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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 sink sharply after global data comes in mixed - Chinese manufacturing in contraction
- Data from US comes in mixed
- Pearson, easyJet, Petrofac and ARM fall
techMARK 2,827.81 -0.71%
FTSE 100 6,773.28 -0.78%
FTSE 250 15,980.13 -1.03%
Mixed economic figures from across the globe weighed heavily on stocks on Thursday, with UK markets retreating after coming close to eight-month highs earlier in the week.
Meanwhile, steep falls from heavyweights Pearson, easyJet, Petrofac and ARM Holdings were also providing a drag in London.
The FTSE 100 finished 53.05 points lower at 6,773.28. The index has struggled to finish above the 2013 closing high of 6,840 set in May, having traded broadly sideways for the past three days.
Things got off to a poor start this morning after a flash reading of the HSBC/Markit purchasing managers index (PMI) for Chinese manufacturing showed that the sector unexpectedly contracted in January. The PMI fell from 50.5 to a six-month low of 49.6 this month, disappointing analysts who had expected a smaller decline to 50.4.
Investors largely shrugged off PMI figures from the Eurozone which came in ahead of expectations - the composite PMI rose from 52.1 to 53.2, ahead of the 52.5 forecast.
However, losses accelerated in afternoon trade in London after a series of disappointing US economic figures, which prompted heavy falls on Wall Street after the opening bell with the Dow Jones Industrial Average suffering triple-digit losses.
The Markit US manufacturing PMI, Leading Indicators Index, House Price Index and existing-home sales all failed to hit forecasts, offset partly by a less-than-expected rise in jobless claims.
Pearson drops after weaker-than-expected 2013
Publishing and education company Pearson sunk sharply after admitting that its trading and financial performance for 2013 was "weaker than expected", particularly in North America, as it reported earnings slightly below analysts forecasts. The Financial Times owner also gave a cautious outlook for 2014, saying that trading conditions were "still challenging" in the current quarter.
Budget airline easyJet fell after guiding to a £70-90m pre-tax loss for the six months to March 31st, down from a £61m loss for the first half the previous year, due to the timing of Easter.
Oilfield services group Petrofac finished with steep losses after its Chief Executive Ayman Asfari warned that the oil industry is "facing a huge amount of cost pressure".
Microprocessor firm ARM Holdings was also a heavy faller, extending its recent decline. The stock has now dropped over 12% since the end of December. Sector peer Imagination Technologies also fell as the stock paused after an impressive 25% run over the last month.
Leading the upside were precious metal producers Fresnillo, Randgold and African Barrick Gold as the prices of silver and gold advanced.
High Street giant M&S gained after Exane BNP Paribas upgraded the stock by two notches from 'underperform' to 'outperform' on the back of the retailer's turnaround. With the valuation near 10-year lows, the broker said that "now is the time to look beyond recent troubles".
In contrast, supermarket stocks were under the weather with Tesco, Sainsbury and Morrison all trading in the red after gloomy comments from JPMorgan Cazenove which kept 'underweight' positions on all three names. |
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FTSE 100 - Risers
Fresnillo (FRES) 780.00p +3.38%
Marks & Spencer Group (MKS) 493.20p +2.56%
Randgold Resources Ltd. (RRS) 4,188.00p +1.63%
Smith & Nephew (SN.) 896.00p +1.07%
Babcock International Group (BAB) 1,424.00p +1.06%
Sage Group (SGE) 431.40p +1.05%
Mondi (MNDI) 979.00p +1.03%
Anglo American (AAL) 1,380.50p +1.02%
Melrose Industries (MRO) 317.70p +0.76%
BAE Systems (BA.) 437.20p +0.74%
FTSE 100 - Fallers
Pearson (PSON) 1,191.00p -8.24%
easyJet (EZJ) 1,672.00p -4.07%
Petrofac Ltd. (PFC) 1,203.00p -3.14%
ARM Holdings (ARM) 973.00p -3.09%
Aggreko (AGK) 1,674.00p -2.96%
Admiral Group (ADM) 1,420.00p -2.74%
Rolls-Royce Holdings (RR.) 1,204.00p -2.43%
Old Mutual (OML) 187.80p -2.39%
International Consolidated Airlines Group SA (CDI) (IAG) 427.40p -2.20%
Standard Life (SL.) 381.70p -2.15%
FTSE 250 - Risers
African Barrick Gold (ABG) 222.40p +11.48%
Kenmare Resources (KMR) 19.07p +5.30%
Polymetal International (POLY) 586.00p +4.92%
COLT Group SA (COLT) 124.70p +1.80%
Jardine Lloyd Thompson Group (JLT) 1,078.00p +1.70%
PayPoint (PAY) 1,134.00p +1.25%
Electra Private Equity (ELTA) 2,399.00p +1.10%
3i Infrastructure (3IN) 135.00p +1.05%
Go-Ahead Group (GOG) 1,970.00p +0.82%
Barr (A.G.) (BAG) 614.00p +0.74%
FTSE 250 - Fallers
Imagination Technologies Group (IMG) 193.00p -5.44%
Afren (AFR) 154.60p -4.57%
Bwin.party Digital Entertainment (BPTY) 115.80p -4.30%
Foxtons Group (FOXT) 329.70p -4.02%
Oxford Instruments (OXIG) 1,725.00p -3.79%
International Personal Finance (IPF) 472.10p -3.59%
esure Group (ESUR) 280.00p -3.45%
Keller Group (KLR) 1,188.00p -3.41%
Thomas Cook Group (TCG) 175.40p -3.31%
Howden Joinery Group (HWDN) 332.30p -3.23% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks fall after mixed batch of economic data - Eurozone manufacturing expands
- Euro-area consumer confidence rises
- US and Chinese manufacturing falls
- US jobless claims drop
FTSE 100: -0.78%
DAX: -0.92%
CAC 40: -1.02%
FTSE MIB: -0.72%
IBEX 35: -0.22%
Stoxx 600: -1.00%
European stocks declined as investors weighed a slate of mixed data in the Eurozone, China and the US.
Markit's purchasing managers' index (PMI) for Eurozone manufacturing in January climbed to 53.9 from 52.7 in December, surpassing the consensus forecast of 53 and the 50 level that indicates expansion.
Markit Chief Economist Chris Williamson said recovery remains "fragile" with high unemployment and falling inflation.
"Companies cut employment again, and selling prices continued to fall amid still-weak demand. Deflationary forces are clearly a concern in many countries," Williamson explained.
European Central Bank (ECB) President Mario Draghi is likely to face questions on deflation fears when he attends the World Economic Forum in Davos, Switzerland, tomorrow.
The drop in inflation helped to drive euro-area consumer confidence higher than expected in January.
An index of household confidence in the euro area rose to -11.7 from -13.5 in December, the European Commission in Brussels said in a preliminary report today. Economists had predicted a reading of -13.
"Hopefully, the further strengthening in consumer confidence in January and the help to purchasing power coming from muted inflation across the Eurozone (just 0.8% in December) will increasingly underpin consumer spending and help Eurozone economic recovery to gain traction as 2014 progresses," said Howard Archer, Chief UK and European Economist at IHS Global Insight.
Meanwhile, Barclays changed its ECB interest rate from "on hold" to another refinancing rate cut in February or March by 15 basis points (bp).
The bank also expects the rate for the deposit facility to be cut by 10bp into negative territory.
"Targeted measures to limit the risk of a restraint in credit supply are likely as a next step. As we mentioned previously, we think it could take the form of a conditional LTRO at a shorter than three-year maturity and should come once the ECB has completed the [asset quality review] (around May)" the bank added.
"Should deflationary pressure increase in the coming months, we think an asset purchase programme would be required to effectively dispel the spectre of deflation."
In China, the preliminary reading of Markit/HSBC's PMI for January manufacturing fell for the first time since July to 49.5 from 50.5 a month earlier. Economists had estimated a reading of 50.5.
US manufacturing, existing home sales, jobless claims
Markit's preliminary US manufacturing PMI declined to a three-month low of 53.7 in January, down from an 11-month high of 55 in December. Analysts had expected it to hold steady.
In other economic data, US existing-home sales rose by a lower-than-expected 1% in December, rebounding after a 5.9% drop the month before.
US jobless claims rose 1,000 to 326,000 last week, below the 330,000 forecast.
The mixed data added to more uncertainty surrounding monetary policy ahead of the Federal Open Market Committee meeting next week.
Markets are waiting to see whether policymakers will continue to scale back their asset purchase programme following December's decision to begin tapering.
Nokia, Pearson
Nokia fell after reporting a drop in fourth quarter sales and profits.
Pearson declined after the education company said it probably spent more on reorganisation last year than it had forecast.
easyJet slumped after the European carrier said its loss in the first six months of its financial year may increase to as much as £90m from £61m in the same period last year.
Asos declined after Goldman Sachs cut its rating of the online fashion retailer to 'neutral' from 'buy'.
Logitech advanced after the maker of computer accessories swung to a third quarter profit that beat analysts' estimates and raised its full-year guidance.
Celesio gained following a report that one of the company's largest shareholders Franz Haniel & Cie. is set to sell a stake of about 75% in the German drug distributor to McKesson Corp.
The euro rose 0.94% to $1.3675.
Brent crude futures fell $0.362 to $107.880 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks sink after surprise fall in US manufacturing PMI - US manufacturing PMI unexpectedly falls
- Existing-home sales slip below forecasts
- FOMC meeting in focus after mixed data
Dow Jones: -0.98%
Nasdaq:-0.95%
S&P 500: -0.88%
US markets fell sharply after the opening bell on Thursday as investors reacted to a barrage of mixed economic data, including figures which showed that growth in the American manufacturing sector unexpectedly eased this month.
Markit's preliminary US manufacturing purchasing managers' index (PMI) fell to a three-month low of 53.7 in January, down from an 11-month high of 55 in December. While the PMI still remains in expansion territory - above the key 50-point level - analysts had expected it to hold steady, sending Wall Street's main indices around 1% lower in morning trade.
Nevertheless, Analyst Cooper Howes from Barclays Research said: "While the short history of the Markit PMI limits its usefulness for forecasting the manufacturing ISM on a month-to-month basis, the headline reading is still solidly in positive territory and is in line with our view that manufacturing activity growth will pick up in 2014."
In other economic data: existing-home sales rose by a lower-than-expected 1% in December, rebounding after a 5.9% decline the month before; although jobless claims beat forecasts, rising just 1,000 to 326,000 last week but below the 330,000 expected by the market.
Furthermore, the Chicago Fed's National Activity Index, house-price figures and the Leading Indicators Index all came in below expectations.
The mixed data added to more uncertainty surrounding monetary policy ahead of the Federal Open Market Committee meeting next week, with markets waiting to see whether policymakers will continue to scale back their asset purchase programme.
PMIs from overseas were also being closely watched by markets today with the manufacturing sector in China unexpectedly contracting and business activity picking up in the Eurozone.
Commodity producers drop on Chinese data
Commodity producers, such as Alcoa and Cliffs Natural Resources, declined following a fall in prices for industrial metals after manufacturing data from China dropped below economists' forecasts.
Lockheed Martin Corp. slumped as the government's biggest contractor posted a 14% dip in fourth-quarter profit, reflecting cuts to federal government spending.
eBay gained as activist investor Carl Icahn proposed spinning-off the company's PayPal unit. The suggestion came as the online marketplace reported a rise in fourth-quarter earnings that beat expectations.
Netflix also surged as the subscription movie and TV series provider forecast customer growth ahead of analysts' estimates. |
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| | Broker Tips | | The share price of High Street giant Marks & Spencer(M&S) received a boost on Thursday after Exane BNP Paribas upgraded the stock by two notches from 'underperform' to 'outperform', expressing confidence in the retailer's turnaround.
With the stock's valuation near 10-year lows, the broker said that "now is the time to look beyond recent troubles" as it lifted its price target by 46% from 390p to 570p.
Analysts said that the group has experienced three years of difficult trading and profit declines with margins having fallen to their lowest in a decade.
"Store refits and product revolutions have proven to be false dawns. In a fast-changing retail environment M&S has suffered from a last mover disadvantage and legacy of under-investment," Exane said.
However, the broker said that "this is changing": "Life beyond recent investments is in sight".
Analysts explained that the company's eCommerce solution will be launched within a year and supply chain improvements are expected to go live. Meanwhile, growth in Food and overseas should also result in a strong uplift to profitability.
"M&S is striking at the heart of recent difficulties."
The broker said these changes could drive a reversal in recent negative earnings momentum with profit expected to jump 40% over the next three years.
The stock was trading 2.16% higher at 491.3p by 14:54 on Thursday. | | |
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