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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 breaks 6,800 to finish at eight-month high - Burberry jumps after Q3 growth beats forecasts
- Anglo American gains after UBS upgrade
- World Bank revises up growth forecasts
- FTSE 100 at eight-month high; DAX hits new record
techMARK 2,840.71 +0.79%
FTSE 100 6,819.86 +0.78%
FTSE 250 16,292.94 +0.35%
Stocks finished strongly on Wednesday, pushing the FTSE 100 above the psychologically-important level of 6,800 for the first since in eight months, helped by an improved macro outlook and strong gains from British luxury brand Burberry and mining giant Anglo American.
London’s benchmark index ended the session 53 points higher at 6,819.86, rising 0.78% to hit its highest closing level since May 22nd 2013. Meanwhile, the XETRA DAX index in Germany rose 2% today to hit a new record high.
Sentiment was also boosted by an upwards revision to 2014 global growth forecasts by the World Bank, which expects the world's economy to expand by 3.2% this year. This is an acceleration from the 2.4% growth in 2013 and higher than its June forecast for 2014 growth of 3%.
Meanwhile, stocks were given an extra lift today by a strong start on Wall Street as US investors celebrated the latest results out from bellwether Bank of America which beat expectations with a surge in profits in the fourth quarter. A pick-up in US mortgage applications and an improvement in a New York regional manufacturing gauge also helped to lift stocks Stateside today.
Comments from Bank of England Governor Mark Carney were in focus today as he said that house prices would increase strongly in 2014 before decelerating next year. Speaking to the Treasury Committee today, he played down concerns that UK banks will be hit by funding problems when the Funding for Lending scheme finishes next year.
Burberry jumps after sales update, Anglo American upgraded
High-end fashion group Burberry surged today after reporting a better-than-expected 14% rise in retail sales in the third quarter, helped by double-digit growth in its key Asia-Pacific region. Chief Executive Angela Ahrendts said she was “pleased” with Burberry’s performance during the “all-important festive period”.
Diversified mining firm Anglo American was also a high riser after analysts at UBS upgraded the stock from 'neutral' to 'buy', saying that the risk-reward balance is more "compelling" after recent weakness. The bank said: "Anglo has underperformed the other diversified miners by 18% over the last three months, and, in our opinion, the valuation now looks attractive."
Rio Tinto, meanwhile, was making gains ahead of its production update out tomorrow. Other mining stocks, however, were mixed with precious metal producers Fresnillo and Randgold Resources falling after Deutsche Bank cut its target prices for both stocks.
Standard Life was higher after Credit Suisse lifted the shares to 'outperform', highlighting its preference for life insurers over property and casualty firms. As such, the bank also maintained its positive stance towards Prudential and Aviva, giving both stocks a lift.
Auto engineering group GKN advanced on plans for its Driveline division to strengthen its global footprint with a new manufacturing plant in Russia - an “increasingly important” market, it said.
Leading the downside was financial services company Hargreaves Lansdown after saying it will need to increase its assets under management by £3.5bn over three years to cover the anticipated revenue shortfall resulting from the changes made to its pricing model under the Retail Distribution Review.
SSE and Centrica were suffering from the effects of a broker downgrade today after Barclays Capital lowered both names to 'underweight', saying that the stocks "still trade on premium valuations" despite recent underperformance.
Imperial Tobacco was in the red after going ex-dividend. |
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| | FTSE 100 - Risers
Anglo American (AAL) 1,332.50p +5.54%
Burberry Group (BRBY) 1,537.00p +4.63%
GKN (GKN) 403.60p +3.17%
G4S (GFS) 258.00p +3.16%
Rexam (REX) 516.00p +3.10%
Royal Mail (RMG) 615.00p +3.02%
Rio Tinto (RIO) 3,254.00p +2.71%
AstraZeneca (AZN) 3,845.00p +2.38%
Standard Life (SL.) 385.90p +2.33%
Mondi (MNDI) 1,043.00p +2.05%
FTSE 100 - Fallers
Hargreaves Lansdown (HL.) 1,446.00p -4.11%
Centrica (CNA) 315.50p -3.52%
Imperial Tobacco Group (IMT) 2,185.00p -3.02%
SSE (SSE) 1,320.00p -2.15%
Fresnillo (FRES) 696.00p -1.97%
Coca-Cola HBC AG (CDI) (CCH) 1,747.00p -1.69%
Resolution Ltd. (RSL) 354.20p -1.50%
Amec (AMEC) 1,052.00p -1.41%
Randgold Resources Ltd. (RRS) 3,790.00p -1.35%
Aggreko (AGK) 1,713.00p -1.27%
FTSE 250 - Risers
Foxtons Group (FOXT) 358.20p +5.98%
Imagination Technologies Group (IMG) 191.60p +5.04%
Ladbrokes (LAD) 173.00p +4.72%
Workspace Group (WKP) 573.00p +3.99%
Bwin . party Digital Entertainment (BPTY) 118.50p +3.40%
Home Retail Group (HOME) 201.00p +3.02%
Carphone Warehouse Group (CPW) 276.50p +2.86%
St James's Place (STJ) 774.50p +2.79%
Hays (HAS) 139.60p +2.57%
Scottish Mortgage Inv Trust (SMT) 1,100.00p +2.42%
FTSE 250 - Fallers
Micro Focus International (MCRO) 734.50p -3.55%
Polymetal International (POLY) 514.00p -3.02%
Keller Group (KLR) 1,232.00p -2.92%
888 Holdings (888) 158.90p -2.75%
Debenhams (DEB) 83.20p -2.46%
Ferrexpo (FXPO) 172.50p -2.38%
National Express Group (NEX) 293.00p -2.30%
CSR (CSR) 680.00p -2.16%
Lonmin (LMI) 301.90p -2.14%
Diploma (DPLM) 695.00p -2.11% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks gain on World Bank global outlook - World Bank raises global growth outlook
- ECB agrees on capital benchmark for banks
- German GDP expands less than expected
- Euro-area’s trade surplus increases
- Spain's inflation holds steady FTSE 100: 0.68%
DAX: 1.90%
CAC 40: 1.27%
FTSE MIB: 1.60%
IBEX 35: 1.22%
Stoxx 600: 0.91%
European equities rose after the World Bank raised its growth forecast for the global economy.
The World Bank expects global gross domestic product will grow by 3.2% this year, up from 2.4% in 2013, driven by an improvement in developed economies.
ECB agrees on benchmark for bank stress test
The European Central Bank wants banks to show they can retain capital worth 6% of their assets when they are reviewed later this year, officials told Bloomberg today.
The source said policymakers have agreed on a benchmark for the ECB’s stress test, which will put banks through a simulated recession to see if they can weather a repeat of the financial crisis.
Elsewhere in Europe, Germany’s economy expanded less than expected last year, according to the Federal Statistics Office in its first estimate for annual gross domestic product growth.
Europe’s biggest economy saw GDP rise 0.4% from 2012, when it increased 0.7%. Economists had forecast growth of 0.5%.
“We expect some further growth acceleration in 2014 and annual GDP growth at 2.0% with some upside risks emerging reflecting better global growth,”
Barclays Research said.
Meanwhile, the euro-area’s trade surplus expanded to €16bn from a revised €14.3bn in October, Eurostat said today.
In Spain, the annual inflation rate held at 0.3% last month, the same as in November, the Instituto Nacional de Estadistica in Madrid revealed.
Burberry gains after quarterly results
Burberry advanced after reporting a 14% increase in revenue in the three months ended December 31st, beating analysts’ estimates.
Centrica and SSE were also lower after Barclays downgraded both stocks to ‘underweight’.
Hargreaves Lansdown declined after the UK broker said it needs to gather £3.5bn of new assets over the next three years to offset pricing changes.
Banca Monte dei Paschi di Siena SpA gained after saying Chief Executive Officer Fabrizio Viola withdrew his resignation.
Hennes & Mauritz was up after Europe’s second-biggest clothing retailer posted a 10% jump in total sales in December ahead of market forecasts.
The euro fell 0.60% to $1.3597.
Brent crude futures increased $0.793 to $107.240 per barrel, according to data from the ICE. |
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| | US Market Report | | US open: Stocks rise as Bank of America beats forecasts - BofA profits soar on easy comparatives
- World Bank lifts growth forecasts
- NY manufacturing at highest since May 2012
Dow Jones: 0.24%
Nasdaq: 0.45%
S&P 500: 0.22%
US markets opened strongly on Wednesday after the World Bank upped its outlook for the global economy and bellwether Bank of America beat expectations with its quarterly results.
Stocks were extending gains after the benchmark S&P 500 jumped 1.1% on Tuesday – its biggest gain in nearly a month on the back of strong retail sales data and an increase in M&A activity.
The S&P 500 was up a further 0.2% on Wednesday after an upwards revision to 2014 global growth forecasts by the World Bank, which expects the world's economy to expand by 3.2% this year. This is an acceleration from the 2.4% growth seen in 2013 and higher than its June forecast for 2014 growth of 3%.
However, the multilateral organisation did raise concerns regarding rising interest rates and singled out the withdrawal of stimulus by the Federal Reserve as a specific worry.
The upcoming Fed policy meeting at the end of the month is beginning to draw some attention on the markets, with investors uncertain about how December’s woeful jobs report will impact the decision on whether or not to continue tapering asset purchases.
As such, a speech by Chicago Fed President Charles Evans and the Fed’s Beige Book will be closely watched later in the session as investors look for clues about the central bank’s next move.
Mortgage applications, NY manufacturing pick up
On the macro-economic front, the Mortgage Bankers’ Association revealed an 11.9% increase in mortgage application for the week to January 10th, compared to a rise of 2.6% a week earlier.
The Federal Reserve Bank of New York’s regional manufacturing gauge moved higher in January to a reading of 12.51 points, up from a revised 2.22 the month before and well past the 3.5 expected by analysts. It is now at its highest level since May 2012.
US producer prices rose by 0.4% on the month in December, in line with market estimates. At the 'core' level they increased by 0.3% versus November, ahead of the 0.1% forecast.
BofA beats forecasts with Q4 numbers
Fourth-quarter profits at Bank of America surged to $3.44bn from just $732m a year ago when results were dampened by mortgage-related settlements. Per-share earnings rose to 29 cents, ahead of the 26 cents expected by analysts. Revenues also rose a better-than-expected 15% to $21.49bn, sending shares 3% higher early on.
Citigroup and Goldman Sachs, who are among 14 companies due to report their quarterly figures tomorrow, were making gains in morning trade. JPMorgan Chase & Co and Wells Fargo & Co, which released their results yesterday, were also advancing after a subdued performance the previous session.
Tesla Motors gained after the electric-car maker said it delivered 6,900 Model S cars in the fourth quarter, pushing its full-year sales beyond a company target.
ExOne Co. slumped after the 3D printing company said 2013 revenue will not exceed $42m, compared to its previous forecast of about $48m. Sector peer Stratasys also dropped after its 2014 profit forecast missed estimates.
The US 10-year government yield was up three basis points at 2.90%.
West Texas Intermediate crude futures for February delivery were 74 cents higher at $93.28 a barrel. |
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| | Broker Tips | | Insurers, Anglo American, Fenner Credit Suisse has upgraded its rating for Standard Life from 'neutral' to 'outperform', saying it prefers more "life-orientated" insurers or conglomerate businesses over the property and casualty sub-sector.
"With much of the rest of the sector trading at relatively fuller valuations and likely to see relatively limited earnings momentum as a result of yields remaining low and the P&C cycle coming to a peak, we see groups with greater exposure to unit-linked life business and those able to deliver improvement through restructuring as better placed to perform."
As such, it has named Prudential 'outperform' as its top pick in the life insurance sector and said it remains positive towards Aviva 'outperform'.
The investment case for Anglo American is improving after the stock's recent weakness, according to UBS on Wednesday, which upgraded the diversified mining firm from 'neutral' to 'buy'.
"Anglo has underperformed the other diversified miners by 18% over the last three months, and, in our opinion, the valuation now looks attractive with the dividend yield at 4.1% and the price-to-net present value ratio at 0.64," the bank said.
Numis Securities has kept its 'add' rating and 475p target for Fenner but has reduced its forecasts for the industrial polymer products company due to currency headwinds.
Nevertheless, the broker said it remains positive on the group's long-term prospects: "We believe that the shares have potential to re-rate later in the year as further evidence of a return to normal mining replacement cycles emerge." | | |
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