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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: Diageo leads markets lower after choppy session - Diageo slumps after H1 miss, BSkyB jumps
- Economic data comes in mixed
- Fed cuts monthly asset purchases by 10bn dollars
- Emerging-market volatility continues to weigh on sentiment
techMARK 2,780.43 +0.45%
FTSE 100 6,538.45 -0.09%
FTSE 250 15,701.80 +0.09%
UK markets finished slightly lower on Thursday after another choppy session as investors showed caution following recent policy changes from across the globe amid continuing emerging-market volatility.
Central banks in Turkey, India and South Africa have all moved to tighten policy in recent days in an attempt to quell a weakening of their currencies in the face of slowing growth in China and a withdrawal of stimulus in the States. However, the positive effects of the rate hikes were short-lived yesterday as the downward pressure on the lira, rupee and rand failed to abate.
These concerns with heightened overnight after the Federal Reserve cut its monthly asset purchases by a further $10bn to $65bn despite some suggestions that the recent developing-nation turmoil could have prompted it to hold off.
Michael Hewson, Chief Market Analyst at CMC Markets, said that companies across Europe with particular exposure to emerging markets were hit today as they "as investors wake up to the possibility that the recent rate hikes in these various markets are quite likely to prompt a slowdown in these parts of the world".
The FTSE 100 closed 5.83 points lower at 6,538.45; it has not closed below this level since December 18th 2013.
Chinese manufacturing, US GDP
A barrage of economic data from across the globe gave traders another reason to tread cautiously today. Things got off to a poor start this morning after revised figures from China confirmed that activity in its manufacturing contracted in January.
Markets largely shrugged off mixed data closer to home which showed a fall in German unemployment to a one-year low and a less-than-expected increase in UK mortgage approvals.
However, stocks picked up off their lows before the close this afternoon following a strong start on Wall Street as the Commerce Department revealed that US gross domestic product growth was 3.2% in the fourth quarter of 2013. While this represented a slowdown from the 4.1% expansion in the third quarter, the two periods combined showed the best back-to-back increase in growth in nearly two years.
Diageo drops on emerging-market weakness
Heading the other way was spirits manufacturer Diageo, which took a hit from weakness in emerging markets as it revealed that global sales growth was limited to just 1.8% in the first half, below analysts' forecasts.
Precious metal miners Fresnillo and Randgold Resources were also falling heavily as gold and silver prices retreated.
Leading the upside was satellite broadcaster BSkyB after an 8% rise in revenue in the first half, helped by strong growth in paid-for subscription products. The company also increased the interim dividend by 9%.
Airline groups IAG and easyJet were both strong risers this afternoon. easyJet was in part helped higher by reports its ski traffic had jumped 20% in the past five years.
Investors at oil major Royal Dutch Shell showed their approval of the company's decision to undergo a major restructuring to boost capital and cut costs after it reported a sharp fall in fourth-quarter earnings.
Shares in Serco plunged after the group issued a profit warning in which it predicted that 2014 profits would fall as much as 20% short of the £277m that the market had expected. The support services group said it now expected 2013 revenue to fall by a mid-single digit percentage.
Engineering firm Renishaw gained after it said it is expecting an improvement in trading activities and revenue in the second half following a weak start to the year. |
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FTSE 100 - Risers
British Sky Broadcasting Group (BSY) 878.00p +3.97%
International Consolidated Airlines Group SA (CDI) (IAG) 418.70p +3.84%
Ashtead Group (AHT) 795.00p +2.38%
Petrofac Ltd. (PFC) 1,184.00p +2.33%
easyJet (EZJ) 1,637.00p +2.12%
Hargreaves Lansdown (HL.) 1,514.00p +2.09%
ITV (ITV) 201.80p +2.07%
Royal Mail (RMG) 602.00p +2.03%
Royal Bank of Scotland Group (RBS) 347.40p +1.82%
Lloyds Banking Group (LLOY) 83.55p +1.79%
FTSE 100 - Fallers
Diageo (DGE) 1,820.00p -4.71%
G4S (GFS) 237.70p -3.73%
Aggreko (AGK) 1,560.00p -3.17%
Burberry Group (BRBY) 1,411.00p -2.82%
BG Group (BG.) 1,008.50p -2.56%
Randgold Resources Ltd. (RRS) 4,142.00p -2.20%
Standard Chartered (STAN) 1,260.50p -2.10%
Fresnillo (FRES) 767.00p -1.86%
Experian (EXPN) 1,039.00p -1.80%
SABMiller (SAB) 2,753.00p -1.73%
FTSE 250 - Risers
Rank Group (RNK) 136.00p +6.25%
Homeserve (HSV) 327.00p +5.08%
Ocado Group (OCDO) 534.00p +4.60%
Cranswick (CWK) 1,299.00p +4.51%
Renishaw (RSW) 1,875.00p +4.22%
RPC Group (RPC) 598.00p +3.64%
Betfair Group (BET) 1,053.00p +3.64%
Carphone Warehouse Group (CPW) 297.30p +3.52%
Dunelm Group (DNLM) 935.50p +2.80%
Jupiter Fund Management (JUP) 374.50p +2.74%
FTSE 250 - Fallers
Serco Group (SRP) 423.20p -16.94%
Lonmin (LMI) 311.00p -5.30%
Kazakhmys (KAZ) 171.50p -4.19%
Perform Group (PER) 235.00p -3.96%
Polymetal International (POLY) 579.50p -3.50%
Evraz (EVR) 86.00p -3.21%
Riverstone Energy Limited (RSE) 874.00p -2.89%
TalkTalk Telecom Group (TALK) 312.50p -2.56%
Rotork (ROR) 2,505.00p -2.45%
African Barrick Gold (ABG) 216.60p -2.43% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks little changed on mixed economic releases - German unemployment falls
- Eurozone economic confidence rises
- Chinese manufacturing contracts
- US GDP expands
FTSE 100: -0.12%
DAX: 0.22%
CAC 40: 0.42%
FTSE MIB: 0.38%
IBEX 35: 0.50%
Stoxx 600: 0.23%
European stocks were little changed as traders assessed a slate of mixed economic data.
Germany's unemployment fell 28,000 in January, more than the 5,000 drop expected by analysts and December's 19,000 decline. The unemployment rate of Europe's biggest economy dipped to 6.8% this month from 6.9% in December.
Separately, German inflation rose less than expected at a 1.3% annualised pace in January, down from 1.4% the prior month. Economists had pencilled in consumer price index (CPI) growth of 1.5%.
Another report revealed Eurozone economic confidence increased in January. The sentiment barometer edged up to 100.9 from 100.4 in December, missing economists' estimates of 101.
The index for consumer confidence in the bloc came in at -11.7 in January, in line with the prior month and forecasts.
Capital Economics said the Eurozone confidence figures point to "a solid but unspectacular start to the year" and suggest that economic recovery is "slowly building momentum".
In China, manufacturing contracted in January, according to HSBC Holdings Plc and Markit Economics, fuelling concerns of a slowdown in the world's second largest economy. The purchasing managers' index (PMI) fell to 49.5 this month from 50.5 in December, below the 49.6 consensus forecast and under the 50 level that signals expansion.
US GDP, jobs and home sales
The Commerce Department said today US gross domestic product (GDP) expanded in line with forecasts at a 3.2% annualised rate in the fourth quarter, compared to 4.1% in the third quarter.
The Labor Department revealed 19,000 more jobless claims to 348,000 in the week ended January 25th. It came in higher than the consensus forecast of 330,000 claims and the previous week's 329,000.
Pending home sales fell by a worse-than-expected 8.7% in December as housing-market activity was dampened by the poor weather last month. Analysts were expecting a fall of just 0.3% month-on-month, in line with the 0.3% decline in November.
The reports come a day after the Fed said the economy had improved since its meeting in December when it began unwinding monthly asset purchases by $10bn to $75bn.
As a result of a pick-up in recovery, the central bank decided to scale back a further $10bn when it wrapped up yesterday's policy meeting. It came as no surprise to analysts who had been anticipating the move.
Givaudan, Diageo
Givaudan SA was up after the maker of flavours and fragrances unveiled full-year net income that surpassed market expectations.
Diageo edged lower after the distiller posted an increase in first half profit that fell short of forecasts.
H&M slipped after the European fashion retailer reported fourth-quarter net income that came in under projections.
Serco Group tumbled after the outsourcing group issued a 2014 profit warning.
TeliaSonera declined as Sweden's largest phone operator posted a drop in fourth-quarter net income that trailed forecasts.
Royal Dutch Shell gained after the oil-company said it would sell off assets and cut costs to boost capital as it reported a sharp fall in fourth quarter earnings.
Ericsson rallied after the maker of wireless networks reported fourth-quarter net income of 6.41bn kronor following a loss a year earlier.
The euro fell 0.79% to $1.3555.
Brent crude futures rose $0.434 to $108.320 per barrel, ICE data revealed. |
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| | US Market Report | | US open: Stocks extend gains after GDP, Facebook and Visa rise - US GDP rises 3.2 per cent in Q4, as expected
- Jobless claims, pending home sales miss forecasts
- Facebook, Visa impress with earnings
Dow Jones: 0.37%
Nasdaq: 1.20%
S&P 500: 0.72%
A decent expansion in US economic growth gave stocks on Wall Street a boost on Thursday as markets recovered after some heavy selling the day before following the Federal Reserve's decision to taper stimulus further.
The Nasdaq was outperforming the other benchmarks early on after upbeat earnings from Facebook and Visa, along with decent gains from Google.
The Commerce Department said today US gross domestic product (GDP) expanded in line with forecasts at a 3.2% annualised rate in the fourth quarter, compared to 4.1% in the third quarter.
According to Paul Ashworth, Chief US Economist at Capital Economics, when considering that the three-week government shutdown occurred at the start of the fourth quarter, the 3.2% GDP expansion is "pretty impressive".
"The broader picture is that, as the massive fiscal drag diminishes, US economic growth is accelerating."
Not all economic data today met forecasts though, as the Labour Department released a market report which revealed 19,000 more jobless claims in the week ended January 25th. Weekly initial jobless claims reached 348,000, higher than the consensus forecast of 330,000 and the previous week's 329,000.
Meanwhile, pending home sales fell by a worse-than-expected 8.7% in December as housing-market activity was dampened by the poor weather last month. Analysts were expecting a fall of just 0.3% month-on-month, in line with the 0.3% decline in November.
US stocks slumped on Wednesday with the S&P 500 falling to its lowest level in over two months after the Fed decided to scale its monthly asset purchases by a further $10bn to $65bn after finding that economic growth had "picked up in recent quarters".
Facebook, Visa
Facebook rallied after the social network reported a 63% rise in fourth-quarter revenue to $2.59bn, surpassing analysts' estimates of $2.35bn.
Visa gained as the debt and credit card network reported profit for the first quarter that beat forecasts.
Google was higher after Lenovo Group agreed to buy the Motorola Mobility mobile-phone business from the search engine for $2.91bn.
Potash Corp. declined after it forecast 2014 profit that fell short of market expectations.
West Texas Intermediate futures for March delivery were up $1.137 at $98.48 per barrel.
The yield on a 10-year US Treasury was three basis points higher at 2.71%. |
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| | Broker Tips | | Broker tips: Diageo, Sainsbury, Wood Group Canaccord Genuity has cut its target for drinks group Diageo from 1,900p to 1,835p and kept a 'hold' rating, recommending investors to take a cautious view on near-term forecasts after a disappointing first-half report.
"While those with a long term horizon may be sanguine about the organic slowdown, we think others should be cautious about F14 and F15 earnings as delivery now appears more dependent on continued and accelerating margin performance."
HSBC has reduced its target for supermarket group Sainsbury after the exit of Chief Executive Officer (CEO) Justin King, who is stepping down after 10 years as boss.
The bank kept its 'neutral' rating for the stock and has reduced its target from 380p to 360p to "reflect the increased risk from a management change at this delicate time, and reflecting our increased concerns on the supermarket industry in general".
Goldman Sachs has reiterated its 'conviction buy' rating for oil and power services firm Wood Group, saying that the company's strong positioning in the market is not reflected in the stock's valuation.
"We view Wood Group as a structural leader (first quartile on our industry positioning framework versus the sector) well placed in a flatter demand environment to deliver superior revenue growth through acquisitions, the pass-through of wage inflation and strong growth in the US shale plays," Goldman said. | | |
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