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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | - Yellen: Tapering to continue as long as incoming data supports
- Precious metal miners track metal prices higher
- Retailers gain after economic data
- Barclays drops seven per cent after 2013 results disappoint
techMARK 2,836.39 +1.06%
FTSE 100 6,672.66 +1.23%
FTSE 250 16,078.28 +1.05%
UK markets rose strongly after a further reduction in tensions, overnight, in Chinese interbank funding markets.
Investors also reacted coolly to new US Federal Reserve Chair Janet Yellen’s remarks, in the afternoon, indicating that the US central bank will continue on its ‘tapering’ path in measured steps.
However, in her first monetary policy report to the House Financial Services Committee, she also said that “the recovery in the labour market is far from complete”. She also explained to lawmakers that quantitative easing is not on a “pre-set course”.
The FTSE 100 ended 1.23% higher at 6,673.
In a sign of the times, figures showed this morning that like-for-like (LFL) UK retail sales rose by 3.9% in January when compared with the year before, according to the British Retail Consortium/KPMG sales monitor. This was much higher than the 1.2% pace registered over 2013.
According to broker Jefferies food sales saw a 2% LFL decline, while non-food sales shot higher by close to 10%. The broker’s suspicion was that some shoppers may be curtailing their expenditure on staples as they make space in their budgets for moving house.
Acting as a backdrop, interbank lending rates in China eased overnight following the week-long Lunar New Year holiday, despite the People’s Bank of China refraining from conducting reverse-repurchase operations.
Lastly, earlier in the day analysts at Barclays Research wrote to clients telling them that in their opinion the time had come to go back into emerging market equities.
Barclays falls, Babcock and precious metals miners gain
Banking giant Barclays fell sharply after a worse-than-expected 32% fall in 2013 adjusted pre-tax profit to £5.16bn with costs coming in higher than predicted. Adjusted income fell 4% to £28.15bn. Various analysts called attention to the lender’s lower than expected net asset value per share, with some indicating that its guidance on dividends had undershot their own calculations. Overall, however, analysts seemed to back management’s current strategy.
Mining stocks were performing well as metal prices advanced with precious metal producers Fresnillo, Randgoldand Centamin making decent gains.
Shares of Fresnillo were further bolstered on Tuesday afternoon after the precious metals miner announced the decision by a Mexican district court to deny the request by the Ejido El Bajío to prevent the lifting of the explosives permit covering its Herradura and Soledad mines.
Engineering group Babcock International rose after it said that third-quarter trading saw high activity levels in all divisions, helped by the improving economic climate. Sector peers Meggitt and Rolls-Royce were also higher.
A number of retailers were performing well after the strong retail sales data from BRC, with Sports Direct,Kingfisher, M&S and Debenhams trading higher. Homewares chain Dunelm wasn’t far behind after lifting its interim dividend by 11.1% as profits edged higher in its first half.
Kazakhstan-focused copper miner Kazakhmys surged after Kazakhstan’s central bank devalued the local currency, the tenge, by 19%. This, analysts
at Investec said, will lead to a 10% reduction in costs for Kazakhmys given that around half of its costs are tenge-denominated. The broker, however, warned that the move could lead to high inflation in the coming years.
Imagination rose on the back of positive comments out of analysts at broker Investec. |
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| | FTSE 100 - Risers
Fresnillo (FRES) 911.50p +5.68%
Babcock International Group (BAB) 1,395.00p +3.95%
Randgold Resources Ltd. (RRS) 4,705.00p +3.86%
Amec (AMEC) 1,112.00p +3.63%
Sports Direct International (SPD) 708.00p +3.36%
Marks & Spencer Group (MKS) 485.60p +3.25%
Johnson Matthey (JMAT) 3,280.00p +3.21%
Kingfisher (KGF) 376.80p +3.20%
Persimmon (PSN) 1,434.00p +2.94%
William Hill (WMH) 353.10p +2.88%
FTSE 100 - Fallers
Barclays (BARC) 264.70p -3.75%
RSA Insurance Group (RSA) 99.10p -3.32%
Sainsbury (J) (SBRY) 348.90p -2.05%
Tesco (TSCO) 318.70p -1.54%
Coca-Cola HBC AG (CDI) (CCH) 1,578.00p -1.44%
Morrison (Wm) Supermarkets (MRW) 237.20p -1.29%
Vodafone Group (VOD) 221.50p -0.23%
Associated British Foods (ABF) 2,805.00p -0.18%
FTSE 250 - Risers
Kazakhmys (KAZ) 208.40p +17.74%
Essar Energy (ESSR) 63.00p +11.41%
Imagination Technologies Group (IMG) 184.30p +7.21%
Centamin (DI) (CEY) 50.60p +6.28%
Home Retail Group (HOME) 190.40p +5.31%
Debenhams (DEB) 77.70p +5.14%
Ferrexpo (FXPO) 165.40p +4.35%
Polymetal International (POLY) 630.00p +4.30%
FirstGroup (FGP) 136.80p +4.03%
ICAP (IAP) 414.50p +3.88%
FTSE 250 - Fallers
JD Sports Fashion (JD.) 1,417.00p -4.26%
Rank Group (RNK) 142.50p -3.13%
Perform Group (PER) 219.00p -2.67%
Devro (DVO) 310.30p -2.42%
Laird (LRD) 305.00p -2.31%
Halma (HLMA) 581.50p -2.02%
NMC Health (NMC) 460.90p -1.94%
Greencore Group (GNC) 249.90p -1.92%
Xaar (XAR) 1,068.00p -1.75%
BH Macro Ltd. EUR Shares (BHME) € 19.36 -1.68% |
| | The Fundamentals of Stock Market Highs | | How to Know when the Bull Market Ends - Given that the stock market rally has now lasted nearly five years and in view of new all-time highs, many market participants are faced with the question when will there be a top at the major share indexes. After all, everybody wants to exit the market near a high and lock in their profits before the market turns downwards again. Read more. |
| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | - Yellen delivers first testimony
- UK retail sales rise
- Greek borrowing costs fall
FTSE 100: 1.23%
DAX: 2.03%
CAC 40: 1.09%
FTSE MIB: 1.04%
IBE35: 1.09%
Stoxx 600: 1.30%
European stocks gained after Federal Reserve Chair Janet Yellen indicated the US central bank will continue to scale back monetary stimulus.
In her first congressional testimony since taking over the reins from Ben Bernanke earlier this month, Yellen signalled that the recent drop off in the pace of employment growth and the turmoil in emerging markets will not stop the Fed from gradually tapering.
The central bank last month decided to reduce monthly bond purchases by $10bn to $65bn, its second round of cuts.
While Yellen noted that the labour market recovery has far to go, she said the Federal Open Market Committee is likely to reduce the pace of asset purchases further at future meetings.
She also addressed the recent upset in emerging markets but believes it does not pose a substantial risk to the US economic outlook.
"We will, of course, continue to monitor the situation."
Capital Economics said: “Overall, we expect the FOMC under her leadership to continue to reduce the asset purchases by $10bn at each meeting this year. The first hike in the Fed funds rate won't occur until mid-2015”.
UK retail sales increase
UK like-for-like retail sales rose by 3.9% in January compared with the year before, according to the British Retail Consortium/KPMG sales monitor. This was much higher than the 0.4% growth registered in December and the 0.8% increase expected by analysts.
Greek borrowing costs fell to the lowest since 2010 as a rise of confidence in the euro-area’s recovery boosted the region’s bonds and stocks.
Portugal’s five-year notes edged higher as the nation raised funding from debt markets for a second straight month. The nation is reportedly selling €3bn of debt maturing in 2024 via banks, its second bond sale this year as the end of its international bailout programme nears.
Interbank lending rates in China eased overnight following the week-long Lunar New Year holiday, while the People’s Bank of China reportedly refrained from conducting reverse-repurchase operations.
Prices for single-family US homes rose in 73% of US cities in the fourth quarter, compared to 88% in the third quarter, as rising values in the past two years started to reduce affordability, the National Association of Realtors revealed today.
Michelin, Peugeot Citroen
Michelin & Cie. was up after Europe’s largest tyre maker reported a fall in 2013 operating profit that missed analysts’ estimates.
PSA Peugeot Citroen rallied after Goldman Sachs added the company to its ‘conviction buy’ list.
Barclays tumbled after reporting a 32% fall in adjusted annual pre-tax profit, reflecting restricting costs and a drop in income at the Investment Bank.
L’Oreal slipped, after rising earlier, following news the beauty products firm will pay €3.4bn in cash for 27.3m shares held by Nestlé.
Hexagon jumped as the maker of measuring instruments reported fourth quarter income that exceeded forecasts.
Alcatel-Lucent dropped after Morgan Stanley cut its rating on the French network supplier to ‘equal weight’ from ‘overweight’.
ICAP gained as Goldman Sachs raised its recommendation on the world’s largest broker of transactions between banks to ‘neutral’ from ‘sell’.
The euro advanced 0.12% to $1.3662.
Brent crude futures rose $0.266 to $108.920 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks fall ahead of Yellen speech US stocks declined as investors awaited Federal Reserve Chairman Janet Yellen's first report on monetary policy tomorrow.
Yellen, who took over the reins from Ben Bernanke this year, may shed further light on the Fed's decision last month to cut monthly bond purchases by a further $10bn to $65bn.
"Global investors are eagerly awaiting the hotly anticipated speech by Federal Reserve chief Janet Yellen tomorrow to see if they can find any signs that the Fed are to raise its main near-0% interest rate in the near future," said Spreadex trader Sam Fox.
A weaker-than-expected jobs report from the Labor Department on Friday raised speculation over whether the Fed will hold back on another round of stimulus tapering at its next meeting in March.
US employers added 113,000 jobs in January, falling short of the 180,000 forecast.
However, the unemployment rate dropped to 6.6%, the lowest level since October 2008.
Fed policymakers have been closely monitoring the labour market in weighing whether the US is strong enough to handle another reduction in quantitative easing.
Hasbro declined as the maker of Nerf and Transformers toys posted fourth-quarter earnings that fell short of analysts' estimates.
Yelp gained following news Yahoo will include its rating of local businesses in its search results.
Sohu.com slumped as the owner of China's third-largest search engine posted quarterly revenue that missed market forecasts.
Green Mountain Coffee Roasters was higher after the company agreed to sell coffee from Krispy Kreme Doughnuts for its Keurig single-cup brewing system by the end of 2014. |
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| | Broker Tips | | Broker tips: Barclays, Prudential, ICAP, Thomas Cook Numis Securities has maintained a 'hold' rating and 274p target for banking giant Barclays after the company's annual profits came in lighter than expectations.
However, despite the bottom-line 'miss', Analyst Mike Trippitt said he was "encouraged" by the progress the company has made on its capital position and leverage.
Insurance giant Prudential shares were making gains on Tuesday morning after analysts at Citigroup reiterated their 'buy' rating on the stock, saying they see an attractive risk-reward balance given the recent pull-back in the price.
"Looking through the debate on FX and the impact of Asian macroeconomic uncertainty, we believe the market is starting to price in an overly bearish outlook on Prudential's longer-term fundamentals."
Goldman Sachs has upgraded its rating for interdealer broker ICAP from 'sell' to 'neutral', saying that cyclical weakness is now being reflected in its share price.
"After recent weakness in the shares there is insufficient downside to our 12-month price target relative to our coverage and we therefore upgrade ICAP to 'neutral'." The target has been left at 440p.
Numis Securities has downgraded Thomas Cook after the tour operator cut first-quarter losses but took a revenue hit from fewer people visiting Egypt.
Numis reduced its recommendation on Cook to 'hold' from 'add', saying: "We believe there is little in the first-quarter announcement to excite the market in the short-term and expect some consolidation in the share price." | | |
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