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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: Markets slip ahead of central bank meetings, retailers fall - Retailers in focus after Sainsbury, Mothercare, Majestic updates
- US ADP data increases taper speculation
- Central banks watched ahead of policy meetings
techMARK 2,781.64 -0.28%
FTSE 100 6,721.78 -0.50%
FTSE 250 16,001.74 -0.42%
Heavy falls in the retail sector and cautiousness among investors saw UK markets slip on Wednesday as equities retreated from a two-month high.
Meanwhile, London stocks extended losses in afternoon trade after a mixed start on Wall Street as investors digested a much stronger-than-expected ADP employment report, which increased speculation surrounding the Federal Reserve's policy meeting later this month.
"The latest ADP jobs report out of the US has added to the prospects of additional tapering from the Fed after beating expectations for December, while also getting an upward revision to its November number," said Michael Hewson, Chief Market Analyst at CMC Markets.
The FTSE 100 finished 33.67 points lower at 6,721.78 by the close of trade today, pulling back after hitting its highest level since November 4th on Tuesday.
Economic data, risk events in focus
Economic data from the Continent was making headlines today after Eurozone retail sales and German factory orders beat forecasts. Eurozone unemployment, meanwhile, was unchanged at 12.1%, as expected, though the Italian jobless rate jumped to another record high of 12.7%.
Asides from the ADP data – which is seen as a rough indicator of the official jobs report due Friday - traders in the States were also awaiting the minutes of December's Federal Reserve policy meeting scheduled for after the close.
Markets are hoping that the minutes will shed more light on the central bank's decision to begin scaling back stimulus last month and potentially give more insight into the Fed's future plans to gradually withdraw its quantitative easing programme.
Looking ahead to tomorrow, policy meetings at the Bank of England and European Central Bank will take place, with the latter likely to be closely watched after the surprise dip in Eurozone inflation revealed yesterday.
Retailers in focus: Sainsbury, Mothercare, Majestic
Sainsbury finished lower after it reported flat like-for-like (LFL) sales in the third quarter as customers held back on spending ahead of the Christmas period. While sales still managed to beat consensus forecasts, S&P Capital IQ maintained its 'sell' rating for the stock and cut its target, saying: "We are increasingly concerned about Sainsbury's weakening balance sheet and do not see any dividend increase in fiscal year 2015."
Rival supermarket Tesco, which is due to update the market tomorrow on its performance over the festive season, was also trading in the red while Morrison edged higher. However, online grocer Ocado surged, rising nearly 12% before the close.
The share price of Mothercare dropped by over 30% after the baby products retailer said that full-year profit would come in below market forecasts as it battled against Christmas price discounting and weak trading conditions.
Wine retailer Majestic was also lower despite saying that UK store sales for the 10 weeks to January 6th were up 5.9% year-on-year as it opened its 200th store during the period. Canaccord Genuity downgraded Majestic from 'buy' to 'hold' today, saying that the stock was "up with events".
Leading the upside were banking stocks, extending gains made yesterday when data showed that funding conditions had improved in the fourth quarter of 2013. Lloyds, RBS and Barclays were higher. Barclays was boosted by upbeat comments from JPMorgan Cazenove which labelled it as a top pick in the European investment banking sector.
Insurance firm RSA also advanced after reiterating its confidence that its recent financial irregularities are isolated to its Irish business. The group attempted to reassure investors ahead of the results of an independent investigation tomorrow.
Engineering software firm AVEVA climbed strongly after UBS upgraded the software company from 'neutral' to 'buy', while home credit group International Personal Finance was hit by a Panmure Gordon downgrade from 'buy' to 'sell'. |
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FTSE 100 - Risers
RSA Insurance Group (RSA) 100.70p +3.02%
Royal Bank of Scotland Group (RBS) 357.90p +2.14%
Glencore Xstrata (GLEN) 314.80p +1.93%
Lloyds Banking Group (LLOY) 83.80p +1.56%
Standard Life (SL.) 370.90p +1.39%
International Consolidated Airlines Group SA (CDI) (IAG) 434.10p +1.38%
Aviva (AV.) 460.20p +1.32%
easyJet (EZJ) 1,626.00p +1.31%
ARM Holdings (ARM) 1,067.00p +1.14%
Sage Group (SGE) 397.50p +0.99%
FTSE 100 - Fallers
Aberdeen Asset Management (ADN) 473.30p -3.60%
Tate & Lyle (TATE) 773.00p -3.44%
Imperial Tobacco Group (IMT) 2,247.00p -2.90%
Aggreko (AGK) 1,690.00p -2.87%
Tullow Oil (TLW) 820.00p -2.73%
William Hill (WMH) 399.80p -2.54%
Sainsbury (J) (SBRY) 360.00p -2.41%
Centrica (CNA) 330.10p -2.16%
Burberry Group (BRBY) 1,450.00p -2.03%
Fresnillo (FRES) 692.00p -1.91%
FTSE 250 - Risers
Ocado Group (OCDO) 513.50p +11.73%
Aveva Group (AVV) 2,261.00p +6.45%
Entertainment One Limited (ETO) 290.30p +6.07%
JD Sports Fashion (JD.) 1,595.00p +4.59%
Domino's Pizza Group (DOM) 522.00p +3.78%
Centamin (DI) (CEY) 46.49p +3.10%
Telecity Group (TCY) 764.00p +2.83%
Ted Baker (TED) 2,300.00p +2.82%
Pace (PIC) 341.70p +2.71%
Foxtons Group (FOXT) 330.00p +2.48%
FTSE 250 - Fallers
International Personal Finance (IPF) 484.00p -5.10%
Renishaw (RSW) 1,948.00p -4.74%
Bwin.party Digital Entertainment (BPTY) 115.90p -3.98%
Diploma (DPLM) 715.50p -3.90%
Imagination Technologies Group (IMG) 168.90p -3.49%
Dairy Crest Group (DCG) 542.00p -3.30%
Rightmove (RMV) 2,711.00p -3.25%
WH Smith (SMWH) 1,006.00p -3.18%
De La Rue (DLAR) 855.50p -3.06%
Catlin Group Ltd. (CGL) 560.00p -2.86% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed after US jobs report - US employers add more jobs
- German factory orders rise
- Eurozone jobless rate unchanged
- Eurozone retail sales grow
FTSE 100: -0.50%
DAX: -0.09%
CAC 40: -0.04%
FTSE MIB: -0.17%
IBEX 35: 0.54%
Stoxx 600: 0.10%
European stocks were mixed as investors weighed a report which showed US employers added more jobs than expected in December.
The report from ADP Research Institute revealed an extra 238,000 jobs last month, up from an upwardly-revised 229,000 in November, surprising economists who had predicted a fall to 200,000.
The ADP report is often seen as a rough indicator of the official non-farm payroll figures released on Friday by the Bureau of Labor Statistics (BLS).
"While the frequent revisions and methodology of the ADP employment report limit its usefulness for forecasting the BLS employment report on a month-to-month basis, this report does suggest some modest upside risk to our forecast of a 175k increase in headline payrolls and a 175k increase in private payrolls in the BLS employment report released on Friday," said analyst Cooper Howes from Barclays.
The Federal Reserve is closely watching jobs data to determine whether the world's biggest economy is ready for another tapering of monetary stimulus.
The US central bank last month reduced its monthly bond purchases to $75bn from $85bn.
The Fed was due to release the minutes from the December 17th - 18th meeting after the close of the European market today.
German factory orders, Eurozone retail sales
German factory orders grew by 2.1% in November compared to month earlier when they fell 2.1%. Economists had forecast a rise of 1.5%.
Eurozone retail sales edged up 1.4% in November, beating expectations for a 0.1% increase. In October sales fell 0.4%.
The Eurozone's unemployment rate remained unchanged at 12.1% in November, as predicted by economists.
Spain's government has said it will cut down its net debt issuance this year from 2013. It plans to issue €65bn worth of new debt in 2014, not including rollovers of existing debt, compared to €71.9bn last year.
Meanwhile, the International Monetary Fund plans to increase its forecast for world growth, Managing Director Christine Lagarde told reporters in the Kenyan capital of Nairobi yesterday.
She said the organisation, which currently estimates the global economy will expand by 3.6% this year, will announce its new forecast in about three weeks.
Banking stocks rally
A gauge of European banks rose after Ireland successfully sold €3.75bn worth of 10-year bonds on Tuesday to strong demand.
Celesio was higher following a report that McKesson Corp. may increase its bid for the drug distributor.
Sainsbury declined after Chief Financial Officer John Rogers said that same-store sales for the company's financial year will rise less than 1%, compared to a previous forecast of a 1% to 1.5% increase.
SAP gained after UBS recommended that investors buy shares in the German software corporation.
Aveva was up as UBS upgraded the stock to 'buy' from 'neutral', citing value for money.
Kion Group AG slumped after Goldman Sachs and private equity firm KKR put a 10.8% stake in the forklift maker on sale.
The euro fell 0.20% to $1.3589.
Brent crude futures rose $0.288 to $107.660 per barrel on the ICE. |
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| | US Market Report | | US open: Stocks mixed after ADP data, investors await Fed minutes - ADP: US added 238k jobs in December, ahead of expectations
- Fed minutes due out later on
- Mulally to stay with Ford, quashes Microsoft rumours
Dow Jones: -0.28%
Nasdaq: 0.06%
S&P 500: -0.12%
US markets opened in a mixed fashion on Wednesday as investors digested a report which showed employers added more jobs than expected in December.
The report from ADP Research Institute revealed an extra 238,000 jobs last month, up from an upwardly-revised 229,000 in November, surprising economists who had expected a fall to 200,000.
The ADP report is often seen as a rough indicator of the official non-farm payroll figures released on Friday by the Bureau of Labor Statistics (BLS).
"While the frequent revisions and methodology of the ADP employment report limit its usefulness for forecasting the BLS employment report on a month-to-month basis, this report does suggest some modest upside risk to our forecast of a 175k increase in headline payrolls and a 175k increase in private payrolls in the BLS employment report released on Friday," said analyst Cooper Howes from Barclays.
Federal Reserve policymakers are using economic data, particularly from the labour market, to determine whether the US economy is ready for a further tapering of monetary stimulus at its meeting this month.
Minutes from the December 17th-18th meeting – when the Fed reduced its monthly bond purchases to $75bn from $85bn - will be released later today and are likely to shed further light on the central bank's decision to scale back quantitative easing. Investors are also hoping that minutes will give more insight into the Fed's future plans to gradually withdraw its stimulus programme.
In other economic data, US mortgage applications rose 2.6% in the week to January 3rd, compared to the previous week's revised 4.2% decline.
Ford jumps as Mulally quashes Microsoft rumours
US auto giant Ford Motor rallied after Chief Executive Officer Alan Mulally bowed out of the race for the top job at Microsoft Corp. "I would like to end the Microsoft speculation because I have no other plans to do anything other than serve Ford," he said in an interview with the Associated Press. Shares in the software group fell after the open.
Micron Technology advanced as the US maker of memory chips reported quarterly revenue that exceeded analysts' estimates.
Forest Laboratories was up after agreeing to buy Aptalis for $2.9bn to expand in gastrointestinal and cystic fibrosis treatments.
Tenet Healthcare slumped after Raymond James Financial downgraded the shares to 'market perform' from 'outperform'. Meanwhile, social media firm Twitter dropped sharply after analysts at Cantor Fitzgerald cut the stock from 'hold' to 'sell'.
Shares of CEC Entertainment surged on rumours that the restaurant and entertainment group is considering a potential sale, according to Reuters.
Aluminium producer Alcoa edged higher ahead of the release of its fourth-quarter results tomorrow evening, which traditionally marks the start of the new earnings reporting season on Wall Street. |
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| | Broker Tips | | Broker tips: Sainsbury, Burberry, Domino's, Air Partner Panmure Gordon has maintained its 'hold' rating for Sainsbury despite the supermarket group beating consensus forecasts with its third-quarter results.
The stock trades at 11.3 times earnings and offers a 4.7% dividend yield which the broker admits isn't particularly demanding. "It is our favourite of the three grocery stocks, although our caution on the short-term sector outlook as a whole holds us back from having a more positive recommendation at the moment," Panmure said.
Nomura has trimmed its forecasts for High End luxury brand Burberry ahead of its trading update next week, saying that currency headwinds are likely to weigh on results in the second half. The broker maintained a 'neutral' rating and 1,630p target for the stock.
Nomura said that recent foreign exchange (FX) volatility will lead to a 4.2% headwind in the fourth quarter, mainly due to the recent strength of sterling compared with last year. If rates stay stable, this headwind will continue into next year, it said.
Canaccord Genuity has lifted its recommendation for pizza delivery chain Domino's Pizza from 'sell' to 'hold' after a stronger sales performance in the fourth quarter.
However, analyst Wayne Brown still voiced some concerns with the business, including the recent departure of Domino's Chief Executive Officer and Finance Director in quick succession, as well as ongoing losses in Germany. Meanwhile, he said that "an achievable rate of new openings needs to be targeted instead of 'missing' guidance".
Liberum has reiterated its 'buy' recommendation on Air Partner and raised its target to 700p for the shares, which have soared around 70% over the last year to just above 600p.
"Air Partner appears to have overcome cyclical and structural challenges with a return to earnings growth in the current period," the broker said in a note, predicting a recovery in earnings in future, with a dividend yield of 3.4% supporting the shares in the meantime. | | |
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