth quarter.
"This balance of growth – with very strong inventory accumulation but mediocre domestic demand growth - is unlikely to persuade policymakers that the economy is on a significantly firmer footing," said analyst Peter Newland from Barclays Research.
Meanwhile, factory orders declined by 0.9% in October, pulling back after a 1.8% gain in September, but better than the 1% fall expected by analysts.
Apple up on China Mobile hopes
Tech giant Apple was making gains today on reports that China Mobile could be offering the company's popular iPhones on its network.
Teen clothing retailer Aeropostale slumped after losses widened in the third quarter and the firm forecast a worse-than-expected loss for the all-important fourth quarter.
Discount chain Dollar General rose after lifting its earnings guidance for the full year, while grocer Safeway fell after Jana Partners trimmed its stake in the firm. |
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| | Broker Tips | | TUI Travel, AMEC, Tesco, DS Smith Numis Securities has recommended investors to 'add' to positions in TUI Travel ahead of the tour operator's full-year results next week, hailing the company's outlook next year.
"In the UK, given improving consumer confidence, rising house prices, economic growth and increasing employment, we believe that the trading outlook for Summer 14 is increasingly positive."
Canaccord Genuity has raised its rating for engineering and project management group AMEC from 'hold' to 'buy' on the back of its medium-term outlook for the nuclear market.
The broker said it is increasingly likely that the UK will proceed with at least two - "but most likely four" - new reactor projects with one or more of the EDF, NuGeneration or Horizon groups. "We expect extensive work for AMEC both in design & procurement, as well as the innumerable public consultations, regulatory assessments, and environmental surveys required, and that this work is likely to be maintained to at least the end of this decade."
Tecso's share price was under continued selling pressure on Thursday after the release of its disappointing three-quarter results the day before, with Panmure Gordon weighing further on the stock after downgrading its rating from 'buy' to 'hold'.
"Tesco was at pains to stress its profits performance remains in line with consensus forecasts for both 2014E and 2015E, but it’s difficult to escape the impression that they are running to stand still, fighting against operational de-gearing in their core store portfolio."
Investec has upped its target for DS Smith from 340p to 350p after a better-than-expected first half from the packaging group, saying there is now upside risk to full-year forecasts.
The broker retained its 'buy' recommendation for the shares. "We see these interim results as very solid, driven by improving volumes and market share gains, in line with the medium-term targets." | | |
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