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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: FTSE ends on a high after data-heavy session - FTSE reverses early declines to finish up 60 points
- Banks lifted by UK inflation data
- Anglo American lifted by UBS note
techMARK 2,881.97 +0.86%
FTSE 100 6,796.43 +0.90%
FTSE 250 16,342.07 +0.60%
Stocks reversed this morning's slight decline to end the session firmly higher, buoyed by a strong performance from the banking sector after January UK inflation came in in below the government's target level.
The FTSE 100 closed up 60.43 points, or 0.9%, at 6,796.43.
Both Royal Bank of Scotland and Barclays registered strong gains after the key consumer price index measure came in at 1.9%, below the target of 2.0% set by the government.
Financial Trader Alex Conroy commented that the data "will have further strengthened the Bank of England's case that interest rates should remain at current levels for the time being and has sent speculators into frenzy".
According to Barclays Research, the fall came from services prices and more specifically recreational and personal services.
"Slightly weaker-than-expected outcomes in volatile prices (energy; food, alcohol and tobacco) were broadly offset by a moderately stronger-than-expected outturn in non-energy industrial good prices," it explained.
It also said the fall was in line with its baseline scenario that inflation pressures should ease in the coming months, giving "comfort to our view that the current brisk gross domestic product (GDP) recovery pace should be non-inflationary (at least for the near future)".
Average UK house price hits 250,000
In other UK macro news, the average price of a home in the UK reached 250,000 in 2013, said the Office for National Statistics (ONS). House prices increased by 5.5% December 2013 compared with a year earlier and up from 5.4% in November. The average price was reached at the end of the year, the ONS said.
Meanwhile, the ONS also revealed that factory gate prices increased by 0.3% over the month (0.9% year-on-year) during January. The consensus estimate had been for an unchanged reading on the month and 0.7% rise when compared to levels a year ago.
US home builder sentiment declines
Over in the US, home builder sentiment index dropped to a reading of 46 in the month of February, after a reading of 56 in the month before. The consensus estimate had been for a reading of 56.
Over in the Eurozone, the ZEW Institute's economic sentiment indicator for Germany fell from January's 61.7 to 55.7, a bigger drop than the consensus expectation of 0.2, while the 'current situation' sub-index, which is generally more closely related to GDP growth, again rose in February, from 41.2 to 50, its highest level since August 2011.
The European research firm also reported that overall Eurozone economic sentiment had fallen to 68.5 in February from the prior reading of 73.3. Consensus had expected an increase to 73.9.
Anglo American lifted by UBS note
Anglo American shares were lifted by a target increase from UBS from 1,580p to 1,650p after its results came in ahead of expectations.
Meanwhile, InterContinental Hotels Group after its full year results showed a negative impact on earnings before interest and tax as a result of hotel/room closures during refurbishments, while 2014 capex guidance was more than 20% ahead of its current forecast. Significantly, there was a potential delay to further cash returns. Numis cut the stock to 'hold' from 'add'.
Rolls-Royce fell after Citi reduced its target from 1,280p to 1,070p and downgraded the stock to 'neutral'.
Numis cut Tate & Lyle to 'hold' from 'add', and cut its target from 858p to 693p. |
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FTSE 100 - Risers
BT Group (BT.A) 418.10p +3.41%
Royal Bank of Scotland Group (RBS) 360.20p +2.39%
Anglo American (AAL) 1,587.00p +2.26%
London Stock Exchange Group (LSE) 2,001.00p +2.25%
Travis Perkins (TPK) 1,945.00p +2.21%
Petrofac Ltd. (PFC) 1,347.00p +2.20%
Associated British Foods (ABF) 2,914.00p +2.17%
Barclays (BARC) 261.30p +2.05%
Persimmon (PSN) 1,444.00p +2.05%
Imperial Tobacco Group (IMT) 2,404.00p +1.99%
FTSE 100 - Fallers
InterContinental Hotels Group (IHG) 1,981.00p -3.22%
Rolls-Royce Holdings (RR.) 976.50p -2.93%
Tate & Lyle (TATE) 644.00p -1.90%
Morrison (Wm) Supermarkets (MRW) 232.60p -1.61%
Randgold Resources Ltd. (RRS) 4,780.00p -1.59%
Centrica (CNA) 314.40p -1.26%
Burberry Group (BRBY) 1,507.00p -0.99%
Legal & General Group (LGEN) 239.70p -0.91%
G4S (GFS) 232.60p -0.81%
Sports Direct International (SPD) 716.00p -0.69%
FTSE 250 - Risers
Wood Group (John) (WG.) 721.50p +6.65%
Bwin.party Digital Entertainment (BPTY) 119.00p +5.31%
Paragon Group Of Companies (PAG) 386.20p +5.12%
Bank of Georgia Holdings (BGEO) 2,372.00p +4.59%
Fidessa Group (FDSA) 2,411.00p +4.37%
WH Smith (SMWH) 1,118.00p +4.00%
Workspace Group (WKP) 583.50p +3.73%
Homeserve (HSV) 342.30p +3.73%
Domino's Pizza Group (DOM) 542.50p +3.33%
Xaar (XAR) 1,090.00p +3.32%
FTSE 250 - Fallers
Kazakhmys (KAZ) 229.00p -3.62%
African Barrick Gold (ABG) 268.60p -2.86%
Telecom Plus (TEP) 1,835.00p -2.34%
Cairn Energy (CNE) 190.30p -2.21%
NMC Health (NMC) 460.00p -2.15%
Centamin (DI) (CEY) 51.50p -2.09%
Polymetal International (POLY) 671.00p -1.90%
Vedanta Resources (VED) 919.00p -1.87%
Rotork (ROR) 2,542.00p -1.85%
Afren (AFR) 148.60p -1.85% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Stocks mixed after German investor confidence, UK CPI - German investor confidence declines
- UK inflation drops
- Empire State manufacturing index falls
- Fed discusses banking rules
FTSE 100: 0.99%
DAX: 0.03%
CAC 40: -0.10%
FTSE MIB: 0.09%
IBEX 35: -0.75%
Stoxx 600: 0.01%
European stocks were mixed as investors weighed reports on German investor confidence and UK inflation.
The ZEW Centre for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, dropped to 55.7 in February from 61.7 in January, after reaching a seven-year high of 62 in December. Economists had predicted a reading of 61.5.
The slump came despite German economic growth of 0.4% in the fourth quarter which exceeded analysts’ expectations.
ZEW also released the Eurozone economic sentiment index for February which dipped to 68.5 from 73.3. Analysts had expected it to rise to 73.9.
The report may add pressure on the European Central Bank (ECB) to consider changing its monetary policy to spur the bloc’s recovery when it meets next month.
In the UK, consumer prices gained 1.9% year-on-year in January, down from the previous month’s 2%, according to the latest data available from the Office for National Statistics (ONS).
It surprised analysts who had expected inflation to remain at the Bank of England’s 2% target.
The fall in likely to back the BoE’s intention to keep interest rates low, according to Alpari UK analyst Craig Erlam.
"While this is negative for sterling, it is very good for the UK economy as it means there’s less chance of the recovery being choked off by a premature rate hike and it continues to close the gap between wage growth and the cost of living,” he said.
US manufacturing
The Empire State manufacturing index, which gauges manufacturing activity in New York, northern New Jersey and southern Connecticut, plunged to 4.48 from 12.5 in January. Economists had predicted a drop to 9.0.
The National Association of Home Builders’ housing market index, which asks survey respondents to rate market conditions for new home sales, dropped to 46 in February from 56 in a month earlier. Analysts had expected it to remain unchanged.
Later on after the market closes, the Fed will hold an open board meeting to finalise new regulatory rules for banks. Banks are expected to face tighter capital requirements under the regulation.
InterContinental Hotels
InterContinental Hotels Group was lower as the hotel operator said renovation costs will hurt this year’s earnings.
Hochtief rallied as Goldman Sachs raised the German builder to ‘buy’ from ‘neutral’.
Inditex declined after Citigroup downgraded the retailer to ‘neutral’ from ‘buy’.
BHP Billiton gained after the world’s biggest mining company posted first-half profit that beat analysts’ forecasts.
Centrica fell as UBS lowered its recommendation on the UK energy supplier to ‘sell’ from ‘neutral’.
Casino Guichard-Perrachon advanced after reporting an 18% jump in 2013 earnings.
Pandora climbed as the Danish jeweller reported fourth-quarter income that surpassed market expectations.
Alstom was down following reports the French government has appointed consultants to study the train and power-equipment maker’s market position and its strategic options.
The euro rose 0.34% to $1.3754.
Brent crude futures bumped up $0.682 to $109.930 per barrel, according to ICE data. |
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| | US Market Report | | US open: Wall Street turns mixed - Home builder sentiment drops unexpectedly
- Empire State manufacturing survey slips in February
- Crude futures advance
Dow Jones Industrials: -0.07%
Nasdaq Composite: 0.56%
S&P 500: 0.07%
US stock futures were little changed as trading resumed and the New York Fed's Empire State manufacturing sector survey revealed that activity in the region fell by more than had been expected.
A later report showed a large drop in home builder sentiment in February, although the lion's shares of the decline seemed attributable to the impact of adverse weather.
Wall Street was thus failing to see any follow-through buying after last Friday's rise. New York markets were returning to trading today after taking a break yesterday for Presidents' Day.
"The first day of the week for the US is likely to be a quiet one, with very little economic data being released and little direction coming from Europe," according to Craig Erlam, analyst at Alpari UK, adding that the only notable release expected on Tuesday was the Empire State manufacturing survey.
The Empire State manufacturing index, which gauges manufacturing activity in New York, northern New Jersey and southern Connecticut, plunged to 4.48 from 12.5 in January. Economists had predicted a drop to 9.
The National Association of Home Builders' housing market index, which asks survey respondents to rate market conditions for new home sales, dropped to a reading of 46 points (consensus: 56).
According to the NAHB said softness was driven in part by "unusually severe weather conditions across much of the nation."
Later on, after the market closes, the Fed will hold an open board meeting to finalise new regulatory rules for banks.
The biggest foreign banks in the US, including Credit Suisse, UBS and Deutsche Bank, were bracing for regulation demanding stricter capital requirements.
Forest Laboratories gained after Actavis agreed to buy the maker of the Alzheimer's drug Namenda.
Netflix edged higher following reported the company suspended a plan to secure a place for its video-subscription service on Time Warner Cable set-top boxes.
Crude futures advance
Front month West Texas crude futures rose by 0.99% to the $101.34/barrel mark on the NYMEX.
Yields on 10-year US Treasuries retreated by 3 basis points to the 2.72% mark.
S&P 500 - Risers
Forest Laboratories Inc. (FRX) $91.95 +28.80%
Actavis plc (ACT) $203.75 +6.19%
Mylan Inc. (MYL) $48.22 +4.59%
Genuine Parts Co. (GPC) $89.43 +4.05%
Humana Inc. (HUM) $103.15 +2.91%
Newfield Exploration Co (NFX) $25.87 +2.78%
J. M. Smucker Co. (SJM) $94.34 +2.76%
First Solar Inc. (FSLR) $54.37 +2.26%
Pioneer Natural Resources Co. (PXD) $189.40 +2.21%
Helmerich & Payne Inc. (HP) $92.43 +2.03%
S&P 500 - Fallers
Kansas City Southern (KSU) $88.87 -7.39%
Waste Management Inc. (WM) $41.71 -4.49%
Coca-Cola Co. (KO) $37.36 -4.04%
Dentsply International Inc. (XRAY) $45.10 -2.47%
Mattel Inc. (MAT) $35.76 -2.44%
Lam Research Corp. (LRCX) $51.21 -2.42%
Noble Corporation plc (NE) $30.45 -2.28%
Transocean Ltd. (RIG) $42.20 -2.17%
Medtronic Inc. (MDT) $55.65 -2.16%
Harley-Davidson Inc. (HOG) $63.60 -2.12%
Dow Jones I.A - Risers
Unitedhealth Group Inc. (UNH) $74.58 +1.44%
Visa Inc. (V) $227.60 +0.71%
Walt Disney Co. (DIS) $79.60 +0.47%
Merck & Co. Inc. (MRK) $55.69 +0.44%
Goldman Sachs Group Inc. (GS) $164.35 +0.38%
Chevron Corp. (CVX) $113.82 +0.30%
Travelers Company Inc. (TRV) $84.26 +0.29%
McDonald's Corp. (MCD) $95.91 +0.14%
General Electric Co. (GE) $25.75 +0.04%
Dow Jones I.A - Fallers
Coca-Cola Co. (KO) $37.36 -4.04%
Procter & Gamble Co. (PG) $77.72 -2.12%
Verizon Communications Inc. (VZ) $45.69 -1.76%
AT&T Inc. (T) $32.75 -1.21%
Wal-Mart Stores Inc. (WMT) $74.91 -1.16%
Home Depot Inc. (HD) $77.29 -0.82%
American Express Co. (AXP) $88.40 -0.67%
Intel Corp. (INTC) $24.60 -0.63%
United Technologies Corp. (UTX) $113.25 -0.54%
Cisco Systems Inc. (CSCO) $22.44 -0.53%
Nasdaq 100 - Risers
Mylan Inc. (MYL) $48.22 +4.59%
Illumina Inc. (ILMN) $168.78 +2.71%
Liberty Global plc Series A (LBTYA) $85.80 +2.63%
Tesla Motors Inc (TSLA) $202.79 +2.30%
Baidu Inc. (BIDU) $170.80 +1.98%
Gilead Sciences Inc. (GILD) $82.65 +1.77%
Intuit Inc. (INTU) $72.74 +1.46%
Green Mountain Coffee Roasters Inc. (GMCR) $117.58 +1.34%
Micron Technology Inc. (MU) $25.38 +1.20%
Twenty-First Century Fox Inc Class A (FOXA) $32.94 +1.09%
Nasdaq 100 - Fallers
Dentsply International Inc. (XRAY) $45.10 -2.47%
Mattel Inc. (MAT) $35.76 -2.44%
Amazon.Com Inc. (AMZN) $350.87 -1.81%
Symantec Corp. (SYMC) $21.00 -1.64%
Garmin Ltd. (GRMN) $45.40 -1.48%
Vimpelcom Ltd Ads (VIP) $10.07 -1.27%
Netflix Inc. (NFLX) $430.26 -1.21%
Facebook Inc. (FB) $66.36 -1.09%
Broadcom Corp. (BRCM) $30.98 -1.02%
Whole Foods Market Inc. (WFM) $51.74 -0.98% |
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| | Broker Tips | | Broker tips: Wood Group, InterContinental Hotels, Centrica Oil services outfit Wood Group's latest full year results were largely in-line, although revenues were about one per cent softer than consensus expectations.
At unchanged guidance for modest growth in earnings per share next year might not seem much to write home about. Yet coming as it did on the heels of two profit warnings that was "important", broker Investec told clients.
As well, the company's current valuation was already more than discounting the risk of a further slowdown in contract awards as the oil majors continue to cut-back on their capital outlays, those analysts explained.
Wood Group also stated its intention to increase cash returns. The company said it expected a further increase of 25% in 2014. The final dividend for the fiscal year 2013, at 22 cents, was already 10% ahead of analysts' estimates.
It also indicated its intention to increase cash returns.
Investec retained its 'buy' recommendation on the shares.
Increased regulatory scrutiny, even if unjustified, of Centrica's pricing structure would hit the company's margins, adding to the pressures coming from other fronts, analysts at UBS wrote on Tuesday.
In the wake of the UK Energy Secretary's letter to Ofgem, the Swiss broker's analysts wrote that the vertically integrated exploration and gas and electricity provider might see all its retail margins fall towards 4% so as to reduce political risk. All else equal that would bite into its earnings per share (EPS) by 16%, resulting in a fair value estimate for the stock of 300p.
Labour could move to freeze tariffs, alongside a possible retail re-regulation. That would cut EPS by a further 13-15% (Fair value: 240p). Likewise, the government might act to restrict its share of the retail market to 20%, which would lop off about another 5% of its EPS (Fair value: 290p).
Neither of those moves would benefit consumers, UBS wrote, although they could limit the country's energy security by handicapping the firm's ability to write long-term contracts, such as those for liquefied natural gas (LNG).
Centrica also faced lower margins from wholesale natural gas Stateside, additional weakness in gas storage and adverse movements in US dollar FX rates.
UBS cut its price target on the shares to 280p from 340p and downgraded its recommendation on the shares to 'sell' from 'neutral'.
They saw "a more significant risk to the downside even from current levels".
InterContinentalHotels Group's preliminary full year operating results came in slightly ahead of forecasts, but adjusting for a fourth quarter liquidated damages receipt then the 'beat' was minimal, wrote analysts at broker Numis.
Also, no new news was forthcoming regarding an additional return of cash to shareholders.
"There may be some market disappointment that nothing new has been announced, but we see scope for a further significant return."
Revenue per available room (RevPAR), one of the most important metrics for hotel operators, grew by 3.8% overall, but by only 1% in China a geographical regions around which there remain "uncertainties".
"As well, the company faces some short-term headwinds given dilution from asset disposals and planned refurbishment.
We suspect that consensus forecasts may drift back a little," the broker added.
As a result of all the above Numis downgraded the stock to 'hold' from 'add' setting a 2,100p target in the process. | | |
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