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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 Flat near right-month high, but miners surge - Markets pause for breath after recent highs
- Mining stocks surge as Citi turns bullish
- Aberdeen drops as AuM fall
- Retailers AB Foods, Halfords, Dixons, Home Retail in focus
techMARK 2,843.65 +0.10%
FTSE 100 6,815.42 -0.07%
FTSE 250 16,209.65 -0.51%
UK markets finished largely flat on Thursday after previously hitting an eight-month high as strong gains from mining stocks were offset by falls from Aberdeenand a number of retailers.
The FTSE 100, which rose to 6,819.86 on Wednesday - its highest level since May 22nd 2013 - was little changed by the close, finishing down just 4.44 points at 6,815.42. The index was trading within a narrow range of 20 points of so for most of the session, swinging between gains and losses throughout the day.
Despite the subdued finish for the wider market, miners put in a decent performance after upbeat comments from analysts.
“The mining sector is worth its weight in gold at the moment, as the only sector propping up the market. The recent cooling-off in the commodities supercycle has meant that natural resource stocks are now undervalued,” said David Madden, Market Analyst at IG.
Across the Pond, markets opened in the red as investors were largely underwhelmed by quarterly earnings from bellwethers Goldman Sachs and Citigroup.
Miners surge as Citi turns bullish
Analysts at Citigroup lifted its 12-month stance on the mining sector from 'neutral' to 'bullish', representing its first positive outlook for the industry in three years. The bank labelled BHP Billiton, Rio Tinto and Glencore Xstrataas its "key picks" in the sector, providing a big boost to each stock today. BHP, in particular, was upgraded from ‘neutral’ to ‘buy’.
Antofagasta, Anglo American, Fresnillo and Randgold Resources were all making gains this afternoon. Russian precious metals firm Polymetal was also firmly higher after UBS raised its recommendation from ‘neutral’ to ‘buy’, saying that company is “well-positioned” for free cash-flow growth.
In contrast, product testing group Intertek fell sharply after a downgrade by Berenberg to 'hold', and postal service and delivery firm Royal Mail was pushed lower after Beaufort Securities cut the shares to 'hold'.
Associated British Foods, the food ingredients company and owner of Primark, was a heavy faller after reporting flat revenues in its first quarter, as continued strength by its Primark division was outweighed by a steep decline in revenues by Sugar.
Festive sales updates from a host of other retail stocks received a mixed reaction from the markets today:Halfords impressed after a better-than-expected 5.2% jump in group like-for-like (LFL) sales in its third quarter;Dixons underwhelmed with a 3% rise in LFL sales in its third quarter; Home Retail gained after strong LFL sales from its Argos and Homebase divisions and upbeat guidance for the full year.
Meanwhile, Sports Direct closed in the red after saying that it sold the 4.6% stake in fellow retailer Debenhamsit bought on Monday and replaced it with a put option over a larger 6.6% shareholding.
SVG Capital declined sharply after big investor Aegon sold 20m shares in the investment company. Aegon sold the stock for a total of £84m and reduced its holding to around 18.5m shares, equal to a 7.9% stake, a significant reduction to its previous holding of 15.4%. |
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| | FTSE 100 - Risers
Antofagasta (ANTO) 832.50p +5.38%
Fresnillo (FRES) 732.50p +5.24%
Tullow Oil (TLW) 907.50p +5.16%
Anglo American (AAL) 1,397.50p +4.88%
United Utilities Group (UU.) 689.00p +4.55%
BHP Billiton (BLT) 1,860.00p +3.82%
Randgold Resources Ltd. (RRS) 3,892.00p +2.69%
Rio Tinto (RIO) 3,334.50p +2.47%
Glencore Xstrata (GLEN) 327.20p +2.43%
Imperial Tobacco Group (IMT) 2,232.00p +2.15%
FTSE 100 - Fallers
Intertek Group (ITRK) 2,879.00p -3.36%
British Sky Broadcasting Group (BSY) 845.00p -2.82%
Mondi (MNDI) 1,014.00p -2.78%
Associated British Foods (ABF) 2,625.00p -2.63%
Lloyds Banking Group (LLOY) 84.10p -2.55%
Johnson Matthey (JMAT) 3,335.00p -2.43%
Burberry Group (BRBY) 1,500.00p -2.41%
Amec (AMEC) 1,027.00p -2.38%
Prudential (PRU) 1,345.00p -2.32%
Sports Direct International (SPD) 721.00p -2.17%
FTSE 250 - Risers
Halfords Group (HFD) 492.50p +6.83%
Polymetal International (POLY) 543.50p +5.74%
Computacenter (CCC) 675.00p +4.65%
CSR (CSR) 703.00p +3.38%
Victrex (VCT) 1,873.00p +3.31%
Petra Diamonds Ltd.(DI) (PDL) 125.00p +3.31%
Vedanta Resources (VED) 897.50p +3.10%
Partnership Assurance Group (PA.) 336.00p +2.60%
African Barrick Gold (ABG) 193.30p +2.22%
Ferrexpo (FXPO) 176.10p +2.09%
FTSE 250 - Fallers
SVG Capital (SVI) 424.50p -8.91%
Dixons Retail (DXNS) 47.11p -6.53%
Premier Oil (PMO) 288.00p -6.49%
AL Noor Hospitals Group (ANH) 825.00p -5.71%
Homeserve (HSV) 290.70p -5.00%
Ted Baker (TED) 2,118.00p -4.68%
Hikma Pharmaceuticals (HIK) 1,250.00p -3.55%
Booker Group (BOK) 154.90p -3.13%
Crest Nicholson Holdings (CRST) 380.00p -3.06%
IP Group (IPO) 175.10p -2.99% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks end lower after inflation data, jobs report - Eurozone inflation falls
- ECB highlights downside risks in monthly bulletin
- US jobless claims drop
- US CPI rises
FTSE 100: -0.07%
DAX: -0.17%
CAC 40: -0.30%
FTSE MIB: -0.85%
IBEX 35: -0.66%
Stoxx 600: -0.16%
European stocks declined as investors weighed inflation data in the Eurozone, Germany and US and the Labor Department’s weekly jobless claims report.
Eurostat confirmed today that the consumer price index (CPI) for the Eurozone last month rose by 0.8%, down from November’s 0.9% increase.
The core inflation rate, which excludes food, energy, alcohol and tobacco prices, slowed to a 0.7% year-on-year pace, comfortably below the previous month's 1% clip.
While the fall in inflation fuelled concerns of deflation, European Central Bank (ECB) President Mario Draghi blamed an adjustment by the German statistics office for the decrease.
The ECB last week said it would keep its policy unchanged, holding interest rates at 0.25%, but reiterated that it was “ready to act” should the economy take a turn for the worse.
In today’s monthly bulletin, the EBC said risks surrounding the economic outlook for the euro-area continue to be on the downside.
The report, which mirrored comments made by Draghi last week, warned that developments in global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions.
“Other downside risks include higher commodity prices, weaker than expected domestic demand and export growth, and slow or insufficient implementation of structural reforms in euro area countries.”
Separately a report from the federal statistics office in Germany this morning showed inflation in Europe’s biggest economy rose slightly in December by 0.4% on the month, pushing up the annual inflation rate to 1.4% from 1.3% in November.
US inflation rises, jobless claims fall
US consumer prices rose by 1.5% in December, up from 1.2% the previous month and in line with analysts’ expectations.
Initial jobless claims fell by only 2,000 to 326,000 in the week ended January 11th, the Labor Department revealed separately, lower than the 328,000 claims predicted.
Analysts at IG said the better-than-expected jobless figures send the message the “tapering by the Federal Reserve is still justified”.
Outgoing Fed Chairman Ben Bernanke was due speak in Washington this afternoon which could offer some insight into whether the central bank plans on another reduction to monetary stimulus.
In December the Fed announced it would begin unwinding monthly asset purchases by $10bn to $75bn.
Mining stocks rally
Mining stocks, including Rio Tinto and BHP Billiton, gained after Citigroup lifted its stance on the sector from 'neutral' to 'bullish', representing its first positive outlook for the industry in three years.
Royal Ahold NV retreated after the Dutch retailer posted fourth-quarter revenue of €7.47bn, missing the estimate of €7.57bn.
United Utilities rose after Morgan Stanley raised its rating on the UK water supplier to ‘overweight’ from ‘equal weight’.
Aberdeen Asset Management slipped after the money manager reported a fall in assets under management and gross inflows in the fourth quarter, reflecting weak investor sentiment.
Ladbrokes edged higher after the UK betting firm said 2013 operating profit will be in the middle of analysts’ estimated range of £129.8m to £151m.
Cie. Financiere Richemont declined after reporting a rise in third-quarter sales that missed projections.
Carrefourslumped after the French retailer posted a fall in fourth quarter revenue.
The euro was unchanged at $1.3605.
Brent crude futures dropped $0.121 to 107.000 per barrel, according to the ICE. |
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| | US Market Report | | US open: Markets lower after falls from Goldman, Citi, Best Buy - Goldman beats forecasts, but shares fall
- Citigroup earnings miss estimates
- Best Buy plunges after same-store sales decline
- Jobless claims inch lower, better than forecasts
Dow Jones: -0.38%
Nasdaq: -0.19%
S&P 500: -0.27%
US markets opened lower on Thursday with the S&P 500 pulling back from a record high as investors showed caution on a busy day for corporate earnings.
Banking heavyweights Goldman Sachs and Citigroup were both trading in the red after the opening bell, while Best Buy dampened sentiment in the retail sector after a surprise decline in same-store sales over Christmas. Meanwhile, investors were also reacting to a slightly more-than-expected decline in claims for unemployment benefits. The data could rekindle speculators fears that the Fed could speed up the tapering process when the Federal Open Market Committee two-day meeting gets underway on the January 28th,” said Alex Conroy, Financial Trader at Spreadex.
The S&P 500 was trading 0.3% down early on after hitting a fresh all-time high of 1,848.38 on Wednesday. The index also set a new intraday record of 1,850.84 during yesterday’s session.
Economic data, Fed in focus
US consumer prices rose by 1.5% in December, up from 1.2% the previous month and in line with analysts’ expectations.
Initial jobless claims fell by only 2,000 to 326,000 in the week ended January 11th, the Labor Department revealed separately, lower than the 328,000 claims predicted.
According to James Paulsen, Chief Investment Strategist at Wells Capital Management, a possible rise in money velocity – the rate at which the money supply is turned over via transaction – this year could have an impact on the Federal Reserve’s monetary easing programme.
“Even though the Federal Reserve has started to taper its quantitative easing programme, should velocity unexpectedly rise it may not be able to taper fast enough to keep growth in the US money supply from accelerating,” he wrote in the Financial Times today.
Outgoing Fed Chairman Ben Bernanke will speak in Washington this afternoon which could offer some insight into the central bank’s next move. Fed official John Williams will also speak in Washington.
Goldman, Citigroup in focus
Goldman Sachs beat estimates with a less-than-expected 19% drop in fourth-quarter net income to $2.33bn, or $4.60 a share, from $2.89bn, or $5.60 a share, the year before. This exceeded analysts’ forecast of $4.18 a share, as equity underwriting revenue doubled and the firm reduced compensation costs. However, the stock was down over 1% early on.
Citigroup fell after missing forecasts despite fourth-quarter net income more than doubling to $2.69bn from $1.2bn a year earlier. Excluding accounting charges and special items, adjusted profit was 82 cents a share, missing the 95 cents estimate.
Best Buy’s shares plunged by nearly a third after posting a unexpected 0.8% fall in same-store sales in the nine weeks ended January 4th despite heavy discounting over the festive period, with domestic same-store sale falling 0.9%. Analysts had predicted 0.5% growth. |
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| | Broker Tips | | Miners, United Utilities, AB Foods Mining stocks were performing well in London on Thursday morning after Citigroup lifted its 12-month stance on the sector from 'neutral' to 'bullish', representing its first positive outlook for the industry in three years. The bank has labelled BHP Billiton, Rio Tinto and Glencore Xstrata as its "key picks" in the sector.
Citi said: "While we remain concerned about the potential long-term structural demand story for commodities in China, and we are cognisant of a potential seasonal slowdown in the first quarter of this year, our move to 'bullish' reflects better bottom-up fundamentals, particularly from the major miners. We would rather be too early than too late in making this call."
Morgan Stanley has raised its rating for United Utilities from 'equalweight' to 'overweight', as part of its review into the UK water sector ahead of the Ofwat regulatory price review that will set prices for 2015-20.
"The 2014 regulatory review will clearly be tough but this is surely well known," the US bank said in a research report Thursday. "We expect clarity on allowed returns shortly, which should remove uncertainty, and we think fears of dividend cuts are overdone."
United Utilities has been labelled as Morgan Stanley's top pick in the sector as it offers good value and has "superior upside" than other water companies.
Panmure Gordon has hiked its target for Associated British Foods, saying that a "sparkling" Christmas from Primark more than offsets weakness from its Sugar division and currency headwinds.
The target has been lifted from 2,175p to 2,500p; however, a 'hold' rating for the stock has been maintained as Panmure believes "the shares are surely due a pause for breath" after a "remarkable run". | | |
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